Story: Mary Ankrah
THE National Insurance Commission of Ghana (NIC) is in the process of introducing a new legal and regulatory framework that would incorporate micro insurance to encourage low income earners to purchase insurance.
The draft legislation is aimed at ensuring legal certainty that would give insurance companies the flexibility to design and designate micro insurance products based on specific criteria that would be specified in the insurance code.
More importantly, the new legislation, which is expected to be passed before the end of 2012, is geared towards increasing the insurance penetration rate on the local insurance market and to contribute to the financial inclusion and social protection for the majority of Ghanaians.
This was made known by the Commissioner of Insurance, Mrs Nyamikeh-Kyiamah, at an international micro insurance conference held in Accra last Tuesday.
The conference was organised by the NIC in collaboration with the German International Co-operation (GIZ) and in partnership with the Munich Re Foundation, the Micro-Insurance Network (MIN) and Making Finance Work for Africa (MFW4A).
The conference brought together stakeholders of the NIC, micro insurance representatives across the country and international insurance experts, as well as consultants, to simulate ideas on the development and practical implementation of micro insurance in the country, identify a set of activities that would facilitate the transition to the new framework and present key lessons of insurance and micro insurance policy implementation from other relevant countries.
At the conference, Mrs Kyiamah said access to insurance services in Ghana was very limited, especially among low income population. In 2010, only 4.1 per cent of the total population held any insurance policy excluding public health insurance while insurance penetration stood at 1.89 per cent.
She indicated that the informal sector, particularly low income households, were typically excluded from the insurance market, even though they were vulnerable to the various kinds of risks that were inimical to their survival and progress.
“Increased access to insurance by low income households is, therefore, a key tenet of financial inclusion and social protection policy and geared towards increasing the insurance penetration rate on the insurance market,” she added.
Mrs Kyiamah said the NIC had placed much emphasis and efforts on the development and implementation of micro insurance and had, therefore, been working in collaboration with the GIZ and other partners to develop the capacity of the insurance industry that would handle micro insurance and other things under a project dubbed: "Promoting Micro Insurance in Ghana (ProMiGH),".
Under the project, the NIC and GIZ would support the development of micro insurance in six key areas through a policy framework and legal review, actuarial capacity development, research, information system and technology, technical services and consumer education and insurance awareness creation.
In addition, the ILO/UNCDF and A2ii from Ethiopia, Mr Yoseph Aseff, pointed out that Ghana was still below five per cent of the insurance penetration because knowledge, products and access to relevant and affordable services were lacking in the insurance market.
This, he said, was because the traditional insurers focused on serving the middle and upper market with the unfounded belief that serving the low income population was not a viable business proposition.
“The poor do not value insurance because they perceive it to be unaffordable and of little relevance to them,” he opined.
Mr Aseff emphasised that the poor required specific products and distribution channels that could support their risk exposure in asset building and innovation that could, in turn, create jobs and wealth for them.
He added that an empowered regulator equipped with a functional insurance Act, regulation and codes could be a catalyst to the development of micro insurance and encouraged insurers to launch scalable and efficient products and services to meet the needs of the population.
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