Rot in the Insurance industry
Some corporate managers in the insurance industry have predicted a gloomy picture about the future of Ghana's insurance industry if efforts are not made to tackle the issue of low pricing in underwriting.Information gathered by The Statesman indicates that as a result of the keen competition in the insurance industry most companies have resorted to softening the rates of their insurance products to unprofessionally grab huge chunk of the market.
A source told The Statesman that instead of the minimum 10% rate charges on general business and life insurance, some insurance firms go as far as charging 7% and 5%. This is said to have shifted the attention of Ghanaians to buy cheap insurance products than doing the right transactions.
The negative effect is that after an accident has happened and the insurance company is required to compensate the victim, they then resort to delays and unnecessary excuses. This negative development, experts say is degrading the image of the industry and giving it a bad name on the international scene.
Report from the National Insurance Commission indicates that efforts by the commissioner to abort the unprofessional practices have been strongly resisted. In view of this, the Commissioner of Insurance, Josephine Amoah has warned companies that any untoward delay in paying insurance claim would lead to their prosecution, an official disclosed.
Currently there are about 20 non-life insurance companies; 16 life insurance companies and two re-insurance companies as well as 25 brokerage firms in the country competing in the small market. The total market premium in 2007 increased to GH¢210million in 2007 from GH¢42m in 2001. During this same period, total market capitalisation increased by 486% to GH¢176m from GH¢30m, with the total assets of the market increasing by 473% to GH¢420m from GH¢73m.
The need for effective supervision and regulation of the financial services and the insurance sectors which is paramount to stakeholders cannot be over-emphasised. Experts have stressed that unprofessional and unnecessary softening of rates in the financial and insurance markets could affect Ghana negatively if the illegal practice is allowed to continue.