The National Insurance Commission (NIC) is deploying a multiple-level approach to increasing the number of people in the country with insurance cover, the Commissioner of Insurance, Ms Lydia Lariba Bawa, has said.
The measures include creating awareness and sensitising the public to the importance of insurance, adopting multiple channels such as the use of information technology and partnership with banks (bancassurance) to the distribution of insurance products, as well as the promotion of micro-insurance.
Insurance penetration is currently less than two per cent, and it is only sensitisation that can help increase the rate of adoption to make the culture widespread.
Ms Bawa made this known to the Daily Graphic in an interview last Monday when she joined a team of chief executive officers to conduct the editorial conference for the country’s most widely circulated newspaper.
Diagnosing and resolving the challenge
Ms Bawa said although Ghana’s low insurance penetration was not an exception to the world average, Ghana’s case had been aggravated by low awareness, as well as mistrust and lack of confidence in insurance companies paying claims for which they were legally liable.
Besides education, the National Insurance Commission is also trying to take insurance to the grassroots and the informal sector since many there see insurance as something for the middle income or the elite’.
The commission is ,therefore, encouraging micro-insurance which is fast gaining currency in the country among the low income bracket of the population.
To address the mistrust and lack of confidence, the NIC has implemented the No Premium No Cover (NPNC) policy which bars credit insurance in the country.
Mr Bawa said the policy had been well received, with full compliance from the companies and their clients, leading to the elimination of premium debts which had threatened the survival of the industry.
This has improved liquidity of the insurance industry and enhanced the prompt payment of claims and expeditiously addressing customer concerns.
‘At the time of need when the insurance company meets its obligation, then it will increase the confidence level. So we’ve asked that claims should be paid within a certain period once the insurance company is legally liable,’ she said.
Before, the insurance companies dragged their feet when paying claims because they had liquidity challenges as customers reneged on paying for cover they had taken with an insurance company.
The insurance industry used to have about 45 per cent of their receivables uncollected, but the implementation of NPNC has overturned that regime, making insurance a cash and carry business to ensure liquidity and hence prompt payment of claims.
Touching on the recent increment in insurance premiums, Ms Bawa said it was necessary to sustain the motor insurance portfolio since the premiums were woefully inadequate to match the claims arising out of it.
The Ministry of Finance last year intervened in the commission’s attempt to increase third party motor insurance premiums by 800 per cent, lifting the base premium from as little as GH¢25 a year.
Consequently, the NIC was allowed to raise the premiums by 200 per cent and stagger the rest by 25 per cent each in 2016 and 2017. The current increase was discussed and agreed upon among stakeholders before its implementation.
Currently, accident victims are paid insurance claims, with the Compensation Fund also paying claims to victims who could not be paid by an insurance company when there is no cover.
The insurance commissioner said from the same fund, monthly allocations were made to the Ghana Road Safety Commission for education, the National Health Insurance Authority for emergency hospital bills for accident victims; the Ambulance Service, the Ghana Police Service and others.
She called on the public,especially vehicle owners, to understand that the premiums were to enable the proper functioning of insurance so that they could receive better services.