Can Ghana work? A look into INSURANCE
Only this time, we have learned that it will not be giants like Nkrumah and Kenyatta who will determine Africa’s future. Instead, it will be you – the men and women in Ghana’s Parliament, and the people you represent. Above all, it will be the young people – brimming with talent and energy and hope – who can claim the future that so many in my father’s generation never found – Former President Obama, when visited Ghana.
“At long last, the battle has ended! And thus, Ghana, your beloved country is free forever! And yet again, I want to take the opportunity to thank the people of this country; the youth, the farmers, the women who have so nobly fought and won the battle. Also, I want to thank the valiant ex-servicemen who have so cooperated with me in this mighty task of freeing our country from foreign rule and imperialism. And, as I pointed out… from now on, today, we must change our attitudes and our minds. We must realise that from now on we are no longer a colonial but free and independent people.
But also, as I pointed out, that entails hard work. That new Africa is ready to fight his own battles and show that after all the black man is capable of managing his affairs. We are going to demonstrate to the world, to the other nations, that we are prepared to lay our foundation – our African personality”. This is part of the speech Dr. Kwame Nkrumah gave on the eve of our independence. Now the big question is, how far have we come?
I was inspired by the words of Bernard Avle of City FM when I listened to him on the 21st of May 2019 on his morning show. When I was listening to him, I kept on asking myself, can Ghana work? This is a country where it looks like the laws are made for only the poor. People steal goats and they are sent to the lowest courts and imprisoned quickly. Others misuse huge sums of money belonging to the nation and they go free because I think higher courts do not necessarily have more power than the lower courts, hahaha. Sometimes, it looks funny. This is a country where the police are scared to stop a 4×4 but are very proud to stop the trotro or the taxi driver.
This is a country where people respect you because of your position in society. When you enter an office in suit and tie, you are given all the needed attention and respect. This is Ghana where people who are paid to do their work would still require money from you in discharging their services to you. Institutions do not work again. Former President of the United State visited Ghana and advised us on building strong institutions.
The citizens have become so selfish and greedy. People always think of what they would gain first in all their dealings with others but not the benefit to the country. Some medical practitioners take huge sums of money before issuing medical reports to accident victims to take it to claim their compensation from insurers. The police take unapproved money from people before issuing a police report. They always tell you and have even pasted on their walls the approved monies to pay but still takes more with no receipt to cover that. This is hypocritical. I have grown to see most Ghanaians as the most hypocritical people in the world. The commercial driver upon sighting the police barrier ahead just find money and puts it in their driver’s license holder and gives it to the police. Just after that, the same driver complains about police taking bribes. There would be passengers who will never condemn this act of the driver. Where a genuine policeman would be doing his work well on the road, people would complain about him causing a delay. There are more to say on these but let descend to the Insurance industry in Ghana.
You do not need to work in the insurance industry to know that, all is not well. People submit all their claims documents and it takes forever to receive their claim amount from insurers. People sign life policies and when they cannot afford and want it canceled, they have to go through a hassle to get this done. Other people’s life policies mature and they have to wait for months before they receive their maturity benefits. People have lost trust in all the insurance players. Simply because they have failed to do the needful. The insuring public is not certain about what they are buying in the form of insurance products anymore. They do not even know who is telling them the truth about insurance. Because they receive different information at the time of taking the policy and there is different information at the time of the claim or taking their maturity benefit.
The insuring public themselves are also part of the problem. Everyone’s anthem is “Ghana is not working”. If Ghana is not working then, it’s whose responsibility to make it work. The players in the insurance industry include Insurance Companies, Insurance Brokers, Insurance Agents, the Regulator, Loss Accessor, Loss Adjusters, Bank engaging in bancassurance and Actuaries. These players are also supported by these Associations; Ghana Insurance Association, Ghana Insurance Brokers Association, the Agents Association, and the Chartered Insurance Association.
Insurance Agents cannot exempt themselves from these malpractices in the industry. Insurance Agents mis-sell all in the name of getting people to sign a policy so they can get their commission. They do not care about the future of the people they are selling their products to. They deliberately, recklessly and negligently give false information or conceal vital information, all in the effort to influence and persuade someone to sign an insurance policy? Mis-selling bring huge benefits to insurers in the short term. They earn a huge premium and also increase their market share and presence. They have a winning advantage over their competitors but it comes to hurt them severely in the long term. Miss -selling will come to light since there would be time for the insured or assured to reap his/her benefits or receive compensation for the occurrence of an insured peril. When this happens, the trust which is so crucial in selling insurance is gone. Our insurance agents should be penalized for these acts?
We have over eighty (80) insurance brokers in Ghana currently. The insuring public is still not feeling their presence. Almost 90% of these brokers have their offices and operations in Accra. Most of these Brokers concentrate so much on non – life companies and cooperate businesses for reasons best known to them. It is always about them first and what they will get. What would be the impact be if insurance brokers were to take over the larger part of the insuring public and act professionally? Are the brokers in Ghana professional in their dealings? They are supposed to be but they lure most of these insurance companies to commit most of these malpractices of undercutting and underpricing of premiums. Now when insurers go behind them and pay illegal money to some Accountants and Business owners to get the brokers off the business then hell breaks loose.
Insurers are still engaging in malpractices in the insurance industry which include undercutting or underpricing of the insurance premium and the payment of unapproved commissions. This is affecting the liquidity and solvency of most companies because they do not charge the right premium. Most companies do not also make underwriting profit because the right premium is not charged for the risk they accept into their books. Now, insurers are just at the mercy of clients. Clients determine the amount they want to pay. Insurers are not underwriting risks again. Insurance managers complain so much about huge targets set for them to achieve hence engaging in all malpractices.
People walk to the insurance company’s office with their premium they want to pay for their risk. They push insurance companies to a tight corner to accept these smaller premiums by bringing the insurers against themselves. The whole thing is if you do not accept it, your competitor will. The same public also will report these insurance companies when they are not able to meet their claims on time.
People spend huge thousands of money to purchase the vehicle of their choice. They also make provisions for all other expenses in connection with the registration of the vehicle and all other things. The only cost left to negotiate is insurance. They also have seen the importance of securing their cherished vehicle so they run to take insurance. They push insurers to accept whatever they can afford. Insurers accept these small amounts all in the name of meeting huge targets set by their companies. But we should remember that the risk is not lessened. People do insurance with the mindset that, nothing will happen. Let’s ask ourselves, which people are normally involved in a motor accident? They also had the same mindset when they were taking the insurance policy.
A taxi driver complained about paying GHS 435.00 for the whole year as very expensive for motor third party insurance. But this same person pays GHS 5.00 every day at his stations for loading passengers. This means, by the end of the year, he might have paid GHS1, 825.00. This same person cannot save GHS2.00 a day for his insurance which covers injury and death to all the passengers he would carry during the period of the policy.
If the public think that motor insurance is expensive, then let’s value ourselves and see how much we cost because the policy is basically to cover injury or death to third parties (ourselves). Let’s do this critical analysis. The cost of seeking medical attention from a health center in the year 2010 would be way far below the cost of seeking the same medical attention from the same injury or sicknesses now, 2019. The cost of everything goes up and I wonder why insurance premiums always remain the same or even come down. People try to compare how insurance works in a developed country to ours but would never compare the premiums they pay to ours.
I wonder why most insurance companies take delight in seeing big gross written premiums but at the end of the day, they make underwriting loss. I am sure shareholders will open their eyes and begin to change the way they set targets for their Companies. Let’s look at this instance, you give GHS1, 000.00 to your wife to sell tomatoes and after selling, she only gets GHS800.00. The only way she can get her actual money or make a profit is when the ‘Susu collector’ comes and pays her the interest on the small amount of money she was putting aside every day from selling. What will happen if one day the Susu collector tells you there is no interest in your money with him? This also means, there is no point in selling the tomatoes. You just have to be given the money to the Susu collector and take your interest at the end of the period. The risk of tomatoes getting spoilt and the hassle you go through to get people to come and buy would be off. This is similar situation insurers find themselves in. It may get to a time when shareholders will not see this business attractive again and may decide to divert. Who will lose then? All the players in the industry and the nation.
Why insurance companies cannot share information among themselves is very strange to me. I have always said that insurers should not see themselves as competitors. No! Their competitors are other institutions that can provide some of the services they are providing now. This calls for unity among all the insurers. For instance, A person who wants to do insurance goes to insurance company ‘A’ with companies ‘B’ motor insurance sticker because he needs No Claim Discount and company ‘A’ will never call company ‘B’ to ask for the person’s claim history. He just grabs it because of the premium but fails to assess the risk he is taking.
The owners and occupiers of commercial properties are supposed to insure their buildings and premises to cover the injury and death it could bring to others who visit their premises. A typical example is the Melcom building collapsing, the circle fuel station and the atomic junction fire, not to remind us of these bad moments. For instance, fuel filling stations, supermarkets, malls, schools, hotels, hostels, restaurants, and others. But what do we see? People are selfish and only care about their profits but not the injury or death their properties could bring to others. Employers even fail to have appropriate insurance for their staff who are working to help them generate enough income in case they sustain an injury in the course of discharging their duties.
How are other industries like banks able to follow all their directives? Do some drivers result to fake motor insurance stickers? Do we understand what we are doing? The minimum motor third party insurance covers the passengers, pedestrians, other people’s property and you the driver in case there is an accident and any of these people get injured or even die. So why will a driver buy a fake motor insurance sticker knowing that he will not receive any benefit from any company when there is an accident and he gets injured….. Is this not ridiculous?
When the insurance regulator begins to whip some insurers, then the insurance companies begin to ask for self-regulation. I still believe the regulator should be seen doing more to eliminate certain malpractices by insurers. Each insurance player thinks they are outwitting the other and is leading the industry to a big pit. We can go on and on. How long can we continue to do this to our industry? Let’s forget whoever started. The most important thing is, let’s all agree to stop since we have seen this is not the right path. We have gone in the wrong direction for far too long as an industry. We have done enough of the wrong things. Let’s pause and take a deep reflection. Let’s begin to do proper underwriting. Let’s begin to pay claims on time. Let agents desist from mis-spelling. Let brokers begin to act professionally and also spread out to most regions and take interest in Life businesses. Let the public begin to understand the benefit of insurance to them and the nation. Let the Chartered Insurance Institute begin to sanction individual professionals who commit offenses. Let other Associations like the Insurers, Brokers and Agents begin to sanction their members for wrongdoing. And above all these, let the Regulator continue to strengthen itself and make sure the right things are all done at all times. Together, we can do it!!!
