Accra floods : Insurance companies confident of settling claims
Ghana's insurance industry has given the assurance that it will be able to adequately compensate affected businesses and individuals that have insured their risks under various policies for which premiums have been duly received.
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The President of the Ghana Insurers Association (GIA), Mr Ivan Avereyireh, told the GRAPHIC BUSINESS that although the losses were ‘horrendous’, the insurance companies would have made sound investments with premiums collected and adequately taken reinsurance measures home and abroad that should enable them to compensate clients who suffered losses in the June 3 widespread flooding.
“The truth is that the damage is quite horrendous and the magnitude of damage you cannot fathom. But every insurer would have made adequate provision to cater for such losses they have insured. They have reinsured these businesses and on their own, they retain a certain amount they know they can pay,” the president assured after leading a team of insurers and risk assessors to visit some areas of Accra’s worst affected by the downpour which claimed lives and property.
Although the losses may be huge and complex to assess, the new National Insurance Commission rules require the 24 non-life and 21 life insurance companies to pay claims quickly, up to three months for the most complex of claims.
So far, officials of the Ghana Fire Service and the National Disaster Management Organisation (NADMO) have put official death toll to 200, including more than 140 who lost their lives in the Kwame Nkrumah Circle Goil Filling Station fire accident.
Some of the worst affected areas include the North and South Industrial Areas, including the Graphic Road, which harbours banks, pharmaceutical companies and showrooms of a number of automobile companies, almost all of which have adequate insurance coverage. The showrooms include those of Toyota Ghana Ltd, Japan Motors, Honda Place, Rana Motors and Modern Automobiles Services Ltd (MAS).
Other areas include the Kwame Nkrumah Circle and surroundings, Adabraka, Teshie-Nungua, the Tetteh Quarshie Interchange and surrounding areas.
Insurance policies in sight
As the insurance industry braces itself to assess the damage and pay compensations to deserving businesses and individuals, initial assessments by the insurers reveal the losses suffered were widespread and could broadly trigger two main policy types; the All Risks Policy (a fusion of a number of policies to cover different perils, and the Fire and Allied Perils (which extends to cover floods, lightening, limited explosions, burst pipes, windstorms etc).
Drilling down further, specific policies would include the Machinery Breakdown; Stock Deterioration; Electronic Equipment (computers and stated electronics equipment); Group Life Policy and Business Interruption policies as well as motor insurance.
Life Insurance policies may also trigger if some of the victims took life cover. On the other hand, some institutions may also have Group Life Insurance which could come into play.
This means the next of kin of those victims without any personal life or group life cover, could only be at the mercy of government magnanimity, philanthropists, NGOs and the likes.
In the case of the Filling Station, the Public Liability Insurance Policy would only cover those who were doing business with the station and not those who were only seeking shelter there on their own frolic.
The country’s insurance industry has been pushing for a compulsory insurance cover for employees who die on the job or become invalid to work due to critical illnesses/or permanent disability resulting from accidents to receive compensation.
Although Workmen’s Compensation which has been embodied in comprehensive Group Life Insurance cover is operational in the country, an important aspect – paying compensation to workers who become critically ill and cannot continue to work, is not typically patronised by corporate Ghana.
Currently, the Workmen’s Compensation Act 1987 (PNDCL 187) places an obligation on corporate bodies to pay compensation to employees who become critically ill or die either through accidents or natural causes, but allows corporates to decide on the mode of compensation. By this, companies can either set aside funds for the payment of such compensations themselves or transfer the risk to an insurance company; this has brought about various group life policies.
Though most big enterprises already subscribe to the Group Life Insurance policies, there are still yet a good number yet to do so, since it is not compulsory. The government which is the largest employer does not take such a policy for its workers.
Regarding the June 3 floods, insurance companies are working with their insured to identify and assess losses and Mr Avereyireh believes that by the sheer magnitude, reinsurance companies may be called upon to help their local partners to compensate for the losses.
Ghana’s three reinsurance companies are the Ghana Re, GN Re and Mainstream Re.
But the industry has shown resilience over the years as it has met its liabilities towards the insured as and when they fell due. Two years ago, the non-life insurance companies paid claims totaling GH¢123.8 million according to the NIC, which is yet to make insurance industry composite figures for last year available.
NP, NC
The well-functioning No Premium, No Cover (NCNC) regime also underlies the confidence of the insurance industry’s ability to meet the latest claims.
“This policy has come to support most insurance companies. This has helped the general business insurance companies to stand up to their real challenges,” Mr Avereyireh, who is also the Chief Executive Officer of Ghana Life Insurance Company Ltd, said, adding that the policy was in the right direction, timely and was happy that the very serious companies were going by it.
The NCNC policy has essentially phased out credit regime for premiums, which hitherto to insurers leaving about 60 per cent of the gross premium earnings in debt with the insured. Premiums so earned are supposed to be given to the insurance companies for investment and reinsurance so that in the event of a loss, the company can meet the claim.
“If about 60 per cent of the earnings that an insurance company earns is in the hands of the insured, how can that company be able to meet up its claims,” Mr Avereyireh quizzed.
Documentation
Captured within the policies are limitations that bound the liabilities and responsibilities of the contracting parties. In the case of the floods, chances are insurance documentations may have been lost; that notwithstanding, the insurer would rely on their own documents subject to limitations of the contract as well as evidence of the losses.
There are also Salvage Experts and Loss Adjusters, who are specialists within the insurance industry who could be called upon to help assess damage and losses.
Modernity and the digital age has also enhanced data availability on demand, thus would help in the quick processing of claims.
Advice
The insurance industry believes the June 3 disaster was a wake-up call for Ghanaians to consider insurance as the surest back-up for picking up the pieces.
“In modern business all across the world, insurance has become a turn-around strategy where companies that suffer losses can start up again,” Mr Avereyireh stressed.
He said the industry had over the years paid huge claims to companies and individuals which take credit for successful recoveries from losses without acknowledging that it was insurance compensation that made the difference.
“Because of these, people do not realise that insurance is a necessity. But if the recipients and beneficiaries talk about it, it would whip up people’s belief in it,” the GIA president stressed.
He believes the local industry had come of age where it could underwrite all forms of risks locally, including the city’s two largest malls, the Accra Mall and the West Hills Mall as well as large commercial properties, hotels and the likes.
“There is no risk that cannot be insured within Ghana and the insurance companies have the capacity. This is why we see insurance companies springing up every now and then, with the international ones pitching camp here. It shows how well the insurance companies are doing and they can really meet their claims,” he stressed.
Mr Avereyireh, therefore, called on every single person in Ghana to insure themselves, because, as he put it “the government is already facing challenges and may not be able to meet such burdens alone.” GB
