Waive VAT on insurance products to protect industry after floods – Dr Agyemang

Member of Parliament for Abuakwa South, Dr Kingsley Agyemang, has called on the government to introduce emergency relief measures for insurance companies following the devastating June 29 floods that claimed several lives and destroyed property in parts of Accra and other communities.

Speaking in an interview, Dr Agyemang urged the government to immediately suspend the recently introduced Value Added Tax (VAT) on non-motor insurance products and consider tax reliefs for insurance companies as they grapple with rising claims.

“There must be a waiver or suspension of the VAT on insurance products. That will definitely increase the uptake of insurance services,” he said.

NIC urges Ghanaians to insure homes, businesses against flood losses

The insurance expert warned that the surge in flood-related claims could significantly affect the profitability of insurance companies and weaken the sector.

“My appeal to government is that there should also be some form of corporate tax waiver for insurance companies. If these companies go out of business, the adverse impact on the economy will be huge. Employment will be affected, future disasters will become more difficult to manage and insurance penetration will decline further,” he added.

Dr Agyemang, who has spent more than two decades in the insurance industry, described the current situation as a challenging period for insurers.

“We are estimating claims at almost GH¢500 million. That is going to balloon every insurance company's claims record. It is a very turbulent time in the insurance sector,” he said.

Despite the challenges, he expressed confidence in the resilience of the insurance industry, arguing that the floods had exposed a long-standing weakness in Ghana's insurance sector.

“We didn't need the floods to expose this. Ghana's insurance penetration is only about one per cent of GDP, compared to the African average of three per cent and the global average of about six per cent,” he noted.

According to him, low insurance penetration leaves households and businesses highly vulnerable to disasters.

“Insurance is one of the key mitigating tools in times of crisis. No one is immune to disasters. You could lose your home, your vehicle or even your life. That is why we must take insurance seriously as a country,” he said.

Beyond insurance reforms, Dr Agyemang renewed his call for the establishment of a statutory National Disaster Risk Management Fund to support victims and finance disaster prevention and response efforts.

“I have persistently called for a disaster risk management regime for this country. We don't have one. That is why we often look helpless in times of disaster. If we leave insurance firms alone to deal with these events, they could become overwhelmed,” he stated.

His comments come as the government steps up efforts to respond to the aftermath of the June 29 floods.

President John Dramani Mahama has announced a series of measures to mitigate the impact of flooding, including the establishment of a Post-Flood Mitigation Task Force to coordinate relief efforts and a two-day nationwide clean-up exercise to desilt drains and reduce the risk of further flooding during the rainy season.