Insurance industry needs proper regulation - MD

Accra, Sept. 3, GNA - Mr Ebenezer Allotey, Managing Director of Prime Insurance Company Limited, a private company, on Thursday called for proper regulations to eliminate "price undercutting" that stifles growth in the industry.

He expressed worry of the fact that unhealthy competition in the Ghanaian insurance industry had resulted in "price undercutting" by some marketers thereby increasing the risks in the industry. Mr Allotey made the call at a workshop organized by the Ghana Insurers Association (GIA) for selected journalists to build their capacity in the insurance industry in Accra. He pointed out that the problem of quoting premiums below the feasible market rates posed a risk that was seriously affecting the growth of the industry.

"Insurance practice in the country now has become like selling tomatoes at the marketplace where the buyer tells you, I will give for example GH¢20 and then the insurer says okay I will accept GH¢10," he said.

Mr Allotey said it became difficult for some companies, which engaged in such price undercutting to pay claims later made by clients thereby increasing the bad perception some members of the public had about insurance companies on the issue.

Concerning perceived delays in payment of claims, he said, insurance companies were under obligation to ensure claimants had genuine rights to make such claims and stressed the need for proof of such claims with legal and verifiable documents. "You know that an insurance fund is a pool that many contributed towards. People have entrusted us with such funds. As custodians, we need to ensure the funds are protected from false claims," he said. Mr Allotey said it was not the intention of any genuine operator of insurance company to unduly delay the payment process and stressed requests of proper documentation and verification of claims made by the companies were genuine means to protect the public funds. "Take banking transactions as an example. When you open an account with any bank, don't they ask for some form of identification and verifications when you go there to cash money?" he asked and added that they were normal procedures that the clients were required in their own interest.

Mr Allotey said another challenge facing the industry was limited knowledge of insurance among the public, which needed to be improved. He urged the journalists to take advantage of the workshop to ask pertinent questions bordering their minds in order to be effective in their reportage on insurance matters. Mr Gabriel Glover, Executive Treasurer of GIA, expressed worry over a report by the International Insurance Associations that put the level of detected and suspected fraud in insurance claims between five to 10 per cent each day.

"Using our claims cost figure of 100,000 per working day, we are looking at a fraud cost of between GH¢5,000 and GH¢10,000 a day," he said.

He said the media could contribute significantly towards reducing the incidence of fraudulent claims in their publications as crusaders against such fraudulent claims. "The GIA intends to put the media high on our social responsibility budget and would encourage member companies to do the same by way of adverts and public education," he said.

Mrs Zita Okaikoi, Minister of Information, in a speech read on her behalf lauded GIA's initiative for organising the maiden workshop in insurance for journalists and expressed the hope that it would provide insight in the business practices of insurance. "The essence of the media's role entails understanding the business of insurance and informing and educating the public on the aspects of insurance that affect their daily lives," she said. Mr Ransford Tetteh, President of Ghana Journalists Association, noted that the media had the responsibility to talk about issues not only on political matters but on business and what pertained to the insurance industry as well in order to develop corporate Ghana in meeting her socio-economic development goals.