Ghana’s insurance industry is urging government to amend the Public Financial Management Regulations (LI 2378) to allow insurers to issue advance payment guarantees for contractors undertaking public sector projects, arguing that the current framework gives banks an expensive monopoly.
Industry leaders say expanding the guarantee market to include insurers would lower financing costs for contractors, improve access to credit and accelerate infrastructure delivery while supporting Ghana’s ambition of becoming a regional trade and logistics hub under the African Continental Free Trade Area (AfCFTA).
Speaking at the 2026 Marine Cargo Insurance Forum in Accra, Managing Director of GLICO General Insurance, Andrew Achampong-Kyei, said insurers remain excluded from providing advance payment guarantees despite existing legislation permitting them to offer such products.
“The law forces state institutions to procure advance payment guarantees exclusively from banks, making infrastructure delivery very expensive, very difficult and inhibiting our growth,” he said.
According to him, the restriction has created an unhealthy monopoly that increases the cost of public infrastructure projects and limits financing options for contractors.
Mr. Achampong-Kyei explained that banks typically require borrowers seeking guarantees to provide collateral valued at between 120 and 130 percent of the facility, in addition to cash collateral of about 10 percent.
He noted that comparable credit guarantee bonds or supplier’s credit bonds issued by insurers could cost as little as five percent of the facility value without requiring borrowers to pledge substantial assets.
“If you inhibit or restrict insurance from playing a part there, you are making the cost of development very expensive and inhibiting our growth. If I need GH¢1 million and must provide that amount in cash as security, it becomes a major challenge,” he said.
Mr. Achampong-Kyei also called for stricter enforcement of Ghana’s insurance laws, including the Insurance Act, 2021 (Act 1061), saying the legal framework is adequate but implementation remains weak.
He further urged stronger collaboration between regulators, particularly the Bank of Ghana, to ensure import financing complies with local marine cargo insurance requirements.
According to him, banks should ensure that insurance linked to import transactions is placed with local insurers rather than offshore providers to reduce foreign exchange leakages.
The industry expects full enforcement of the local marine cargo insurance policy to retain an estimated US$100 million in annual insurance premiums within Ghana, strengthening the domestic insurance market and supporting trade under AfCFTA.
Industry players also stressed that insurers must improve claims settlement by making the process faster, fairer and more transparent to build confidence among businesses.
Chief Executive Officer of Africa Sureties and Insurance Advisory Company (ASIAC), Solomon Lartey, said Ghana’s low insurance penetration reflects a business culture that undervalues risk protection despite the relatively low cost of insurance.
“If you lose 78 vehicles, it will affect your balance sheet. The cost of not buying insurance that costs only about 0.25 percent is far greater than the premium itself,” he said.
Mr. Lartey urged businesses to incorporate insurance into their financial planning to protect assets, strengthen resilience and minimise financial losses.
