Some insurance companies have expressed concerns about the blatant disregard for the country’s insurance laws in line with the importation of goods into the country, affecting the bottom line of both insurers and importers.
The current Insurance Act mandates all goods being imported into the country to be insured locally in a bid to build the capacity of local insurers and to also boost insurers premium income from activities associated with marine services.
The Managing Director of IEI Ghana, Uche Okugo told the B&FT that the lax in the implementation of the marine insurance laws is affecting the revenue flow of insurance companies.
He explained also that importers incur excessive cost in importing goods as they pay double premium by undertaking Cost, Insurance and Freight (CIF) transactions with their foreign partners when they could have taken only Cost and Freight transaction, which would have saved them from paying high insurance premium to a foreign insurer.
“When the goods arrive in Ghana, the Customs Division of the Ghana Revenue Authority also takes a 1% of the total cost of the imports as insurance if the importer has no insurance cover on the goods.
“Because the laws of this country require all insurance on imported goods besides personal effects to be taken locally, Customs officials are right in raising additional charges as insurance on the goods for local insurers, which is never done,” he said.
According to the insurance Act, 2006, unless authorised by the National Insurance Commission, no one shall enter into a contract of insurance with a foreign insurance when it comes to activities that raise liabilities in the country or goods other than personal effects is being imported into the country.
However, adherence to the provisions in the insurance Act relating to the importation of goods has largely been ignored, while the Commission has failed to enforced them affecting both insurers and importers.
Mr. Okugo said: “In the case of Ghana the law on marine insurance is there but it’s not being implemented, which has affected the premium income of insurance companies reducing our bottom line.
“It has also made it difficult to grow local capacity. The economy has to do with trade financing since there is heavy demand for importation. This creates a market where the heavy users of insurance is the trade industry.”
