Coronavirus hinders insurance penetration growth

Insurance penetration in Ghana may not witness an increase as earlier projected following the coronavirus outbreak, the National Insurance Commission (NIC) has said.

According to the Deputy Commissioner of Insurance at the NIC, the sale of life insurance policies to the public by insurance firms has drastically reduced in the wake of the pandemic.

Michael Kofi Andoh, speaking in an interview said the coronavirus-related partial lockdown had since impacted negatively on insurance agents selling life insurance policies to the public.

“An analysis of our distribution channel tells us that about 65% of life insurance policy is sold by insurance agents and so when you had this lockdown, social distancing measures, you have businesses slowing down. We are expecting that both life and non-life policies will be impacted because the day to day selling goes more with the life policies so we are expecting that the life will be hit harder than non-life insurance policies,” he lamented.

Despite the impact, Mr. Andoh said the resumption of business activities has culminated in a positive outlook for the sale of non-life insurance policies.

“The feedback we have had from the non-life insurance company so far is that it has been very useful especially during the lockdown. This is because insurance companies would sell motor insurance policy without going to their offices or they could do all that and issue their stickers on the motor insurance database. So, it has been a very big positive for the business continuity aspect of the non-life insurance policies,” he added.

Ghana’s insurance sector which currently has a penetration rate of 2 percent coupled with the coronavirus could adversely affect the insurance sector in general.

But to deal with this, the NIC on January 20, 2020, began the implementation of the Motor Insurance Database (MID) policy to clamp down on the menace of vehicles with fake motor insurance stickers plying on roads.

The Commission issued a directive giving all insurance companies to migrate all their information unto a MID system.

Meanwhile, over 272,000 stickers have so far been electronically issued following the MID’s introduction.

This follows an initial 78,000 newly insured stickers issued as of February 17, 2020 since the insurance regulator introduced and implemented the policy.