Create more capital to insure big companies

Accra, Oct. 1, GNA - Mr Kwadwo Baah-Wiredu, Minister for Finance and Economic Planning, on Monday urged insurance companies to create the necessary capital base to meet the insurance covers of large investments sprouting in the country.

He noted that the recent oil discovery, the construction of the Bui Dam, the management of Foreign Direct Capital and other breakthroughs required insurers with huge capital outlay to take care of their insurance needs.

Speaking at the launch of the 2007 Insurance Awareness Month of the Ghana Insurers Association in Accra on the theme: "Fresh Thinking, Fresh Approach: A Strong Insurance Industry, An Assert to the National Economy," Mr Baah-Wiredu said that many individuals and corporations still did not insure vital possessions or processes that were necessary for their survival.

"In the advanced countries more than 80 per cent of individuals have some form of life insurance but in Ghana the proportion of the insured individuals is less than 10 per cent and most private houses and others have no insurance," he noted.

The Minister urged insurance companies to look for ways to educate the public on the benefits of insurance to ensure that the majority of Ghanaians insured their property.

Mr Baah-Wiredu commended the insurance industry for the role it had played in the development of securities and the capital markets as well as the growth of bonds, long-term government securities and corporate equity market through life and pension policies.

Ms Josephine Amoah, Commissioner of Insurance, told insurers to improve their governance structures and internal control mechanisms to foster greater transparency and accountability.

She also called for the complete overhaul of the attitudes of practitioners such as undercutting and move towards a more industry-led solution to problems faced by the insurance market. Ms Amoah said insurers invested heavily in market research to get the understanding of customer needs to enable them to develop products that would have higher consumer appeal.

She said the insurance industry must, as a matter of priority, target a wider market within and beyond the boundaries of Ghana and step up their Information Technology base to do electronic-business apart from their traditional operations.

"Business practices around the globe are changing rapidly and insurers cannot continue with the old practices," Ms Amoah stated. "We need fresh thinking and a fresh approach to how we relate to others and how to treat our clients."

She stressed Ghana was becoming an international financial services centre and that was a challenge and opportunity for the financial sector, pointing out that the banking sec tor had already taken a stride by coming out with offshore banking.

The insurance industry, however, needed to position itself well to take advantage of some of these opportunities, she said. Ms Amoah emphasised that the industry ought to develop both financial capacity and technical competence to handle the magnitude and complexity of the risks associated with globalisation.

"One sure way to improve expertise in specialist areas of insurance such as oil and gas, engineering and construction insurance, bonds and consequential loss and liability is for the industry to attract professionals such as engineers and building technologists and lawyers into mainstream insurance and encourage them to stay." She called on the insurers to be fair to their clients by ensuring that clients were certain of contract terms at the onset and ensuring judicious and prompt settlement of claims.

Ms Amoah said as public confidence increased, patronage would also increase and that the industry would have the strength both in financial terms and that of numbers to make an impact on the lives of the people. Mr M E Baba, President, Ghana Insurers Association, said the new insurance law would come with a new era where compliance would occupy a lot of management time and some significant doors might be opened to the industry.

"We therefore need fresh thinking and a fresh approach toward the key issues of our industry to thrive in the new environment", he added.