A University of Ghana Business School (UGBS) report on the insurance sector in the country suggests that less than a third of insurance companies have succession plans. This is a concern, since it indicates that more than two-thirds of insurance companies in the country do not have sustainability plans!
So, in effect, people are paying premiums to these companies whose long-term plans are suspect. In the event of insolvency, which can be a likelihood, does it mean people’s monies would be lost much in the same way as those who saved with microfinance companies that collapsed?
How are clients’ monies guaranteed? The report has encouraged Parliament and Cabinet to work expeditiously to pass the new Insurance bill so that full legal backing is given to the planned reforms of the National Insurance Commission, regulator of the insurance industry.
From the fore-going, there is a need to strengthen corporate governance in the insurance industry and insure that clients’ monies are protected from the vagaries of a fragile industry operating within an uncertain economic environment.
We say this not because we do not have faith in the insurance companies, but lessons of the recent past from what occurred in the microfinance sector and left thousands distressed with no hope of any redress are still fresh in our minds. The commercial banking sector has not been spared such uncertainties, as we have witnessed a number of banks fold up.
Insurance companies need to be insulated from such uncertainties so that their clients’ savings and monies can be protected.