Life insurance companies in the country are now faced with significant challenges in selling insurance policies to consumers as pressure in the economy forces people to cut down on their discretionary expenditure.

Industry chieftains noted that the unfavorable economic conditions are affecting purchasing power, which reduces the ability of persons to subscribe to savings plans, which leads some policy holders to cancel their savings and life insurance policies because they cannot afford anymore to continue paying their monthly premiums.

The income of life insurance companies in the country grew by 21.6 percent last year to show the continuing decline in the sector’s growth, which began six years back.

The growth in life insurance income last year is a two percent decrease over the previous year’s performance and 31 percent since 2010, with the steepest decline being recorded in 2012 when life insurance income growth went down by 12.6 percent.

B&FT’s analysis of the financial statements of all the 19 life insurance companies operating in the country as part of the newspaper’s annual insurance survey shows that despite the seemingly increase in the value of income recorded over the period, the growth in income is down as insurers are now experiencing difficulties in convincing consumers to buy insurance. Despite these declines and inevitable financial constraints facing players, analysts believe the market potential is still attractive and promising.

Among the 17 life companies posting premium increase in 2015, 12 posted double-digit growth and seven posted single digit growth to show that the industry looks solid and stable and there is certainly room for more growth.

In 2015, the gross premium income of the insurance companies was GHC705.9 million, more than the GHC580.5 million the companies made a year earlier.

Despite the growth in the value of the income, the insurance companies are disappointed in the decline in life insurance income growth, which coincided with the slowdown in economic activities in the country with Ghana’s economy expanding 3.9 percent last year, down from 7.3 percent a year before.

Government has predicted that the economy this year will grow by 5.4 percent on the back of the seemingly stability in energy supply and the coming on stream of new oil production fields such as Tweneboa, Enyenra, Ntomme (TEN).

However, several policy think-tanks and research institutions such as the Institute of Statistical, Social and Economic Research (ISSER) believes slowdown in the global economic environment and slump in commodity prices will dampen Ghana’s economic growth prospects.

The uncertainty in the economic environment, however, is a worry to life insurers who believe the situation is frustrating efforts to boost insurance penetration as the present economic condition has pushed people to turn to their life insurance policies to meet immediate cash needs by surrendering their policies.

This is evident in the fact that over the past four years, most of the life insurance companies have recorded a surge in surrender with the trend being more evident this year amidst the tightening of the central bank’s monetary policy regime and rise in inflation, utilities and fuel prices as well as depreciation of the cedi.