Create products to attract informal sector - Minister
Accra, Oct. 12, GNA - Mr. Kwadwo Baah-Wiredu, Finance and Economic Planning Minister, on Wednesday urged insurance companies to develop products innovations that would enable them to tap the vast potential of the informal sector.
"It should be possible to have a product for farmers whereby they would be allowed to pay their premiums during their harvesting seasons," the Minister suggested when he officially launched the StarLife Assurance Company Limited in Accra.
The Minister said the unavailability of appropriate products had contributed to the underdevelopment of the life assurance sector when the majority of Ghanaians operated in the informal sector.
According to him the integrity and the reputation of the insurance industry from the point of view of the general public was still low thus affecting the confidence of the public in insurance in general and in life assurance products in particular.
Mr. Baah-Wiredu said under the macro economic instability of the recent past where annual rate of inflation was very high, life assurance policies had very little attraction for the average Ghanaian.
However, because the economy was in stable condition at the moment, life assurance premiums had grown from 31 billion cedis in 2000 to about 220 billion cedis in 2004, growing at an average annual rate of 65 percent.
Mr Baah-Wiredu said, "...the ordinary Ghanaian must very much be aware of the existence and the benefits of life assurance products on the market as education on the nature and terms of a typical life assurance policy."
He noted that government was making serious efforts to create the congenial atmosphere for the life business to thrive, which would accelerate the mobilisation of long-term funds needed to grow the economy.
Mr Baah-Wiredu said a new life insurance law would be passed soon, which would require better governance and management structures for insurance companies and also give adequate regulatory powers to the National Insurance Commission.
Dr Kwabena Duffuor, Chief Executive Officer of the Star Assurance Group of Companies, from which the new StarLife Company is born, called for review of the sections of the Insurance Bill that dwelt on weightings of assets.
He said the bill had indicated 100 percent weightings on short-term instruments such as cash, call money, fixed deposit, treasury bills and government stocks and bonds but expressed worry that long term instruments attracted very low weightings.
"Since life assurance liabilities are usually of long term nature, these sections of the bill if not reviewed would continue to create mismatches between our assets and liabilities," he said.
Dr Duffuor said in order to improve on the technical solvency of the life assurance companies in particular, there was the need to examine the weights given to the investments in computers, land and buildings, mortgages and quoted shares on the stock market.
On the potential of life business, he said a higher rate for mortgages and investments in real estates would help the country to reduce the ever-increasing shortfall in the housing stock delivery. Ms Josephine Amoah, Commissioner of Insurance, said the combination of a stable macro economic environment, tax incentives such as those offered under the log term savings law made this period in time one of the most opportune times for the development of life assurance business in the country.
She therefore urged insurance companies to rise up to the challenge of developing innovative products that would suit the varied needs of the insuring public.