Business Analyst - August 9

Tuesday, August 9, 2022
INSURANCE
Insurance penetration: a battle
that could be surmounted with
little but assiduous efforts
tHE insurance penetration
rate in Ghana was below 1
percent in 2009. Fast forward
to 2022, the penetration rate
has now surpassed the 1
percent mark and is currently hovering
at a rate which is less than 2 percent.
the life and non-life insurance
penetration rate is growing steadily
across the globe, and countries like
China, the united States of America
(uSA) and the united Kingdom are
experiencing double digits penetration
rates.
Insurance against unexpected risks
is all but a very important trump card
not only for businesses, but also
individuals who seek to hedge the
limitless risks that they face ranging
from property risks to individual
personal risks. Data has shown that the
patronage of Life insurance products
and services in Ghana has been on the
horizon, with the aged and the youth
now regarding Life insurance as an
avenue to secure their future against
the inevitable, death.
Life insurance products provided by
insurance companies in the country do
not only offer death or funeral benefits
which have been the toast of most
customers, but also an avenue to save
toward a particular goal for a specific
period of time. Insurance companies are
now revolutionising their insurance
products by blending insurance services
with savings and investment options.
Individuals can now save and invest,
and at the same time, insure themselves
against the unexpected.
Despite the innovative approaches
embarked on by insurance companies
in the country, the patronage of
insurance services in general is
nonetheless very low. Despite the
emergence of insurance brokerage firms
which total over eighty on the
insurance market, the patronage level
hasn’t seen any significant
improvements, with the penetration
below 2 percent. nonetheless, the influx
of insurance brokerage firms has gone a
long way to allay some of the fears that
is usually often than not associated
with insurance. Insurance brokers serve
as an intermediary and a liaison
between customers and the insurance
companies.
Insurance brokerage firms do some
of the marketing and case closing for
most insurance companies. With the
emergence of the insurance brokerage
business, insurance companies can now
get closer to understanding the
customers better, and thus, tailor
customer-centric products to meet their
demands. Customers can also rely on
their brokerage firms in the claims
settlement processes which is the
headline reason for the nonchalant
feedback to insurance services in the
country.
“
Insurance companies
and players in the
industry should
critically review their
claim settlements
processes. Advantages
could be taken of the
digitalised economy to
streamline processes
and procedures in
claim settlements.
Mobile money services
could help sort out
problem.
the Insurance Brokers Association
of Ghana (IBAG), which was set up on
27th october 1988, regulates the
insurance broking business in Ghana.
the association periodically organises
conferences for registered insurance
brokerage members to educate them on
best insurance broking practices and
new developments in the insurance
fraternity. Member-companies pay
subscriptions to keep their membership
in good standing, and also adhere to
code of conducts and other disciplinary
procedures in the broking business.
the crux of the matter is that
despite the fact that the insurance
industry is developing innovative
marketing strategies and initiatives to
rake in patronage of its services, they
need to push a little further. With little
but assiduous efforts, the insurance
industry can surmount the many
bottlenecks that bedevil the industry.
the institutionalisation of the
brokerage business is a step in the right
direction toward achieving double
digits penetration rates. Insurance
companies should descend the
hierarchical industry ladder and
continue their strong partnership with
brokerage firms in convincing the
Ghanaian market.
Moreover, more innovative products
that seeks to commingle insurance
services with investments and savings
services should be targetted. Micro
insurance is one key area that could
spearhead the agenda to penetrate the
informal sector. Individuals are seeking
to pay premiums digitally rather than
cash. Mobile money services should be
taken into deep cognisance in
permeating the informal sector.
Additionally, to allay fears and build
trusts in insurance services, insurance
firms should fulfill claim settlement
timely. Most complaints from the
general public regarding insurance
services in the country have to do with
claims settlements. the conundrum of
claims settlement resounds on the
streets of the country. Patrons of
insurance services and non-patrons
alike have questioned the claims
settlements of insurance companies.
they argue that claim settlements have
to go through several bottlenecks before
payments would be processed, resulting
in delays and inconveniences.
Insurance companies and players in the
industry should critically review their
claim settlements processes.
Advantages could be taken of the
digitalised economy to streamline
processes and procedures in claim
settlements. Mobile money services
could help sort out problem.
Finally, the regulating authority of
the insurance industry in the country,
the national Insurance Commission
(nIC), should enforced the minimum
capital requirements in the insurance
industry. In June 2019, the minimum
capital requirement of life and non-life
companies was increased from
GH¢5million to GH¢50million. that of
reinsurance companies moved from
GH¢40 to GH¢125million, that of
insurance brokers increased from
GH¢300,000 to GH¢500,000, and that of
insurance reinsurance brokers was
maintained at GH¢1million. A well
capped insurance industry would
strengthen the insurance industry and
increase the trust the customers have in
the sector.
the battle to hit double figures in
the insurance penetration rate is well
on course. Massive efforts should be
made to educate the general populace
on the importance of insurance in
ameliorating general risks. the
insurance business sector is at the bud
stage, and more investors can venture
into it. With little but painstaking
efforts, we can make the insurance
sector a better sector for all of us.
The writer is an Accountant