Insurance penetration: a battle that could be surmounted with little but assiduous efforts

The insurance penetration rate in Ghana was below 1 percent in 2009. Fast forward to 2022, the penetration rate has now surpassed the 1 percent mark and is currently hovering at a rate that is less than 2 percent. The life and non-life insurance penetration rate are growing steadily across the globe, and countries like China, the United States of America (USA) and the United Kingdom are experiencing double digits penetration rates.

Insurance against unexpected risks is all but a very important trump card not only for businesses but also for individuals who seek to hedge the limitless risks that they face ranging from property risks to individual personal risks. Data has shown that the patronage of Life insurance products and services in Ghana has been on the horizon, with the aged and the youth now regarding Life insurance as an avenue to secure their future against the inevitable, of death.

Life insurance products provided by insurance companies in the country do not only offer death or funeral benefits which have been the toast of most customers, but also an avenue to save toward a particular goal for a specific period of time. Insurance businesses are now revolutionizing their insurance products by blending insurance services with savings and investment options. Individuals can now save and invest, and at the same time, insure themselves against the unexpected.

Despite the innovative approaches embarked on by insurance companies in the country, the patronage of insurance services, in general, is nonetheless very low. Despite the emergence of insurance brokerage firms which total over eighty in the insurance market, the patronage level hasn’t seen any significant improvements, with the penetration below 2 percent. Nonetheless, the influx of insurance brokerage firms has gone a long way to allay some of the fears that are usually often than not associated with insurance. Insurance brokers serve as an intermediaries and a liaison between customers and insurance companies.

Insurance brokerage firms do some of the marketing and case closing for most insurance companies. With the emergence of the insurance brokerage business, insurance companies can now get closer to understanding the customers better, and thus, tailor customer-centric products to meet their demands. Customers can also rely on their brokerage firms in the claims settlement processes which is the headline reason for the nonchalant feedback to insurance services in the country.

The Insurance Brokers Association of Ghana (IBAG), which was set up on 27th October 1988, regulates the insurance broking business in Ghana. The association periodically organizes conferences for registered insurance brokerage members to educate them on the best insurance broking practices and new developments in the insurance fraternity. Member companies pay subscriptions to keep their membership in good standing, and also adhere to the code of conduct and other disciplinary procedures in the broking business.

The crux of the matter is that despite the fact that the insurance industry is developing innovative marketing strategies and initiatives to rake in the patronage of its services, they need to push a little further. With little but assiduous efforts, the insurance industry can surmount the many bottlenecks that bedevil the industry. The institutionalization of the brokerage business is a step in the right direction toward achieving double digits penetration rates. Insurance companies should descend the hierarchical industry ladder and continue their strong partnership with brokerage firms in convincing the Ghanaian market.

Moreover, more innovative products that seek to commingle insurance services with investments and savings services should be targeted. Microinsurance is one key area that could spearhead the agenda to penetrate the informal sector. Individuals are seeking to pay premiums digitally rather than in cash. Mobile money services should be taken into deep cognizance in permeating the informal sector.

Additionally, to allay fears and build trust in insurance services, insurance firms should fulfill claim settlements timely. Most complaints from the general public regarding insurance services in the country have to do with claims settlements. The conundrum of claims settlement resounds on the streets of the country. Patrons of insurance services and non-patrons alike have questioned the claims settlements of insurance companies. They argue that claim settlements have to go through several bottlenecks before payments would be processed, resulting in delays and inconveniences. Insurance companies and players in the industry should critically review their claim settlement processes. Advantages could be taken from the digitalized economy to streamline processes and procedures in claim settlements. Mobile money services could help sort out problems.

Finally, the regulating authority of the insurance industry in the country, the National Insurance Commission (NIC), should enforce the minimum capital requirements in the insurance industry. In June 2019, the minimum capital requirement of life and non-life companies was increased from GH¢5million to GH¢50million. That of reinsurance companies moved from GH¢40 to GH¢125million, that of insurance brokers increased from GH¢300,000 to GH¢500,000, and that of insurance reinsurance brokers was maintained at GH¢1million. A well-capped insurance industry would strengthen the insurance industry and increase the trust the customers have in the sector.

The battle to hit double figures in the insurance penetration rate is well on course. Massive efforts should be made to educate the general populace on the importance of insurance in ameliorating general risks. The insurance business sector is at the bud stage, and more investors can venture into it. With little but painstaking efforts, we can make the insurance sector a better sector for all of us.



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