By Justice PEPRAH
One of the biggest problems facing the insurance industry in Ghana is low public awareness and understanding of insurance products. Many people lack knowledge about the benefits of insurance, leading to misconceptions and reluctance to purchase policies.
Additionally, issues such as trust in insurers, lack of proper communication of and adherence to regulatory frameworks, and limited product offerings further complicate the landscape, hindering growth and penetration in the market.
I have tried to make several proposals notably:
- a) Insuring government vehicles, which are currently excluded from the Motor Third Party Risk Act of 1958.
- b) Advocating for unemployment insurance, a proposal that was mentioned sometime ago by the government of Ghana in his address to the people when there was COVID.
- c) Publishing a case for separating the regulation of health insurance (NHIA) from service provision (NHIS) and others.
Based on my industry experience, insights from other jurisdictions, and extensive reading, I firmly believe that enhancing professionalism and establishing a clear career path in insurance agency work can address some of the industry’s significant challenges related to trust and public understanding of insurance products.
This approach would not only expand the insurance sector but also create substantial employment opportunities for youth, particularly considering there are over 2,000 agents currently operating without formal recognition as professionals. This will also support the development of the Ghana Insurance College, as this institution will be essential for offering these courses for the agents or anyone who wants to become and agent or takes insurance agency as a career and a profession.
I recently spoke with insurance agents who have been in the industry for over ten years, and they expressed significant concerns about the frequent changes in contract agreements imposed by their insurers.
These changes create challenges in their work, especially as new high targets are set. If agents fail to meet these targets within the specified time frame, their contracts can be terminated, regardless of their years of service. In Ghana, agents are tied to their insurance companies, which submit their names to the regulator for registration.
This means that the same insurer can also initiate contract terminations. For agents who have dedicated over a decade to their work, this uncertainty raises questions about the fate of their established client relationships and businesses.
Due to these challenges, many young people entering the field view insurance agency work as a temporary option. It’s well-known that much of the public complaints, misunderstanding and dissatisfaction in the industry stems from business conducted through the agency channel. Often, agents prioritize their commissions over the best interests of their clients, leading to scanty information provided and this brings lack of trust.
The insurance regulator, under the Insurance Act of 2021 (Act 1061, Section 136), has outlined sanctions for agents who fail to communicate clearly, accurately, or fairly, or who mislead clients. However, many agents do not feel they have a profession to protect, which diminishes accountability.
Additionally, their knowledge of insurance products is often limited, as they primarily relay information they’ve been instructed to share, lacking a deep understanding of policy terms and conditions. Many insurers hesitate to invest in training their agents, fearing that they may leave after receiving that investment.
So, where lies the solution to these challenges? This is where my proposed initiative comes into play.
1) Establish a professional designation for insurance agents, such as the Chartered Insurance Agent of Ghana (CIAoG), through the Chartered Insurance Institute of Ghana.
2) The Ghana Insurance College should develop certificate, diploma, and advanced diploma courses to support the CIAoG professional pathway.
3) Once agents achieve the advanced diploma and meet the required years of experience, they can be awarded chartered status.
4) After obtaining chartered status, agents can be recognized as independent professional agents by the National Insurance Commission, with regulations limiting the number of insurers they can represent at any given time, distinguishing them from brokers.
- a) The significance of this initiative is that it creates a clear career progression for insurance agents.
- b) Permanent staff may seek to become Chartered Insurance Agents due to the flexibility it offers in managing their time.
- c) Enhanced knowledge will empower agents to uphold professionalism and ethics in their work.
- d) The regulator can implement stronger sanctions for agents who engage in mis-selling, including license revocation and suspension of commission payments for a specified period.
- e) This initiative will create employment opportunities for youth and contribute to the expansion of the insurance industry.
Overall, this approach aims to change the public’s perception of insurance agents, fostering greater understanding and trust, ultimately driving growth and market penetration. I am open to discussion, and I plan to share this proposal with the Commissioner of Insurance, the President of the Chartered Insurance Institute of Ghana, the Director of the Ghana Insurance College, the President of the Insurance Agents Association, and other relevant organizations.
The writer is a Chartered Insurance Practitioner holding designations from the United States of America, United Kingdom, and Ghana with over seventeen (17+) years of insurance industry experience.
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