Ghana begins implementation of no premium no cover

Bawa

Chuks Udo Okonta and agency report

Ghanaian insurance industry has commenced the implementation of No Premium No Cover policy today Inspen has learnt.

The initiative was to start on January 2, but was moved to today due to some uncertainties.

The nation’s Commissioner for Insurance, Lydia Bawa, said the decision was taken to stem the sale of insurance products on credit.

She noted that the menace of granting insurance cover on credit has stemmed the growth of the industry as most operators find it difficult to pay claims due to lack of fund.

She said: “The Problem we have in Ghana is about payment of claims. Insurance companies are not paying claims, and that is giving us a bad name.  The insurers are not paying claims because they are underwriting on credit. So, they are not able to generate enough premiums, invest and make claims.

“I have learnt from the Nigerian Insurance Industry experience.  From discussion with Nigerian Insurance Commissioner, Fola Daniel, I got to know that he introduced no premium no cover, to halt the sales of insurance on credit and its is working well for the industry.

“I believe it would restore the confidence that is already lost by policyholders and the general public. This is one major project I have taken as the new Commissioner. “

She noted that having been an underwriter for 31 years, in the Ghanaian insurance industry, she is abreast of all the issues in the sector and pledged to reform the industry.

She said perception and mistrust has been the bane of the industry, adding that most people believe insurers take premium and do not pay claims; hence, they do not really trust insurance.
She called on insurers across Africa to intensify awareness about insurance, adding that the apathy on insurance can be change through proactive awareness creation.

Preparing the operators for the take-off of the initiative, a Director of the Nigerian Insurance Commission (NAICOM) Barineka Thompson, said insurance companies in Ghana would benefit immensely from the new policy, adding that the policy had improved the Nigerian insurance sector significantly.

He said the ‘no-premium, no-cover’ was about risk, corporate and ethical behaviour management, adding that it helped insurance companies to learn financial management as well.

From the onset insurance companies might find the new policy very much unprofitable but with time they would begin to realize that it’s beneficial, Barineka said.

He pleaded with his Ghanaian counterparts to collaborate effectively with regulators in the country by filing their returns on time to ensure that the new directive becomes successful.

“We must all resolve and collaborate for this directive to be a success because we all in the industry stand to benefit a lot from it,” he said, adding that the law is not for regulators or government alone.

The business environment has changed and so insurance companies must understand that regulations have to change to match up with the new business environment, according to him.