Business News of 2014-07-02

Insurers push for review of law on marine cargo insurance

Insurance companies are urging government to review the law on compulsory insurance for marine cargo to include penalties for people and institutions who fail to comply.

The law is currently without accompanying sanctions for non-compliance, something the Ghana Insurers Association (GIA) said needed to be addressed for the benefit of the industry and the marine public in particular.

"The legal people will tell you that if a law says do 'A,' then it must as well tell you the punishments or sanctions you will receive if you do not do 'A. But as we speak, the law on marine insurance does not do that and I think that does not make it a good law," the new President of the GIA, Mr Ivan Abubakar Avereyireh, told the GRAPHIC BUSINESS after his investiture in Accra on June 26.

"Therefore, one of the things I will be doing as president is to work with the government and the National Insurance Commission (NIC) to review the law so we can include penalties for non-compliance. If we do that, it will force people to insure all their marine properties and that will save them the costs they normally incur upon damages or losses," he added.

A successful review of the law to include punishments would help deter people and institutions from failing to insure their marine properties and subsequently give more businesses to the dozens of insurance companies operating in the country.

Marine insurance, although popular and very lucrative for the insurance community, is one of the least explored in the country.

Insurance from that category of the market is limited to the few public enterprises and properties in the marine sector, leaving the activities and properties of many private businesses virtually untouched.

The inclusion of punishments would, therefore, help open up that lucrative aspect of the sector to the local insurance industry and that could translate into higher earnings for companies that would push for deals.

The edge for sanctions is part of efforts being pursued by the new Board Members to ensure that insurance covers a larger chunk of the populace.

Mr Avereyireh, who replaced Mr Kwame Gazo-Agbenyadzie, the Managing Director of Metropolitan Insurance Company, as President of the association, mentioned the need for compulsory insurance for all active workers in the country and the extension of insurance penetration from the current 1.5 per cent to three per cent by 2016 as some of the targets he and the new team would be working to achieve.

Insurance verses social security

Although the National Pensions Act 2008 (Act 766) mandates workers and their employers to contribute part of their salary to the Social Security and National Insurance Trust (SSNIT) to manage, it is silent on the welfare of active workers.

This, according to Mr Avereyireh is not fair to those in active service.

As a result, he said his outfit would work with the NIC, which regulates the local insurance industry, to make it compulsory for all active employees to be insured.

"SSNIT is there for retired workers. How about the active ones? If someone dies or is maimed in the course of work, what happens to his or her dependants? That is why we want to ensure that workers are insured so they and their dependants can have something to fall on should the unfortunate happen," he explained.

The Commissioner for Insurance at the NIC, Mrs Lydia Lariba Bawa, said in a separate interview that efforts by the Mr Avereyireh-led board to expand insurance coverage, review the law on marine insurance and also get insurance for all workers was laudable.

She, thus pledged her outfit's support for the team towards achieving such targets.

She also mentioned the need for mergers in the insurance industry to help create formidable companies capable of taking up bigger deals in the country.

"Nigeria for instance had over 150 companies but after recapitalisation, it reduced the number to just 49. In our case, I think the recapitalisation can reduce the number from the current 49 to like about 20," she said.

The commission is considering raising the stated capital for reinsurance companies to the equivalent of US$12.5 million, five million US Dollars for insurance companies and US$200,000 for brokerage firms.