Impact of Inflation and Interest Rate on Life Insurance Companies in Ghana: A Post-Covid Analysis

Abstract

In the past few years, global economies have been hit severely by global warming, the Covid pandemic and recently, the Russian-Ukraine war. Developing economies and basic institutions such as insurance companies are not exempted from high inflation spikes, interest rates, and slow economic growth. This has raised the cause to examine the impact of inflation and interest rates on the life insurance companies in Ghana. Specifically, the study investigated how inflation and interest rates affect life insurance investment and underwriting profits. The study's results disclosed that although inflation had a negative impact and interest rate positively affected investment income, both were insignificant. However, the impact of both inflation and interest rate on underwriting profit was highly significant. Claims ratio had a negative relationship with investment income and underwriting profit, while premium growth positively impacted investment income but negatively affected underwriting profit. The life insurance industry must work to remain relevant and valuable to customers by offering innovative products and solutions that are more efficient and cost-effective. They can invest in technology and digitalization to automate various processes and operations to reduce costs, increase efficiency, and protect shareholders’ capital.