Claims Payment is Everything; Get it right Insurers!
Everything negative – pressure, challenges – is all an opportunity for me to rise, Kobe Bryant. It attracted my attention, a statement by the transport minister on behalf of the government concerning the recent Tema tollbooth motor accident. The Government has assured footing all medical bills of all the victims injured on Monday, 5th July 2021 after a tipper truck crashed into the Accra-bound tollbooth on the Tema motorway. Roads and Highways Minister, Kwasi Amoako-Atta said the government’s primary concern is to take care of the victims on admission. “Government is prepared to take care of the bills. They (those injured) were at the tollbooth premises, and they were involved in an accident. We shall sort it out”, the Minister told the media. Mr. Amoako-Atta further indicated that another area of concern for the government is for a probe into the accident and that based on its findings, additional safety measures will be put in place to protect lives at tollbooths nationwide. “What concerns us and what concerns the government is for us not to lose any of them and do whatever we have to do to save their lives. Our primary concern is to see to their health, we will not shirk our responsibility. I can assure their families and the people of Ghana.” One person died, and five others were seriously injured as a result of the crash.(citinewsroom, 2021).
I believe this is good news for the victims and also for their families. I am particularly happy the government has shown so much concern. But I am a little disappointed. How I wish the insurance company that insured the truck would have been at the scene and make a statement to the family and the public. I am not saying they should accept liability instantaneously but being at the scene and showing concern would have a great impact on the lack of trust and confidence people have in the insurance industry. In my opinion, insurance companies could use these accidents that get public attention to sensitize people on the need to have insurance. All that I am trying to say is simple, insurance companies need to get involved quickly and begin to speed up processes. Even though we are all not happy about the frequent occurring of these accidents, I also think it presents an opportunity for insurance companies to win the trust of the public. The third-party motor insurance covers medical expenses to victims and insurers could give some initial amount to medical service providers to take care of these victims. These gestures would go a long way to increase the trust and confidence of the public in insurance.
The government has been generous to donate to these people and even take care of them. This is a great gesture. I would kindly also urge the government to go further and facilitate the documentation these people would need to make claims at insurance companies. Such documents include police and medical reports and other statutory declaration documents. The insurance claims process in Ghana is seen as cumbersome sometimes due to easy access to certain documents which are required by insurers. It is also not always good for the government to wait and spend money when these events occur. The government could be advised to insure all its workers against accidental death or injury.
The insurance claims ratio is calculated as the net claims incurred divided by the net earned premiums. It is a key ratio that indicates how well an insurance company pays claims and to some extent, of fair customer treatment. The ratio is an indication of how much policyholders get back in return for each cedi of premium paid to insurance companies. The industry average over the years ranges between 40% and 60%. Since the core obligation of an insurer is to pay claims, insurers must ensure that all incurred claims are paid quickly to win the confidence of the public. In 2018, the industry average increased to 42% from 37% in the previous year.
| Percentage (%) | |||||
| Year | 2014 | 2015 | 2016 | 2017 | 2018 |
| Industry Average | 37 | 37 | 39 | 37 | 42 |
From the NIC 2018 annual report, delays in the payment of claims and the repudiation of legitimate claims by insurance companies have led to a situation in which the public does not trust the insurance sector and has a poor perception in most African countries. Whilst the public perception of insurance is improving, the image of the insurance industry to the ordinary Ghanaian is not very favourable. This reputation has not helped the efforts to increase the patronage of insurance.
The above challenges notwithstanding, total gross premium income grew by a decent 21% from GHC2.4 billion in 2017 to GHC 2.9 billion in 2018. This can be compared to a 26% growth in 2017 over 2016. Industry total assets similarly increased from GHC 5.4 billion to GHC 6.2 billion over the same period. Given the slowdown in growth rates and the impairment of assets, total corporate taxes paid by the industry declined to GHC 36 million down from GHC 50 million in 2017.
In 2018 the total benefit payments made for Life’s business amounted to GHS 704m.
Total industry premium without GOGIP contribution amounted to GHS 2.6bn in 2018. 51% of this was contributed by the Non-Life industry whose premium. was GHS 1.34bn whilst the Life industry contributed 49%, that is, GHS 1.30bn. When GOGIP’s premium is included, Non-Life contribution increases to GHS1.60bn representing 54% of the total amount whilst Life’s contribution declines to 46%.
The National Insurance Commission has published the claims payment guidelines for non-life insurance companies. Going through this guideline, it is not supposed to take an insurance company more than a month to pay a legitimate claim after all necessary documents are submitted and the claim is admissible.
The writer is a Chartered Insurance Practitioner of United State of America, USA, United Kingdom, UK and Ghana (CPCU, ACII, ACIIG), and holds MPhil in Enterprise Risk Management and Business Consulting from Kwame Nkrumah University of Science and Technology, attained Bachelor’s degree from University of Ghana, Legon and have Applied Insurance studies, Diploma and Advanced Diploma (AAIS & AIS) from Ghana Insurance College / Malta Insurance Training Institute with 15years industrial experience. His interest lies in insurance, risk and data analysis.
Justice Peprah AGYEI, CPCU, ACII, ACIIG, MPhil, BA (0208498571)
Reference
Citinewsroom: https://citinewsroom.com/2021/07/motorway-tollbooth-crash-government-will-foot-medical-bills-of-victims-roads-minister/
National Insurance Commission: Annual report, 2018
