Mr Justice Yaw Ofori, the Commissioner of Insurance, has urged insurance companies to avoid setting premiums at very low prices with the intention to achieve new customers or drive competitors out of the market.
Speaking at the launch of Bedrock Insurance Company, Mr Ofori said it is surprising that companies were willing to set prices so low that there is not enough as pure risk premium.
He said companies engaged in undercutting were, therefore, unable to pay claims promptly, leading to clients’ dissatisfaction and loss of confidence in the insurance industry.
To safeguard the interest of the policy holder and to ensure the safety and soundness of the industry, the Commission is actively embarking on measures to significantly reduce under pricing and ensure a fair treatment of customers.
He said with the creation of the special investigation unit, the Commission was enforcing compliance with the set of market rates and also with the low cover directive.
“The Commission in that way is enhancing market conduct,” he said, adding that it had also provided general timelines for the settlement of genuine claims.
Mr Ofori urged Bedrock to play by the rules so as to become a sustainable and competitive player.
Mr Kwame Pianim, an Economist, who was the guest speaker, said the insurance industry could be improved by ensuring a healthy macro-economic stability so that the good performance in the industry is not whittled away by depreciation in the external value of the cedi.
There is also the need to minimize ruinous competition in the general business not necessarily through regulatory intervention but by having a group of skilled actuarial professionals who will assess risks and provide benchmark pricing guidelines to the industry.
Mr Pianim called for regulatory support to expand the list of mandatory insurance cover beyond the current third party for motor vehicles and fire insurance for private commercial property.
In this direction, he said, mandatory insurance cover could be considered for many areas, including all government vehicles, the percentage related to GNPC share in oil and gas installations and operations to be locally insured with local insurers.
He said the top 10 insurers could get 50% of the placements and the balance being shared equally among the 19 remaining insurers adding that all commercial buses and rental vehicles should be comprehensively insured.
At the end of the fourth quarter of 2018, total premium raised by the insurance industry was 2.5 billion out of which non-life recorded 1.2 billion. This goes to show the amount of money pumped into the general industry.
Mr Albert Eyeson-Ghansah, the Chief Executive Officer of Bedrock Insurance Company, said the company would optimize its core insurance and business processes by leveraging on new Line of Business System to deliver value for customers more efficiently and effectively.
He said the company would be investing in the right people and the right technologies and adopting continuous improvement in its operations.
“We’ve spent time to prepare ourselves – implementing robust software from which will go live right after today,” he said.
“Ghanaians believe in quality brands that are result-oriented and the Bedrock brand although young promises to put at the fore front of its services the fair treatment of customers,” Mr Eyeson-Ghansah added.
He said as Bedrock geared up to take advantage of expanding opportunities in the changing environment, it would direct its efforts at raising standards in the fair treatment of consumers.
“In the long run, the industry as a whole has a clear interest in informed, responsible and capable consumers. And we are committed to maintain the high standards of providing our customers the best of services”.
Mr Eyeson-Ghansah assured stakeholders that the company would be in Ghana for the long haul, fully complying with all regulatory requirements.
He pledged support to efforts being made by the Commissioner of Insurance and his team aimed at creating a responsible, responsive and well-regulated insurance industry.
Ehunabobrim Prah Agyensaim VI, the Omanhene of Owirenkyi, who chaired the launch, urged management to ensure that they build a people centered business to deepen trust and confidence in the industry.