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Business News Thu, 25 Feb 2016

Low insurance penetration blamed on lack of public confidence

Deputy Commissioner of the National Insurance Commission, Simon Davor, says the low level of insurance penetration in the country is because the public lack confidence in insurance companies.

Insurance penetration in Ghana is currently hovering around 1.85 per cent and the deputy commissioner believes it is because insurance firms do not honor claims on time or use technicalities to put impediments in the way clients anytime they make claims.

He was speaking at the launch of six Universal Merchant Bank (UMB) Bancassurance products in Accra.

UMB Bancassurance is the 30th in the country and it being underwritten by Phoenix Insurance from the CDH Group.

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The service comprise of a cocktail of non-life products such as motor (comprehensive and third party), home/household comprehensive as well as personal/family insurance policies.

Mr. Davor noted that whereas the UMB Bancassurance products promise to deliver value to prospective clients, it is important for them to train their agents to communicate the details of the products well so that clients would not be caught in a web of technicalities when it is time to make claims.

"Very often insurance agents tell clients very nice things to convince them to sign on to insurance policies without telling them what the terms and conditions are but when the client is ready to make claims they are now introduced to hidden clauses," he said.

He also expressed worry about the way some insurance firms even take two weeks or more to honor a simple claim even when the client has satisfied all the necessary conditions.

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Mr. Davor said the growth of insurance penetration will largely depend on how firms remove unnecessary impediments and pay claims promptly to engender public confidence in insurance.

He therefore advised UMB not to use their own staff to sell insurance policies, saying that by regulation "UMB cannot be the agent of its own insurance policies."

Mr. Davor urged UMB and other Bancassurance service providers to abide by their regulatory requirement which demand the use of only well trained and qualified persons as agents of Bancassurance product to avoid the situation where clients are deceived into buying policies without being told the full facts.

He also urged them to stick to the regular reporting rule as required by regulation, saying that the NIC will not compromise on that.

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The NIC Deputy Boss is confidence that UMB's insurance partners, Phoenix Insurance, which is an indigenous company, has the experience, integrity and the muscle to deliver to the expectations of both clients and the regulator.

Managing Director of UMB, John Awuah assured prospective clients that their products are well researched and targeted at providing a one stop shop for both banking and insurance with the view to drawing a lot more Ghanaians into the financial sector.

He described the UMB Bancassurance products as a novelty designed to meet the insurance needs of all categories of Ghanaians and people resident in Ghana.

Mr. Awuah noted that in spite of the exponential growth in insurance density from about US$2.1million in 2006 to over US$31million in 2015, penetration remains painfully low, and that provides huge opportunities for growth.

He therefore urged Ghanaians to take advantage of Bancassurance services to protect their homes, properties, valuables and lives as no one know what could befall them in the future.

Managing Director of Phoenix Insurance, Sony Heward-Mills believes the Bancassurance a service will help banks to retain clients and cut cost of operations and also ensure financial inclusion in Ghana.

He believes the service also provide clients with a one stop shop for banking and insurance, double insurance cover, convenient premium payment as well as easy and automatic renewal of policies.

"For us as underwriters this service gives us access to a wide range of clients at the bank, improve personal selling, gain access to a wide range if distribution channels through the bank's branches and help to improve insurance penetration," he said.

Source: Myjoyonline.com