Charles Adu Boahen
Government has expressed concerns about numerous problems in the country’s insurance industry, which has performed below expectation in recent times.
Speaking at the reception of the National Insurance Commission (NIC) on Monday in Accra, Charles Adu Boahen, Deputy Minister of Finance, stated: “The insurance industry is plagued with issues in the areas of transparency of fund management, good corporate governance and consumer protection. This is a major concern to us.”
Owing to the situation, he said government, as a policy-maker, has resolved to carry out reforms in the sector.
NIC has urged to establish and enforce prudential standards to ensure that institutions under its supervision operate within a stable, efficient and competitive system.
“I expect the NIC to work with the Ministry of Finance in 2018 to pass a new Act. The Act should adequately address minimum capital needs, risk-based capital needs, corporate governance, consumer protection and transparency.
“The Act, when passed, should provide the needed legal environment for the implementation of the best regulatory practices to ensure a safe and sound insurance market that is able to support the government’s economic transformation agenda and also help lay the foundational blocks of the financing needs of the private sector.”
Mr Boahen also called for adequate capitalization of the insurance companies to ensure they operate efficiently, adding that the proposition made by the NIC to increase the minimum capital requirement is laudable.
“With the imminent increase in the capital requirement for universal banks, the insurance industry must also be adequately prepared to address challenges and handle big ticket transactions.”
Proposing the establishment of a rating agency to rate insurance companies, he said the NIC must work to attain a market insurance penetration of at least five percent in the next three years.
Board Chairman Emmanuel Ray Ankrah, in a remark, also complained about claims by policy holders, which need significant improvement in order to boost the confidence of the public in the sector.
“The sector must engage professional fund managers to ensure transparency of their funds. The brokerage sector must also be activated to facilitate insurance transactions and dramatically improve confidence in the sector.”
Regulation should be situation-based, a new regulatory regime, which is neither soft nor hard and is situation-based, is under keen consideration, as the new NIC is committed to effective and open/transparent regulation, the chairman said.
By Samuel Boadi