Commissioner hints of GH¢30m capital for insurers
A loss adjuster and a former Director of the Ghana Insurance College, Mr Justice Yaw Ofori (JYO), has taken over as Commissioner of Insurance at the National Insurance Commission (NIC), with a pledge to help give the industry a facelift.
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Maxwell Akalaare Adombila of the GRAPHIC BUSINESS (GB) caught up with him for a discussion on the industry and his plans for stakeholders.
He first asked what new policies the insurance industry should expect under his leadership.
JYO: They should expect a new and strong insurance commission. We should also expect insurance to be a key player in the financial sector. Insurance is to lead in the mobilisation of long-term funds for investment and that means that life insurance should be developed to a higher level.
We expect government's support to develop the bond market to serve as an avenue for insurance as well as the capital market. Secondly, I want to position insurance as a household name in Ghana. By that, I mean we have to improve the claims payment system, we have to revive confidence in insurance and things like that.
Thirdly, I expect to improve on insurance penetration by making in-roads into the informal sector such as micro and agricultural insurance.
Fourthly, I want the NIC to be a leading regulator in insurance on the African continent. This requires that the new bill that we expect Parliament to pass is passed into law.
All these, if well achieved, will increase insurance penetration in Ghana. It will also aid in the adoption of a risk-based supervision.
GB: It is interesting that you are aiming at using insurance to help develop the bond market. How do you intend to achieve that?
JYO: You know, insurance monies are invested because the premiums do not belong to insurers. So generally, insurers are supposed to invest those monies in a way that will help bring good returns to enable them to pay out claims when they come.
But because bonds are long term and insurance monies are not generally readily needed, investing them in bonds help the money to sit within the system. This helps in economic development. This is more so with life insurance since their policies take longer term to mature.
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GB: Prompt payment of claims is one thing that, if properly done, can help earn insurance a good image. How do you intend to enhance claim payments to the benefit of the business?
JYO: Generally, I feel that we need to improve upon the claims payment process to help revive confidence in insurers. Normally, people feel that insurers are more reluctant in paying claims but that should not be the case. We are going to see a situation where claims investigations, negotiations and settlements are more proactive.
This should instil confidence in the people and give them a reason to buy insurance. It will also help them to see insurance as a means of financial protection.
The no premium, no cover policy, means that when there is a claim and it is legitimate, then we as insurers should be prompt in settling them.
I have realised that the industry has some claims guidelines in place which give time limits for payments. We are going to dwell much on some of these things as against previously when we dwelt more on solvency and the general financial soundness of the companies.
GB: With insurance penetration within less than two per cent, many, including us at the GRAPHIC BUSINESS, believe that the industry is inundated by a plethora of companies that virtually do less. This, we think, is not good for professionalism and growth. What is your take on this?
JYO: Well, it is a concern we all share in but what we need to know is that the laws are such that if a company meets the laid down criteria, you cannot or should not deny them entry. So, going forward, what I think we should be looking at is how to raise the bar of entry for new ones and also make those already operating more competitive and stronger.
Elsewhere, insurance companies are very strong and well grown to the extent that they own banks. It is not the case here in Ghana but I think we can get there.
We should encourage consolidation and get them to merge into stronger, and bigger ones that can underwrite bigger transactions.
GB: You mentioned the need to raise the bar for existing and prospective entrants. Does that include taking a second look at the minimum capital for insurers?
JYO: Sure, I think we should look at the stated capital again. At GHS15 million, I think it is not big enough to encourage the growth and competitiveness that we should be aiming at as an industry. I think that something double should be fine for the companies. That way, we can get them to consolidate for the numbers to reduce and it will also improve their ability to grow the market.
So, yes, I will be looking to see how I can get the industry to recapitalise, cut off some inefficiencies and be resilient enough to support growth of the industry and the entire insurance industry.
GB: Fake insurance stickers for vehicles are now gaining notoriety with the attendant losses in revenues to insurers and the country as a whole. How do you intend to deal with this menace?
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JYO: Yes, this is really an issue for the industry. If these fake stickers were actually going through the legitimate channels, it would have built a lot of capacity for the insurance companies.
I believe there are a lot of leakages in the system and this is one of them. Whatever we can do, together with the industry and the security agencies, we will do.
We are looking at a situation where the police can easily access information on insurance policies reported to the NIC just within a second.
This way, the insurance companies, vehicle owners and the state will all benefit because mind you, some people do not even know that their stickers are fake until they are told.
GB: Who is Justice Yaw Ofori?
JYO: I am a chartered insurance person and has practised as a Claims Loss Adjuster, an Insurance Manager with Vanguard Assurance. I am the first Director of the Ghana Insurance College, a position I held until my appointment.
In terms of education, I am a product of the University of Ghana and a proud Vandal. I am an affable, principled and firm person. I am married with children.
