Seth Kobla Aklasi, MD of Ghana Reinsurance PLC
When I walked into the underwriting department of a prominent Ghanaian insurance firm back in early 2000, underwriting was actually taken seriously. It was part art, part rigorous science, and a whole lot of responsibility.
I spent my first month in the Fire and Accident Department before being shipped off to Motor (because that’s just how we set up departments back then). Armed with physical rate books, survey checklists, and thick proposal forms written in dense legalese, we saw ourselves as the supreme guardians of the balance sheet.
Each peril was rated separately. Inexperienced drivers and learner drivers were loaded for higher risk. Commercial vehicles had named drivers, and we spent real mental energy figuring out who was most likely to drain the pool. Our mandate was simple: evaluate risk accurately, price it properly, and protect the company’s money.
A quarter of a century later, walking into a Ghanaian insurance office feels like stepping into a completely different world.
Yes, the industry has grown. Insurance revenue looks higher on paper, digital apps are everywhere, and the marketing campaigns are flashier than ever. But technical underwriting, the foundational pillar of insurance, has suffered a slow, quiet death. What was once a respected craft centred on risk assessment has largely devolved into a desperate, race-to-the-bottom price war driven by target-chasing executives.
Looking back on my journey from 2000 to where we stand today, this is how we lost the plot, and why the consequences of these choices are now becoming increasingly difficult to ignore.
The Early Years: “Upgrading” to Continuous Sheets
From Y2K to the late 2000s, technology arrived to “modernise” us. Core insurance software replaced manual rate charts, and proposal forms were drastically shortened.
Simplifying those forms and stripping out legal jargon was great for customer experience. However, in our rush to make sales completely frictionless, we threw the baby out with the bathwater. We purged essential, precedent-backed risk questions, reducing complex risk disclosures to generic, one-page forms or quick digital checkboxes.
At the same time, computerisation didn’t turn underwriters into analytical powerhouses; it turned them into glorified data-entry clerks. Our main job became typing numbers into dropdown menus and printing policies on continuous-feed paper using dot-matrix printers that clattered away loudly. (At least it was a noisy upgrade from the typing pool, where chatty typists and manual typewriters used to hold court!)
Instead of analysing risk, underwriters were trained to navigate software options. If a rate came out “too expensive” for a client, management would routinely issue manual overrides to hack the price down and close the deal. Speed of policy issuance became the only metric that actually mattered.
From Early Tech to AI: Automating Bad Habits Faster
As the industry now races toward Artificial Intelligence, I can’t help but feel a sense of déjà vu.
Early computerisation stripped away human analytical thinking without offering anything smart in return. In theory, AI could fix this: it can evaluate satellite imagery for flood risks, track telematics for fleet management, and enforce strict rating floors.
However, if Ghanaian insurers simply use AI to spit out instant, ultra-discounted quotes faster without capturing real risk data, we aren’t innovating. We are just automating bad underwriting at scale.
The Rate-Slashing Craze and Investment Dependence
As more insurers and brokerages entered the Ghanaian market, both local and foreign, and gained immense leverage, commercial desperation took over a fragmented market:
Underwriters Were Silenced: Underwriting desks lost their authority to business development teams. The underwriter’s new job was simply to match or beat a competitor’s ridiculously low quote.
High Yields Masked Bad Habits: For years, high domestic Treasury bill and government bond yields saved us from our own stupidity. Executives didn’t care if the core underwriting operation lost money because they could park premium cash, if collected, in high-interest government paper and make up the difference on the back end.
Broker Pressure: Brokers played insurers against each other, driving rates down to rock bottom while premium credit defaults piled up (at least until the NIC stepped in with the introduction of the “No Premium, No Cover” policy in 2014). Consumer Behaviour: Consumers see insurance as a statutory compliance obligation rather than risk protection. Where buying insurance is viewed purely as a way of avoiding police fines or regulatory sanctions, the consumer naturally shops for the absolute cheapest sticker price.
The Scale Problem: Small Pockets, High Overhead
To understand why rate-cutting is so chronic, you have to look at the actual size of the Ghanaian market.
The entire non-life insurance service revenue sat around GH₵5.8 billion as of Q4 2025 (~$540 million USD). That modest pie is split among nearly 27 competing companies. The top five players control over 60% because they have strong institutional backing, large balance sheets, and corporate account dominance, with corporate and commercial businesses being heavily broker-driven, with brokers both local and international preferring them.
That leaves the rest of the smaller companies fighting tooth and nail over the remaining 40%, largely driven by high dependency on retail motor and low retention capacity.
This brings us to a silent killer: The Fixed Cost Trap.
An underwriter at a smaller firm can do brilliant technical work and achieve a fantastic loss ratio of 40% or 35%. On paper, their portfolio looks pristine. But because the company’s absolute revenue is so small, fixed overheads — head office rent, executive salaries, branch networks, software licences, and regulatory fees — eat up 60% to 65% of the income.
The good loss ratio is completely wiped out by uncontainable fixed costs. Facing an overall loss, management panics and orders the team to slash rates to chase sheer volume, hoping more cash inflow will dilute their overheads. It is a classic, vicious cycle.
“Political Business” and the Challenge of Risk Control
Compounding this is the issue of public sector and infrastructure accounts, what we colloquially call “Political Business.”
Large state-owned accounts, ministry assets, and major public projects can sometimes be influenced by institutional relationships, procurement dynamics and changes in the broader business environment, rather than being determined solely by technical underwriting considerations. In some cases, this can also be accompanied by commission structures that are difficult to sustain.
Underwriters can sometimes face pressure to issue cover without the full benefit of risk inspections, appropriate warranties or other technical safeguards. In addition, where large portfolios change significantly following changes in government or public-sector priorities, insurers can find it difficult to build stable, long-term portfolios. They expand operations to service political accounts today, only to lose them tomorrow and be left saddled with huge fixed costs.
DDEP, Low Yields, and IFRS 17: The Reality Check
For decades, we relied on financial engineering and high interest rates to hide our technical flaws. Then reality finally caught up with us.
The Domestic Debt Exchange Programme (DDEP)
When the government launched the DDEP, our safety net vanished. Insurers suffered coupon haircuts, extended maturities, and massive impairment losses on government bonds.
The asset side of the balance sheet took a beating, leaving companies completely dependent on their core underwriting operations, the exact muscle we had allowed to atrophy for 20 years. The regulatory response included appropriate forbearances and restrictions on dividend payouts, particularly where capital positions were affected by valuation and impairment issues. Meanwhile, rapid depreciation of the cedi and high inflation sent the cost of vehicle spare parts and building materials through the roof, triggering skyrocketing claim costs on severely underpriced policies.
IFRS 17: No Place Left to Hide
Under the old accounting framework (IFRS 4), companies could smooth over underwriting losses, defer expenses, and use investment income to make the annual report look pretty. IFRS 17 ruined that trick:
Immediate Losses: If you write an underpriced, loss-making (onerous) group of policies, IFRS 17 forces you to recognise that loss on your income statement immediately. No more hiding it under the rug. Separation of Results: It strictly separates your Insurance Service Result from your Investment Income. Boards and shareholders can now clearly see whether the core insurance business is actually making money or just bleeding cash. The Consolidation Challenge: Sustainability Over Fragmentation
The regulator has tried to fix this by repeatedly raising the Minimum Capital Requirement (MCR), hoping weak companies would merge into fewer, well-capitalised insurers.
It hasn’t worked, largely because of the local shareholder mindset.
Ghanaian corporate culture has an intense aversion to merging. Shareholders would rather hold 100% of a struggling, undercapitalised, tiny insurer than own a 15% stake in a strong, profitable market leader. Merging means surrendering board seats, losing executive privileges, and changing company names. So, instead of merging, institutions scramble for paper-capital fixes, equity restructurings, or regulatory extensions just to cross the minimum line, without changing their broken business models.
Risk-Based Capital: A New Test for Underwriting Discipline
The non-life insurance market is entering a period in which sustained reliance on heavily discounted policies simply to maintain cash flow will become increasingly difficult to sustain. For years, some players survived by meeting a fixed minimum capital bar while offering deep discounts on car insurance to bring in quick cash, a game of financial musical chairs that works right up until the music stops.
Under the emerging risk-based framework, the focus moves beyond a flat capital requirement towards a more nuanced assessment of the risks inherent in each company’s business. Persistent underpricing and significant concentrations of unpaid premiums will carry greater capital and financial consequences under a risk-sensitive framework. Add in the eye-watering costs of hiring risk experts and actuaries just to keep up with basic reporting, and many players may find the math simply doesn’t work anymore.
This environment may encourage further market consolidation, although that consolidation may not necessarily take the form of large, conventional acquisitions. The top-tier insurers have zero interest in buying out weak rivals just to inherit a closet full of unpaid claims, understated liabilities in technical reserves, skeletons and sceptical customers.
Instead, consolidation will look more like a quiet clearance sale: struggling companies selling off their viable client lists, merging with peers just to stay afloat, or handing back their main licences to downgrade into smaller niche markets like micro-insurance, most probably. Over time, this natural cleanup will trim Ghana’s crowded field of nearly 30 companies down to a leaner, much stronger group of around 12 to 15, if the new framework is implemented consistently and effectively. Recent regulatory developments in other African markets also demonstrate the importance of timely and decisive supervisory action.
Market profits will follow a classic “it gets worse before it gets better” path. In the short run, smaller insurers will see their already thin margins wiped out as brand-new regulatory expenses hit their bottom lines. But as the chronic price-slashers exit or mend their ways, overall industry profits will finally stage a comeback. Because the new rules make reckless rate-cutting far too expensive, sensible pricing will return to everyday coverages for personal lines insurance. Companies will finally have to price policies based on real risk rather than whatever discount beats the rival down the road.
Ultimately, the new regime has the potential to address some of the practices that have contributed to the race to the bottom. By forcing insurers to focus on actual balance-sheet health instead of chasing quick volume, the surviving companies will keep a healthier chunk of profits locally rather than shipping the best business off to overseas reinsurers.
The end result is a market that isn’t just smaller, but actually built to make an honest profit and, as novel as it might sound to frustrated policyholders, actually pay out claims happily and very promptly, with AI-enabled drones that survey and provide instant repairs of damaged assets insured adequately by a happy insuring public that realises the real value of insurance.
The Way Forward
After 26 years in this industry, I don’t believe technical underwriting is permanently dead, but it is certainly on life support. Continuing with the status quo is no longer an option.
If we want a sustainable industry, a few hard choices must be made:
Embrace True Consolidation: Local shareholders need to put pride aside. A market of our size needs 8 to 12 strong, deeply capitalised insurers, not 30 fragmented players cutting rates just to pay for head office rent. Use Technology for Intelligence, Not Just Speed: We need to stop using software merely for fast data entry. AI and digital platforms should be configured to enforce strict rating floors, analyse actual risk data, and block arbitrary manual discounts. Re-empower the Underwriter: Underwriters must be given back their authority. Executive KPIs should be tied to combined ratios and underwriting profitability, not raw Gross Written Premium growth (which matters far less under IFRS 17 anyway).
Strengthen Technical Discipline on Large Risks: Public sector and infrastructure accounts should be underwritten based on appropriate risk engineering reports, sound pricing, actuarial standards, and timely payment of premiums, with technical considerations given their proper weight.
Tariff Systems: The issue will elicit a lot of discussion and emotion. Maybe, with the strengthening of underwriting and risk-based supervision, the abolition of tariffs may bring better competition that will show the mettle and ability of insurance companies to rate their risks. Life companies are surviving without strict tariffs. How will the non-life companies survive without them?
The era of relying on high investment yields to compensate for weak underwriting is no longer sustainable. It’s time to bring the underwriter back from the sidelines and restore technical discipline to the heart of the business.
Copyright © 1994 - 2026 GhanaWeb. All rights reserved.
