BoG Issues New Bancassurance Directive to Strengthen Banking-Insurance Partnerships

Ghana's Bancassurance Directive (2025): A New Era of Regulation and Opportunity

 

Ghana's financial services ecosystem is entering a pivotal moment with the release of the Bank of Ghana’s new Bancassurance Directive (2025). This regulatory intervention aims to formalise the relationship between banks and insurers, setting the stage for deeper insurance penetration while significantly tightening governance standards.

The directive mandates a fundamental shift in how bancassurance operates, moving the model "from 'distribution bolt-on' to fully integrated bancassurance platforms," which will align "product-governance, compliance, training and customer-value," as noted in the analysis.

 

Key Regulatory Shifts and Requirements

Under the new directive, Regulated Financial Institutions (RFIs), such as banks and deposit-taking institutions, face strict new rules focused on risk separation and consumer protection.

1. The Distribution Partnership Model

RFIs are required to adopt the "Distribution Partnership Model". This model is defined by two core principles:

• The RFI must act strictly as an agent for the insurer and "may not share underwriting risk."
• To manage potential conflicts of interest, the bank "may contract with only one life insurer and one general insurer under that model."

2. Prohibited Activities

The directive explicitly restricts activities that could lead to mis-selling or the conflation of banking and insurance services:

• Banks are prohibited from designing insurance products, underwriting them, or engaging in compulsory sales tactics.
• Crucially, they cannot make the "purchase of insurance a condition for other banking services (such as loans or account opening)." This provides an essential protection for customers, ensuring "freedom of choice" and "fewer cases of bundled products hidden in other banking services."

3. Enhanced Governance and Reporting

The regulation raises the compliance bar by mandating a robust governance framework:

• Board oversight and "delineated senior-management responsibilities" are required.
• RFIs must establish clear consumer-protection disclosures, including "clearer disclosure of insurer identity."
• Institutions must monitor and "report semi-annually to BoG" on business metrics like "volumes of policies, premiums, claims, complaints" to measure the effectiveness of the governance-first framework.
• Sanctions for non-compliance are significant, ranging "from administrative fines to suspension of bancassurance operations and restrictions on lending."

The Urgency and Strategic Opportunity

The introduction of the Directive is seen as timely, given Ghana's persistently low insurance penetration rate:

• The rate has "remained stubbornly low: around 1.0 % of GDP," according to a recent report by Deloitte.
• Bancassurance has historically underperformed in distribution, accounting for only "about 12.9 % of life-insurance premiums and just 2.3 % of non-life premiums in 2021," according to Oxford Business Group.

However, the banking sector's extensive reach remains "a channel of immense promise for reaching the under-insured." The directive acknowledges this potential while addressing the risks of "mis-selling, weak governance or conflation of insurance with banking services."

For institutions ready to commit, this is a "strategic inflection point." As the analysis concludes, the "next phase of growth in Ghana’s insurance industry will depend less on product invention and more on disciplined execution—supported by regulatory clarity and institutional readiness."

Quick-Take Action Points for RFIs (Sidebar)

Institutions must prepare for full compliance ahead of the directive's effective date by focusing on the following actions:

• Review and ensure your bancassurance agreement aligns with the Distribution Partnership Model.
• Ensure insurer-partner covers underwriting risk; bank acts only as agent.
• Train board and senior management on their oversight role in the bancassurance business.
• Establish clear disclosures to customers: insurer identity, product terms, premiums, non-coercion.
• Monitor and report semi-annually to BoG: volumes of policies, premiums, claims, complaints.