…has small base of an educated, trained, and experienced workforce
Insurance companies in Ghana, a new World Bank report says are inefficient. The report also cited other countries in West Africa where the insurance business is small and inefficient.
The recently released World Bank report titled “De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Services,” says insurance companies in Ghana and other countries within the West African Monetary Zone (WAMZ) are inefficient and too small in operating.
According to the report, there are far too many small insurance companies competing for premiums and that only one company within the entire WAMZ region, Nigeria’s NICON, has a gross premium base in excess of $100 million.
“The insurance markets of the WAMZ countries are not efficient,” the report stated.
With the possible exception of Nigeria, the World Bank says there seems to be a relatively small base of an educated, trained, and experienced workforce for the insurance industry and the insurance regulators in the region.
The report however, noted that insurance regulatory supervisors in Ghana and Nigeria are best staffed and equipped even though the degree to which the industry is supervised varies significantly across the countries.
The region’s regulators share little information among themselves the report says. “There are no formal Memorandum of Understandings (MoUs) whereby information could be shared.”
Harmonization and improvements in cross border trade, the report argues could be brought about by implementing certain courses of action, such as a common approach to supervision, licensing, and claims payments.
Each of the WAMZ countries has its own set of insurance laws and regulations but authors of the report claim, “The laws presently do not take risk-based capital into consideration—the emphasis is on absolute capital.”
The relatively high levels of capital requirements in Nigeria impose a significant barrier to entering the insurance market for insurers from other WAMZ countries, the report said.
It adds “Space for regulatory arbitrage in respect of capital requirements is negated by the fact that branch operations are not permitted in any of the WAMZ countries: separate corporate structures need to be established.”
By Ekow Quandzie
I totally agree with the report from the World Bank concerning Insurance companies in Ghana and other countries within the West African Monetary Zone (WAMZ) are inefficient and too small in operating.However,comparing Nigerian population to other West African countries,Nigeria has a large population more than 1/5th of Ghana population.So,I think the population likewise also shoots up their gross premium base.My Insurance lecture always talks about making some amendments to our Insurance Act and also increasing the minimum capital requirement over and above what they are being required now to about $5 million.And with this I think any Insurance company trying to penetrate into the industry will be more serious and efficient.I also strongly advice that our Insurance firm should take up to the merging of Insurance companies especially the smaller firms.Insurance in Ghana and other West African countries have not been more efficient and effective into educating and targeting the rural areas.It’s high time we popularize Insurance all over the length and breadth of the country and not only concentrate on the rich and those of a higher status.We need to do more than what we are doing now.