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Business News Wed, 15 May 2019

NIC, insurers push to sensitize public on insurance

The National Insurance Commission (NIC) and key stakeholders have initiated a sensitization programme to increase insurance penetration in the country.

This is part of concerted effort and policy direction of sector players namely – Insurance Awareness Coordinators Group (IACG), Ghana Insurers Association (GIA), Ghana Insurance Brokers’ Association (GIBA) and the Regulator itself, aimed at bringing insurance closer to the door steps of people by making it more attractive for clients to purchase the products.

Currently, insurance penetration in the country is estimated to be less than two percent although this does not include health insurance; this trend, various stakeholders note is worrying and are targeting up to five percent penetration by the end of next year. The successful mainstreaming of both micro-insurance and agricultural insurance, combined, have the potential to achieve this.

Indeed, the sensitization programme has been timed to coincide with the introduction of formal regulatory and facilitation frameworks for micro-insurance and agricultural insurance, both of which form major components of the impending new Insurance Law expected to belatedly be passed before the end of this year.

Micro-insurance will create formalized avenues for offering simplified insurance cover for micro and small scale entrepreneurs and their assets, thus providing opportunities for insurance penetration across the vast majority of indigenous small enterprises and their owners nationwide.

Agricultural insurance, on its part will create formalized avenues for the provision of insurance cover to farmers, including small-holders, and their crops nationwide. Since small scale agriculture is the largest single employer of Ghana’s work force, its introduction as a mainstream financial product will offer access to over one million Ghanaians.

Instructively both micro-insurance and agricultural insurance have been introduced already in Ghana but are not at all widespread, primarily being operated on levels akin to pilot projects, often in collaboration with foreign development partnership agencies or foreign NGOs who are seeking to help popularize them among the populace at the grassroots level.

The introduction of these two aspects of insurance are crucial not just because of the risk amelioration they offer; policy holders will have much easier access to direly needed, but currently unavailable credit from commercial lenders too, since their insurance cover would make them much less risky prospects for lending.

To ensure the realization of the five percent penetration target, the NIC has launched the second phase of the Insurance Awareness Campaign project to deepen the successes chalked during the first phase of the awareness penetration exercise which was implemented as a pilot project.

The campaign seeks to raise peoples’ awareness on the need for insurance and deal exclusively with a number of mitigating factors affecting the effectiveness of the process to enable the general public buy into the idea of insurance.

According to the Commission, the second phase of the penetration exercise is targeting more than 25 million people in over 210 districts across the country from May to June this year. A total of 50 radio stations have been earmarked as the mode of communication to reach the targeted audience and currently, campaigners have developed jingles in 34 local languages to ensure a smooth process of intensifying insurance penetration.

Speaking to the Goldstreet Business during the launch of the event in Accra, Deputy Commissioner of the Commission, Mr. Kofi Andoh underscored the need for active participation of sector players and the public to enable the Commission reach its projected target of five percent penetration next year.

“Penetration involves contribution of gross premium to Gross Domestic Product. When you want to grow an insurance market, there is the demand side and the supply side. This event is part of the effort to whip up demand for insurance”, he reiterated.

Aside this measure, the Commission and stakeholders are also working to enforce existing laws concerning the maritime sector as well. Importers are required to insure their incoming goods locally but, due largely to pressure from their exporting counterparties usually prefer to insure the goods in the country of origin and pay the penalty for this (one percent of the value of the goods) to Customs and Excise upon arrival of the goods in Ghana. The NIC is expecting to witness a major growth rate in this area together with the annuity market and measures are underway to ensure its realization.

Already, the NIC is working with the Ghana Fire Service to enforce compulsory insurance cover for commercial buildings against fire and allied perils as well as third party liability. The regulator is also considering promoting efforts to make workmen’s compensation insurance cover compulsory as well.

Source: goldstreetbusiness.com