President of the Ghana Insurers Association (GIA) Seth Aklasi has said that the cost of Motor Insurance Premiums in Ghana went up by 4 to 9 percent in January.
This is different from the 30 percent expected increment that was announced by the Chief Executive of the Ghana Insurers Association, Dr. Kingsley Kwesi Kwabahson.
Dr Kwabahson had projected the 30 percent increment owing to the imposition of the Value Added Tax (VAT) rate on Non-Life Insurance products by about 21 percent.
“We are still engaging with stakeholders and what I can give at the moment is scenarios but I will not dog-tail on the details. For example if you look at 10% increment for example, plus VAT take its to 31%…15 percent increment means plus 21 VAT and that makes about 36%.
“…So that is why we having a stakeholder engagement to ensure that whatever is charged will be equitable and makes business sense,” Dr. Kingsley Kwesi Kwabahson told journalists on December 14, 2023.
Speaking on the Ghana Tonight show on TV3 Thursday, February 1, Mr Seth Aklasi said “Motor tariffs actually went up in January but then it wasn’t up to the 30 percent that the CEO of the Ghana Insurers Association put out initially. The tariffs went up, depending on the year of registration, by 4 percent and by 9 percent, so that was all the increment that happened.
“I think when The CEO was talking about the 30 percent, that was when we got wind of the fact that the government has actually proposed imposing VAT on Non-Life Insurance products, so ordinary if you look at how the VAT is, then we were thinking of having transferred that to the insured as well. So that is why he put it out, it was for a minimum of 30 percent but it hasn’t happened because we are not really clear about the effective date for the VAT.”
Show host Alfred Ocansey asked again: “So what this means is that if the VAT kicks in eventually, premiums will go up again beyond the increment we saw in January, the 4 to 5 percent?”
In answer, he said “Yes, the government has the power to impose taxes and as long as parliament has actually passed the subsidiary legislation and assented to by the president then we as corporate entities will eventually have to collect it on behalf of the government.
“I want to put on record that we are not really clear as to exactly how that VAT is going to be imposed. There is the option of a zero rating.”