The painful experience from the controversial Domestic Debt Exchange Program (DDEP) is quietly reshaping Ghana’s insurance industry.
The experience is impacting how insurance companies invest, thereby reducing their exposure to government securities and increasingly diversifying their investment portfolios.
According to C-Nergy Global Holdings‘ Thought Leadership Series titled “Deepening Insurance Penetration in Ghana: Moving from Growth to Relevance,” the shift reflects a more cautious investment approach adopted after the DDEP fundamentally altered the sector’s perception of sovereign risk.
Sector players say insurance companies play a critical role beyond paying claims. Premiums collected from policyholders are invested in long-term assets that support national development by financing government activities, businesses, and capital markets. These investments also help insurers generate returns needed to honour future claims.
Before the DDEP, government securities were the preferred investment destination for many insurers because they were widely regarded as safe and dependable. Data cited in the report from the Ghana Insurers Association shows that as of 2022, about 40% of the industry’s assets were invested directly in government securities.
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However, the report reveals that this position has changed significantly since the debt restructuring programme.
Holdings of government securities have declined by 13 percentage points within the non-life insurance sector and by 9 percentage points among life insurers, reflecting a deliberate effort to reduce concentration in sovereign debt.
Instead, insurers are gradually redirecting more of their investments into other financial assets. The report notes that by 2024, listed securities accounted for approximately 27% of investment holdings within the non-life insurance sub-sector, signalling a growing appetite for portfolio diversification.
The report argues that while insurers remain important institutional investors capable of mobilising long-term domestic capital, the DDEP experience has underscored the importance of spreading investment risk rather than relying heavily on a single asset class.
C-NERGY says insurance serves not only as protection against unforeseen losses but also as a key financial intermediary, channelling long-term savings into productive investments that support economic growth.
However, it warns that Ghana’s low insurance penetration continues to limit the industry’s contribution to national development. With fewer people purchasing insurance policies, the sector mobilises less long-term capital for investment, weakening its ability to finance government, businesses and the broader economy.
