New directive favors SIC Insurance for state business

The State Interests and Governance Authority has issued a directive (Reference: SIGA/SOE.SIC/1225). This directive tells State-Owned Enterprises (SOEs) to use SIC Insurance PLC for their insurance needs. The aim is to support the state-owned insurer.

This instruction comes after SIC Insurance lost much of its market share. Ten to fifteen years ago, SIC held 20% to 25% of the non-life insurance market. By 2014, it dropped to 16%. Today, its share is estimated between 4% and 6%.

Critics say this directive is similar to past practices that unfairly favored private companies. For example, Enterprise Insurance grew its market share to 30%. This happened during a time when the Finance Minister had strong ties to the company. Government business was thought to be directed to Enterprise informally. Projects like the National Cathedral insurance and the COVID-19 health workers' package were cited as examples.

Economists warn that such directives distort the market. They say it hurts fair competition and private companies. Private insurers like Star Assurance, Hollard, and GLICO pay taxes and employ thousands of Ghanaians. When the government picks winners, it can weaken the national tax base and the financial sector overall.

This policy means the government is stepping into the market directly. This can affect how efficiently insurance companies operate. It also raises questions about creating a fair business environment.