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Ghana insurers: operations of Nigerian companies bring higher competition
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The Ghana Insurers Association (GIA) believes the Nigerian insurance companies, like what Nigerian banks have already done in the banking sector, will introduce innovative and competitive products and services that will leap-frog the insurance industry to attain unprecedented profitability.
In an interview with Business Day in Accra on Tuesday, Gabriel Glover, Executive Secretary of GIA, expressed satisfaction that Nigerian companies have garnered stakes in local insurance companies and started operations. Glover said the Nigerian companies will awoaken insurers in the country from their complacency and ginger them up to engage in keen competition.
“What happened to the banks when the Nigerians came? The Nigerian insurance companies will bring healthy competition to make the industry more proactive. I don’t have a problem with them,” he noted.
He said the National Insurance Commission (NIC), the regulator, consulted the players in the industry before the insurance law was revised and updated to bring it abreast with contemporary innovations in a globalized economy, adding that “members of the GIA understand the import of the implementation of the new law.”
He said the GIA is not averse to the implementation of the industry laws because they serve as a guide to the operators to improve their performance. But he blamed the government for not enacting and implementing appropriate rules, regulations and policies conducive for the growth of the insurance industry.
“For example, if government makes insurance of cars, all markets and business premises and public liability to have some fire insurance, and social security compulsory, then the industry will grow. Government should come out with a structuralized insurance policy for agriculture. With government policy and financial backing, that will encourage the industry,” he suggested.
Quizzed about the inadequacy and ineffectiveness of the $1 million minimum capital requirement for insurance companies, Glover argued that though the requirement was lower in the past, the companies performed well and it was later gradually increased as the industry grew.
He said he was, therefore, not alarmed by the intension of the NIC to up the capital stipulation since it was” a laudable idea.” Yet he observed that “it is also dangerous because you are likely to create a monopolistic competition.”
He emphasized that the NIC assesses the operations and assets of insurance companies to find out whether their capital matches with their liabilities and risks.
So the increment of the minimum capital requirement, he contended, will not necessarily eliminate some insurers through acquisitions and mergers.
“We need to move gradually and when companies decide to come together or merge, then it makes business sense. Customers look at the balance sheet of companies and how financially healthy they are before doing business with them,” the GIA Executive Secretary remarked.
Responding to a question about the challenges facing the association, he explained that the public have a wrong perception about insurance and do not, therefore, understand the necessity of paying premiums since the returns are not immediate and easily quantifiable.
Glover did not mince words about the current problems confronting the insurance industry. “There is need for the industry to do a lot of education. Products put in the market are not tailored to suit the right segments. We also have to do a lot of research.”
The GIA has developed a website to propagate information about insurance to the public and potential investors. It plans to undertake frequent market surveys and publish strategically periodic market reports soon. There are 23 insurance and two reinsurance companies in Ghana. The GIA, the umbrella body of all insurance companies, was formed in 1988 to promote, protect and advance the interests of its members, among other objectives.
In an interview with Business Day in Accra on Tuesday, Gabriel Glover, Executive Secretary of GIA, expressed satisfaction that Nigerian companies have garnered stakes in local insurance companies and started operations. Glover said the Nigerian companies will awoaken insurers in the country from their complacency and ginger them up to engage in keen competition.
“What happened to the banks when the Nigerians came? The Nigerian insurance companies will bring healthy competition to make the industry more proactive. I don’t have a problem with them,” he noted.
He said the National Insurance Commission (NIC), the regulator, consulted the players in the industry before the insurance law was revised and updated to bring it abreast with contemporary innovations in a globalized economy, adding that “members of the GIA understand the import of the implementation of the new law.”
He said the GIA is not averse to the implementation of the industry laws because they serve as a guide to the operators to improve their performance. But he blamed the government for not enacting and implementing appropriate rules, regulations and policies conducive for the growth of the insurance industry.
“For example, if government makes insurance of cars, all markets and business premises and public liability to have some fire insurance, and social security compulsory, then the industry will grow. Government should come out with a structuralized insurance policy for agriculture. With government policy and financial backing, that will encourage the industry,” he suggested.
Quizzed about the inadequacy and ineffectiveness of the $1 million minimum capital requirement for insurance companies, Glover argued that though the requirement was lower in the past, the companies performed well and it was later gradually increased as the industry grew.
He said he was, therefore, not alarmed by the intension of the NIC to up the capital stipulation since it was” a laudable idea.” Yet he observed that “it is also dangerous because you are likely to create a monopolistic competition.”
He emphasized that the NIC assesses the operations and assets of insurance companies to find out whether their capital matches with their liabilities and risks.
So the increment of the minimum capital requirement, he contended, will not necessarily eliminate some insurers through acquisitions and mergers.
“We need to move gradually and when companies decide to come together or merge, then it makes business sense. Customers look at the balance sheet of companies and how financially healthy they are before doing business with them,” the GIA Executive Secretary remarked.
Responding to a question about the challenges facing the association, he explained that the public have a wrong perception about insurance and do not, therefore, understand the necessity of paying premiums since the returns are not immediate and easily quantifiable.
Glover did not mince words about the current problems confronting the insurance industry. “There is need for the industry to do a lot of education. Products put in the market are not tailored to suit the right segments. We also have to do a lot of research.”
The GIA has developed a website to propagate information about insurance to the public and potential investors. It plans to undertake frequent market surveys and publish strategically periodic market reports soon. There are 23 insurance and two reinsurance companies in Ghana. The GIA, the umbrella body of all insurance companies, was formed in 1988 to promote, protect and advance the interests of its members, among other objectives.
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