Business News of Thu, 3 May 20181

Insurance penetration to improve under Payment Systems and Services Bill - BoG

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The Bank of Ghana is getting set to lay before parliament a Payment Systems and Services Bill aimed at facilitating the provision of insurance services by the various banks in the country.

This is according to the Director and Head of Payment Systems at the Bank of Ghana, Dr Settor Amediku who says the Bill if passed into law by the end of 2018 will not only improve on financial inclusion but also broaden the insurance penetration rate in the country.

“The overall objective is to deepen the payment and financial systems in the country. This Bill is to encourage partnership among banks and insurance companies,” Mr Amediku said whiles speaking at the Pan African Bancassurance and Alternative Distribution Conference in Accra.

He said, “The latest data we have is that 4.5 million Ghanaians have health insurance in Ghana. Through bancassurance, you will be able to pay some premium and get access to health care.

After the bill, we will see more collaborations among the insurance companies, banks and fintechs so as to deepen insurance penetration especially in the rural zones,” he added.

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Meanwhile, Chairman of the conference and Managing Director of Mainstream Reinsurance Company Limited, Professor Adom Frimpong, is making a case for the Central Bank not to overly rely on the increase in minimum capital requirement for insurance industries.

Speaking at the event, Professor Adom Frimpong, argues that such a move by the BoG risks throwing local business in the insurance sector off.

He said, “Currently we are on risk-based management. Bank of Ghana increasing capital for banks does not mean insurance sector must also increase the minimum capital.

Building the confidence in consumers is very necessary but what I am trying to say is that if you (the Bank of Ghana) sit down for years before certain things happen badly before striking it could be problematic. You could be kicking the local insurance companies out of business, he explained to Joy Business,” Prof. Frimpong said.

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Minimum Capital

Last year the National Insurance Commission (NIC) met with the Finance Ministry in a move to increase the minimum capital requirement for insurance companies which currently stands at GH¢15 million.

At this meeting, the Commissioner of Insurance, Justice Yaw Ofori proposed GH¢50 million as possible new level. The proposed increments according to the regulator have been influenced by current developments in the economy and it is also to help insurance companies to absorb industry risk.

The Pan African Bancassurance and Alternative Distribution Conference brought together participants from East, West and South Africa to create a continental bancassurance and Alternative Distribution.

It was under the theme: “Innovate or Die.

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