Data from the National Insurance Commission (NIC) has stated that insurance premiums generated through bancassurance in 2020 was GH¢271 million. This amount is a huge leap and almost double the amount recorded in 2016 which stood at around GH¢150 million.
The data further revealed that the percentage of life insurance premiums generated through bancassurance rose from 7 percent in 2016 to 13 percent in 2019; it is hoped that the figure would further rise in 2021.
Bancassurance is an arrangement between a bank and an insurance company allowing the insurance company to sell its products to the bank’s client base. This partnership arrangement can be profitable for both companies. According to the NIC, bancassurance has been one of the reliable channels of growing insurance penetration and since the granting of the first license in 2007, it has shown great growth prospects.
Speaking in an interview with the B&FT at the official launch of the bancassurance partnership between Allianz and UBA Ghana, the Deputy Insurance Commissioner, Michael Kofi Andoh said: “Insurance is usually sold not bought. Even though people need insurance, nobody wakes up wanting to buy insurance. As a result, we thought that since everybody goes to the bank, it will be easier for the banks to sell insurance to the people.
The bank is most likely to come in contact with people who need insurance and have what it takes to buy insurance, and therefore we thought it was a good idea. We license the first one in 2007 and ever since then a lot of them have come on board. It is a very good strategy and it is helping. All over the world bancassurance is helping insurance companies to use the banks network to sell to people who need insurance.
As the figures I gave out, you can see that the premiums that are sold through the bancassurance channel is gradually growing and we expect it will improve as we get into the future.”
He noted that, the commission has over the years been working hard to find sustainable ways to grow the insurance industry and enable it to play its expected role in the development of the nation. It recognized that growing the insurance industry requires attention to be paid to a number of things.
The first is to guarantee need-based products are designed to help the average Ghanaian mitigate the risks that they face in the occupations and day to day lives. Secondly, the need to prove the value of insurance to the insuring public.
“There is the need to delight the customer right from the point of sale to the point of claim. We must be seen to be concerned about their grievances and frustrations and refrain from using flimsy excuses to repudiate their claims.
But more importantly, we need to develop innovative, suitable and cost-effective distribution channels that enable the product to be easily and conveniently delivered to the consumer. This is where bancassurance comes in. Again, profound technological innovations such as blockchain technology, digitization, and artificial intelligence are fast disrupting the insurance status quo. The only way out for the insurance industry is therefore to join the innovation wagon.
Even though brokers and agents have been and still remain the major channels of insurance distribution in Ghana, the trend is rapidly changing. Bancassurance and the mobile phone are the current emerging forces,” Mr. Andoh noted.