Alliance Insurance has posted a 32.6 per cent increase in its gross premiums for last year. The company’s gross premiums rose from GH¢6.32 million in 2012 to GH¢8.38 million in 2013.
Last year's revenues were driven by an increase in net premium revenue, which rose from GH¢5.542 million in 2012 to GH¢8.29 million last year, culminating in the 32.6 per cent rise in gross premiums last year. The surge in the net premium revenue contributed significantly to the achievement of a net profit of GH¢784,779 for the year, representing a 35.6 per cent growth over the 2012 figure.
The company’s market share grew from 1.3 per cent to 1.5 per cent during the year under review. Also, while the industry average of solvency margin is 169 per cent, Regency’s solvency margin is 180 per cent, underscoring its solidity.
Even though Regency posted much-better-than-expected results, the Managing Director of the company, Mr Bode Oseni, said the results could have been higher but for the unhealthy competition in the insurance industry, which involves companies cutting corners to get deals.
He explained that the additional revenues could have come from the series of businesses that it had lost and continue to lose to competitors through unhealthy practices such as premiums undercutting.
"Our challenge is the unhealthy competition. Sometimes, we do lose businesses because people have competed unhealthily in terms of cutting the rates. Of course, those people will tell you that they are comfortable with those rates but when you look at it, it is obvious that appropriate premiums have not been paid.
"And you know, insurance funds are a common pool; you need to contribute adequately to them so that the pool will be sustained for you to be able to pay genuine claims," Mr Oseni explained.
The local insurance industry has been grappling with unhealthy competition, including underpricing and related issues, which ultimately pose liquidity pressures on some of the companies and their ability to pay claims promptly.
Penetration as of last year was reported at about 1.7 per cent for an industry that has close to 45 companies jostling for clients.
Thumbs up to NIC
In April, this year, the National insurance Commission (NIC) introduced a new policy that prevented companies from insuring polices on credit.
The policy by the regulator, dubbed 'No premium, no cover' was a response to the debt problem that the industry has been grappling with.
Mr Oseni said it was the best thing that ever happened to the local insurance industry in recent times.
"The greatest thing it has done is to increase cash flow. In the first quarter, business was slow but it is now picking up and we are optimistic that we will meet our targets. It is the best thing that has ever happened to this economy and I pray and hope that it will be sustained for the betterment of the industry," he said.
On the proposed imposition of value added tax (VAT) on insurance, it will not benefit the industry, which is already suffering from low patronage.
"I believe VAT should not be added to insurance premium. I cannot see any reason why that should be the case, but if the government in its wisdom decides to apply VAT, there is nothing we can do. However, it will add more burden to that of premium payers and I will advise the government to rethink that issue," he added.
Going forward, Mr Oseni said Regency Alliance would continue to pay its claims promptly, abide by professional ethics, especially guidelines from the NIC, as well as listen to and respond promptly to the needs of its stakeholders and clients.GB