Business News of 2013-12-27

SIC Group hits back at GIA

The SIC Group of Companies has described reactions by a section of the insurance industry to Government’s recent directive to Ministries, Departments and Agencies (MDAs) as unfortunate.

According to the group, the submission of the Ghana Insurers Association (GIA) on the directive, which is supposed to be the mouthpiece of the industry ostensibly, treated some of its members as though they were alien to the association.

“Evidently there is a deliberate bias by the GIA against some of its own members. It is also strange the deliberate attempt to rope in brokers and agents that are not affected in anyway by the directive.

“Secondly, the directive gives option for MDAs wishing to insure elsewhere to advance reasons and be responsible for their actions now and in the future. This is typical in any business environment. GIA should not be seen to try to shield MDAs from taking responsibility for their actions. We believe the insurance companies hold their employees accountable for their actions. Government, as an employer, is not different from any other employer who wants results and value for money.

On insurance penetration, the group said excluding people who are registered with the National Health Insurance, only five percent of Ghana’s population has an insurance product.

“Insurance penetration, which is defined as the contribution of total insurance premiums to GDP is still 1% (one percent). This can be compared to South Africa 14.8%, Namibia 7.3%, Kenya 2.8%, and Malaysia 4.8%. The industry was given further impetus by the introduction of the compulsory insurance for commercial buildings.

It added that the impact of the repeal of the PNDC Law 227, PNDC Law 79 and PNDC Law 169 on the insurance penetration is insignificant owing to the facts.

Insurers can only compete on service and innovative products to the market. It is not the insurances of MDAs that will grow or collapse any insurer but the ability to innovate products and offer outstanding service delivery to the insuring public.

“Even more paradoxical is the allusion that about 9,000 employees and agents will lose jobs by the directive. How much insurance do the MDAs have to be serviced by such large number? It is difficult to believe that the insurance industry is that inefficient with current technology.

“Moreover if any insurer may collapse as being implied because they do not write government business, it means their business model is not sustainable and therefore a charade. It will then be logical to conclude that such insurers require immediate regulatory attention. GIA will do the industry a lot of good by pointing such insurers to the regulator instead of being their mouthpiece.