IBAG President: VAT on Insurance Slows Policy Uptake

The introduction of Value Added Tax (VAT) on non-life insurance premiums significantly hampered policy uptake in 2025, dealing a substantial setback to insurance brokers and the industry as a whole, outgoing President of the Insurance Brokers Association of Ghana (IBAG), Shaibu Ali, has revealed.

Mr. Ali stated that the VAT implementation negatively impacted policy sales, leading to a noticeable slowdown. “For most brokers, the numbers show a real impact,” he said, adding that the tax affected consumer choices.

Speaking at IBAG’s 12th Annual General Meeting (AGM), Mr. Ali described 2025 as a challenging year. The 15% VAT, effectively increasing insurance costs to around 22%, was introduced when many businesses and individuals had already finalized their financial plans.

The VAT on non-life insurance premiums, enacted under the Value Added Tax (Amendment) Act, 2023 (Act 1107) on July 1, 2025, was a government initiative to broaden the tax base and boost domestic revenue.

While acknowledging the potential fiscal benefits for the state, Mr. Ali emphasized that the timing of the policy created difficulties for the insurance sector. “It came at a time when people had already done their budgets. That made the increase feel even heavier,” he explained. He expressed hope for a recovery in 2026.

Trust Deficit Remains a Key Issue

Beyond the tax burden, Mr. Ali highlighted persistent public mistrust as a major obstacle for the insurance sector, despite significant progress made over the years. He refuted the common perception that insurance companies routinely deny legitimate claims.

“People are still living in the past. The era when insurers could simply bluff and refuse to pay claims is largely gone,” he asserted.

He pointed to enhanced regulation by the National Insurance Commission (NIC), the availability of complaint resolution mechanisms, and the crucial role of insurance brokers as safeguards for policyholders. “If an insurance company refuses to pay a valid claim today and the case is right, the NIC will compel them to pay. Even the Ghana Insurance Association has a complaints bureau that investigates such cases,” he clarified.

Mr. Ali underscored the value of insurance brokers, stating they possess the same technical expertise as insurance company staff but are better positioned to advocate for their clients’ interests. “Everything an insurance company employee knows, a broker knows. We went to the same classrooms, wrote the same exams. The difference is that brokers checkmate insurers to ensure policies are right and claims are honoured,” he said.

Industry Resilience and Growth

Despite the headwinds, IBAG experienced positive growth during Mr. Ali’s tenure. Membership increased from 84 in 2022 to 114 in 2025, with a notable rise in youth participation through mentorship programs, media outreach, and professional development opportunities.

The association also expanded its international presence by participating in key conferences, including the African Insurance Organization (AIO) Conference in Ethiopia and the British Insurance Brokers’ Association (BIBA) Conference in the United Kingdom.

Financially, IBAG demonstrated improved performance, with revenue rising from GH¢6.1 million in 2023 to GH¢6.8 million in 2024, and total assets exceeding GH¢12 million.

New Leadership Takes the Helm

During the AGM on December 12, IBAG elected a new executive council. Stephen Kwarteng Yeboah was unanimously elected President, receiving all 58 valid votes cast. Bianca Noshie was elected Vice President, and Philip Atinga secured the position of Treasurer.

Kofi Akoto will serve as General Secretary, Shiela Wristberg as Assistant Secretary, and Leticia Baidoo as Assistant Treasurer.

As he passed on the leadership baton, Mr. Ali remained optimistic about the future of the insurance broking industry, urging the public to overcome outdated perceptions and engage with insurance through licensed brokers. “We are making headway as an industry. The challenge now is changing mindsets and helping people understand that insurance done right works,” he concluded.

Image Source: MYJOYONLINE