Ghana insurance regulator to expose companies undercutting premium

The National Insurance Commission (NIC) is to conduct a special audit to expose insurance companies which are engaged in premium undercutting which is affecting their ability to pay claims.

The acting Commissioner of the NIC, Mrs Nyamikeh Kyiamah, who made this known in Accra Tuesday, warned of dire consequences for insurance companies which would be found indulging in unhealthy market practices.

At a meeting with chief executive officers of insurance companies, Mrs Kyiamah said “some of those insurance firms are demonstrating doubtful commitment to the development of our market”.

Some of the firms are alleged to show no respect for the rules and regulations of the insurance business in the country and also indulge in premium undercutting, affecting their ability to pay claims.

Mrs Kyiamah said another area of concern to the NIC was the problem of huge outstanding premium debts on the books of the insurance companies.

She said the ratio of outstanding premiums to gross premiums rose from 34 per cent in 2007 to 43 per cent in 2008, stressing that “this is a serious matter”.

She explained that the result of such huge outstanding premiums was the companies’ inability to invest, which also negatively affected their solvency position.

Mrs Kyiamah said to address some of those problems, the NIC, apart from its inspection and enforcement activities, intended to work closely with approved auditors to ensure that the internal practices of insurance firms not only complied with the law but also showed a commitment to the development of the industry.

She noted that the enforcement of the rules had become more urgent as a result of the expected rapid growth in the oil and gas industry in the country.

As part of efforts to support local insurance companies, she said the NIC would design and implement a suitable risk-based supervision model for the Ghanaian insurance industry in line with international best practices.

Source: Daily Graphic