A former President of the Ghana Insurers Association (GIA), Mr. Ivan Abubakar Avereyireh, has proposed a GH₵1 million penalty as a stronger deterrent against undercutting in Ghana’s insurance industry.
He said, undercutting, where insurers offer lower premiums than competitors to attract clients has become an increasingly common practice, therefore it must be addressed urgently.
Speaking at the 2025 Ghana Insurance Summit in Tema, he argued that the current fine of 5,000 penalty units (GH₵60,000) is insufficient, as many companies can pay it without even informing their boards.
Mr. Avereyireh urged the National Insurance Commission (NIC) to amend the Insurance Act, 2021 (Act 1061) to increase penalties for companies engaged in undercutting.
He suggested that individuals responsible for signing underpriced policies should face direct consequences.
“After penalizing the companies, we must also hold individuals accountable. The Chartered Insurance Institute of Ghana (CIIG) should be able to remove offenders from its books. If people know they’ll be punished, they’ll think twice before engaging in undercutting,” he said.
He encouraged insurers to focus on ethical business practices, product differentiation, and customer service instead of cutting prices below regulated rates.
However, undercutting can lead to the struggling of some companies to generate sufficient revenue to cover claims, leading to financial instability and collapse.
Persistent undercutting damages the reputation of the insurance industry, making it difficult for customers to trust providers. This lack of confidence can reduce overall insurance penetration in the country.
While undercutting may attract short-term gains for some companies, it weakens the overall industry by reducing profitability, limiting reinvestment opportunities, and increasing the risk of business failures.
Acting Commissioner of the NIC, Dr. Abiba Zakariah reaffirmed the Commission’s commitment to addressing undercutting, acknowledging that industry players have long demanded tougher measures and assured that stricter enforcement was on the way.
“If harsher sanctions are needed to end this, we won’t hesitate to implement them. But beyond fines, individuals involved should also face severe consequences, including being barred from operating,” she stated.
Dr. Zakariah also suggested introducing “fit-and-proper tests” for industry professionals to ensure high ethical standards and prevent unethical practices.
