Solomon Lartey, MD of Activa International Insurance Ghana: “A Good Insurance Sector Can Attract FDI”

Accra
August 17, 2017

The Managing Director of Activa International Insurance Ghana Solomon Lartey has stated that insurance must be seen as a key factor in Ghana’s development agenda, not to be relegated to the background. Speaking at the 2017 Ghana Economic Forum on the theme “Building a Ghanaian Owned Economy, 60 years on, The Role of Insurance”, Lartey mentioned 10 critical things that insurance will do to improve economic development if proper attention is given to its essence in the economy.

According to Lartey, every investor needs adequate guarantees to ensure that their investments are properly protected and can have them back as easily as possible. If insurable losses occur, investors need the assurance a) that they are fully covered, b) that their losses will be paid for, and c) that they will receive payment on time to ensure business continuity.

Government (through regulation) must ensure that insurers build more capacity both financially and technically to enable them take on more risks locally. Taking on risks without adequate technical and financial capabilities puts investors—and for that matter the whole economy—at risk. “If Ghana will continue to ask for FDIs, then it should be ready to provide the same or even higher standards of protection for the risks of those organizations investing in our country,” he added.

Given that insurance is a dominant factor in the risk management spectrum, it is vital that the kind of cover given to these foreign companies investing in Ghana match what they obtain elsewhere. Ghanaian companies must also ask for similar covers as those bought by multinational organizations who are experienced buyers of insurance, as these are generally richer covers than the standard wordings usually issued on the local insurance market.

It is important that as Ghana seeks to become an attractive destination for FDIs, some of these things are checked so as not to deter will-be investors from choosing countries with less rigid insurance and reinsurance requirements over Ghana. “It is good to domesticate and tariff our markets, but we must do it smart,” noted Lartey.

Activa’s MD also stressed that insurance in Ghana must be seen as a tool to attract FDI, a tool to encourage and protect private sector investments, and a tool to grow and sustain SME businesses.

Sighting the Grenfell fire loss in London as an example, Lartey noted that governments in Africa, and Ghana in particular, must rely on insurance to enable them to focus on their core mandate of governance and economic development, and relieve themselves of the burden of business continuity and idleness of national resources. The Grenfell tower, a property belonging to the councils of Chelsea and Kensington, was insured by Protector Forsikring, a Norwegian company, and reinsured by Munich Re, a German company, adding that insurance is an international activity and must be respected as such.

Touching on investments, Lartey stated that insurance does not only protect investments, but can also be a source for both short and long term investments. If insurance companies are empowered and they grow capital, they will in turn make available cheap capital for various aspects of national development. There are insurance companies in Ghana, which have evolved into groups; e.g. non-life insurance companies now owning life, health, real estate, pensions, banks etc. Lartey added that in India more than 12% of funds for infrastructure development comes from insurance.

Discussants on the panel during Activa’s MD’s presentation at the 2017 Ghana Economic Forum were the deputy commissioner of insurance Simon Nero Davor and Dr. Gemegah of the Wisconsin University in Accra.

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