By Grace Zigah
The Ghana Revenue Authority (GRA), under the directive of the government, has issued a new mandate requiring all insurance companies to apply a 15% Value Added Tax (VAT) on non-life insurance policies.
This directive, which forms part of broader efforts to expand the government’s tax base, has sparked widespread discussion about its potential impact on the cost of living, especially for businesses and middle-income households.
Background to the Policy Shift
The enforcement of VAT on non-life insurance is not entirely new, but its full implementation has gained renewed momentum in 2025 as part of the government’s fiscal consolidation measures.
The Ghanaian economy, which has been grappling with debt restructuring challenges and IMF-backed reforms, is under pressure to boost domestic revenue generation.
As a result, sectors previously enjoying tax exemptions or leniencies are now being brought under full taxation.
The GRA’s new enforcement covers all non-life insurance policies, including fire, marine, travel, burglary, property, and personal accident insurance.
This comes as the government aims to meet its ambitious revenue targets and reduce dependency on external borrowing.
Breakdown of the New Charges
Under the revised structure, insurance companies are required to include the 15% VAT on top of the gross premiums charged for each policy.
A snapshot of the new cost implications reveals the following:
Fire Insurance: A policy previously priced at GHS 1,500 now attracts an additional GHS 225 in VAT, raising the total cost to GHS 1,725.
Marine Insurance: This has seen one of the steepest increases. A monthly premium of GHS 10,000 now incurs GHS 1,500 in VAT, pushing the total cost to GHS 11,500.
Travel Insurance: A premium of GHS 2,000 will now require an additional GHS 300 in VAT, resulting in a total charge of GHS 2,300.
Burglary Insurance: This sees a jump from GHS 800 to GHS 920 due to the GHS 120 VAT addition.
Property Insurance: Similarly, a GHS 2,000 premium now rises to GHS 2,300 with the VAT.
Personal Accident Insurance: A relatively low-cost product at GHS 500 now costs GHS 575 after the VAT charge of GHS 75.
Welfare and Economic Implications
Industry analysts and consumer welfare advocates have expressed concern over the burden this policy places on insurance clients.
Non-life insurance products are critical risk-mitigation tools, especially for small and medium-sized enterprises (SMEs), landlords, importers, and frequent travelers.
The additional cost could discourage individuals and businesses from renewing or subscribing to insurance policies altogether.
“This increase may lead to a drop in insurance penetration in Ghana, which is already among the lowest in the region,” said one industry expert. “We risk creating a population that is more vulnerable to financial shocks, particularly in sectors like trade, logistics, and real estate.”
Moreover, business owners fear that the VAT-inclusive premiums could force them to either pass on the cost to consumers or operate without insurance—both of which pose economic risks.
Insurance Industry Response
While insurance companies have complied with the directive, there are concerns about how this may affect their client base.
Some companies have started educational campaigns to help clients understand the changes, while others are exploring product restructuring or bundling services to offer better value.
An executive at a leading insurance firm who spoke on condition of anonymity said, “We understand the government’s revenue drive, but this move may be counterproductive if it leads to a decline in policy uptake. We are already seeing hesitation from clients, especially those in the informal sector.”
Calls for Reassessment
Stakeholders are urging the Ministry of Finance and the GRA to reconsider the blanket application of the VAT, possibly by offering reliefs or exemptions for low-income earners and essential service providers.
Others are calling for a phased implementation or tiered VAT structure based on the type of insurance product and the client profile.
