We learn how Ghana’s National Insurance Commission (NIC) is helping to support and develop Ghana’s insurance industry.

The National Insurance Commission was established in 1989 to ensure the effective administration, supervision, regulation, monitoring and control of the business of insurance, to protect insurance policyholders and the insurance industry.

Among other things, the NIC is committed to ensuring that insurance companies operating in the Ghanaian market survive, are financially sound and honour their obligations towards policyholders.

“The Commission is mandated to perform a wide spectrum of functions including licensing entities, setting standards, and facilitating the setting of codes for practitioners,” explains Dr Justice Ofori, Commissioner of Insurance and Chief Executive Officer of the NIC. “The Commission is also mandated to approve rates of insurance premiums and commissions, provide a bureau for the resolution of complaints and arbitrate insurance claims when disputes arise.”

The NIC’s other responsibilities include the provision of recommendations to the finance minister for policy formulation, supervision of practitioners, enforcement of compliance and public education and sensitisation. To achieve all these goals the development of strong relationships with regulators from other countries and international bodies such as the International Association of Insurance Supervisors (IAIS) and the Association of African Insurance Supervisory Authorities (AAISA) is essential. The NIC also ensures the conformity of practitioners to internationally accepted standards.

To do this, the Commission makes sure it only employs the best and then invests in its pool of talents.

“We hire technically and professionally qualified and competent personnel.  With the recent injection of industry-experienced tried and tested practitioners into the regulatory and supervisory framework, our manpower needs have been further strengthened” Dr Ofori disclosed. “Equal opportunity training is also included in IAIS Courses for staff of the NIC.”

A Four-Year Plan

To effectively carry out its mandate, the Commission has formulated and put into action a four-year Strategic Plan (2018-2021). This plan’s objective is to help the NIC grow the insurance industry and its contribution to Ghana’s Gross Domestic Product (GDP).

The main strategies to achieve this overarching objective include the implementation of the Motor Insurance Database (MID) to curb the leakages from the motor insurance space knowing the motor insurance portfolio alone is over 40% of the country’s total insurance premium income, the passing of the Insurance Bill into an Act to facilitate the growth and development of the industry; the improvement of the capitalisation and efficiency of regulated entities, and the improvement in compliance with the current compulsory insurances and the introduction of additional ones.

The implementation of the MID is a particular feather in the NIC’s cap, and it is clear Dr Ofori is proud of the implementation of this intervention.

“In the bid to stem the incidence of fake motor insurance in the system, the Motor Insurance Database (MID) was developed and implemented in January 2020,” Dr Ofori intimated. “The Database, perhaps one of the most commendable feats chalked by the Commission has been largely accepted by members of the insuring public.”

Another achievement of the NIC is the announcement of the new minimum capital requirements in June 2019, providing the opportunity to insurance entities to adequately prepare to recapitalise by the January 1st, 2022 deadline.

It is clear how strongly Dr Ofori feels about these new requirements.

“It will further continue to improve on an environment where insurance companies will no longer compete on pricing but the quality of their services and thereby promote a safe insurance market and engender a sound financial infrastructure and shaping the needed element of insurance service delivery – TRUST!” he insists.

Following the success of the MID, the NIC is also currently in the process of developing a Marine Insurance Database, partnering with the Customs Division of the Ghana Revenue Authority (GRA) to improve compliance with Section 37 of the Insurance Act and promoting the growth of Marine Insurance business in Ghana.

At the same time, the NIC has implemented the International Public Sector Accounting Standards (IPSAS), bringing Ghana’s insurance sector in line with global standards.

“This makes the NIC one of the few State agencies to have blazed the trail globally ahead of the set deadline for compliance with IPSAS,” Dr Ofori points out.

In working to improve standards, the NIC has also been strengthening its relationships with its key stakeholders.

“The Commission has strengthened its close cordial working relationship with key stakeholder agencies including the Driver and Vehicle Licensing Authority (DVLA), the Ghana National Fire Service (GNFS) and the Motor Traffic and Transport Department (MTTD) of the Ghana Police Service and the National Road Safety Authority (NRSA),” Ofori says. “Each of these organisations is helping to uphold the NIC’s mission of increasing public confidence in insurance in diverse ways under their various jurisdictions.”

Managing A National Risk

As well as helping to develop Ghana’s insurance industry, the NIC led the entire insurance industry made up of the Ghana Insurers Association (GIA), the Chartered Insurance Institute of Ghana (CIIG), the Insurance Brokers Association of Ghana (IBAG), the West African Insurance Companies Association (WAICA), the Ghana Insurance College (GIC) and the ECOWAS Brown Card Scheme (Ghana) in donating GHS 1,105,000 to the COVID-19 National Trust Fund during the heat of the pandemic in 2020.

COVID-19 is just one of the challenges facing the sector, but the NIC has played an invaluable role in overcoming those challenges.

“The COVID-19 pandemic and the generally negative perception of the sector have been our biggest challenges,” the Commissioner says. “This challenge has, however, been largely tackled through the introduction of technology to the practice of insurance by various regulated entities. It is the reason the industry has witnessed an upward growth in 2020 when most of the other sectors of the economy were hardly hit by the pandemic.”

This is an exciting time for the NIC, with the 2020 Insurance Bill having been passed and the final document in the process of being published. The Commission has been commended for its work in the introduction of various digitization reforms that have transformed the industry and those in the offing such as the Marine and Aviation Databases.

The NIC is also working with other key stakeholders with the view to taking up the cost of towing vehicles broken down in Accra to reduce the high rate of accidents that keep claiming lives and properties. This is expected to be replicated in the other regions of the country as time goes on.

“Indeed, the story of the NIC is being rewritten and the objective is to align it with growth and progression for the benefit of the people, and protection of policyholder interests,” Dr Ofori tells us.

He believes the Ghanaian insurance sector will develop in the future through constant education with the use of the informal sector that constitutes about 80% of the working class.

As Dr Ofori is famous for saying, “When people are well educated, they appreciate the need for insurance. That is the way we want to go”, the NIC through his leadership is not resting on its oars as it has extended its training of personnel of security agencies which is facilitated by the GIC. This is in addition to the training of 10,000 youth as Insurance Sales Executives thus creating employment and increasing the uptake of insurance across the country.