Ms. Lydia Lariba Bawa, Commissioner of Insurance, Nations Insurance Commission, has announced that the insurance industry wrote GH₵1.02billion in premium in 2013 -- of which 40% was uncollected.
She pointed out this indebtedness has impacted negatively on most of the companies’ liquidity and solvency positions.
However, the Commissioner explained that it is also heartening to note that the new premium directive has changed the insurance industry in Ghana, gently enhancing the cash flow position of insurers.
The Commissioner dropped this hint at the fifth Cedants’ awards night organised by Ghana Re-Insurance in Accra recently.
She indicated that even though the inflow of businesses may be slowed a bit, insurers can be certain about the risk they are carrying in their books at any particular point in time
“We have compared the current situation with the Nigerian market and noted that their market experienced a similar decline as clients had to review their budgets in order to pay premiums upfront. Equally, we expect our situation to improve over time as it happened in Nigeria,†the commissioner narrated.
She explained that one of the objectives of the no premium no cover directive is to reduce credit risk of insurers.
Bawa noted that reports indicate that some intermediaries have decided to introduce credit terms to their operations by paying premiums upfront for their clients, but advised all those engaged in such practices not to resort to credit as a competitive tool as they will inherit the same liquidity problems.
She pointed out that payment of genuine claims in a prompt and fair manner is another key priority in the Commission’s efforts to raise public confidence in the insurance industry.
More significantly, in view of this and alongside the “No premium, No cover†directive, the Commission has introduced guidelines on claims management for non-life insurers.
The guidelines spell out timelines for the settlement and payment of genuine claims. Insurers have a maximum period of four weeks to pay claims upon receipt of the required documents in support of the claim.
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