Kwame Gazo-Agbenyadzie, Chief Executive of Metropolitan Insurance Company is one of the most accomplished insurance industry practitioners in Ghana, with vast expertise and experience covering both life and general (non-life) insurance. At a time of profound change in Ghana’s insurance industry, through a major recapitalization exercise, the separation of life and non-life activities, which now have to be done through separate companies, and the imminent introduction of compulsory fire insurance, his insights are invaluable, for most the biggest change has been the separation of life and non-life insurance which has forced a major shake-up in the industry have had to establish different firms for each of the two areas.
“The separation was necessitated because accounting for life insurance is different from that of general business” explains Gazo-Agbenyadzie. “Even though the previous law mandates companies to separately account for the businesses in their books, these was the tendency for companies doing well in non-life to use general business funds to subsidise the life accounts and vice versa. In the long run this can affect the security of the policy holders. Furthermore the separation was done so that companies can concentrate on the development of their life business, which is smaller as compared to the non-life sector.”
Indeed, general businesses dominance is in direct contrast to the situation in many developed economies, where the life sector is the dominant one and, as life funds are long term, plays a major role in funding the financial markets. However, even in Ghana, the life industry is now growing much faster with the former proportionate contribution to total insurance premiums rising from 12% in 2000 to about 30% in 2006.
Agrees Gazo-Agbenyadzie: “In terms of contributions to the total market share, there is a tremendous amount of potential in the life market, such as that growth in the insurance industry is being driven by the life sector. Life business has grown by an annual average of 50% over the past five years. This has been achieved as a result of new life products, improved technology and more effective sales teams.”
Actually, the number of varieties of life products available in Ghana have risen dramatically over the past decade. These range from purely protection policies to investment linked products. The challenge now is to reach more people with them.
“Our customers are both companies and individuals says Gazo-Agbenyadzie but he quickly admits that “because of the difficulty in collecting premiums, we usually target individuals in formal employment since it is cost effective to collect premiums at source. In the informal sector, because of the irregularity of incomes, the policyholder may default which will cause the policy to lapse.”
This means there is still lots of untapped potential in the rural areas; the problem being how to unlock it. “The major problem with the rural majority is the irregularity of income” he complains. “However some companies have started micro insurance schemes working with some rural banks. Benefits offered by such schemes are small as premiums are relatively small. This matter is under serious consideration by the industry.”
The insurance group which Gazo-Agbenyadzie heads stands to gain a lot from even faster growth in life insurance. At Metropolitan Life Insurance Ghana, a joint venture between Metropolitan Insurance of Ghana and Metropolitan Holdings of South Africa, a wide range of life policies are on offer. These include the Funeral Provider, Pensions Provider, Financial Provider, Child Study/Educational Provider, Master Plan and Group Benefit Plans among others.
“The separation was necessitated because accounting for life insurance is different from that of general business” explains Gazo-Agbenyadzie. “Even though the previous law mandates companies to separately account for the businesses in their books, these was the tendency for companies doing well in non-life to use general business funds to subsidise the life accounts and vice versa. In the long run this can affect the security of the policy holders. Furthermore the separation was done so that companies can concentrate on the development of their life business, which is smaller as compared to the non-life sector.”
Indeed, general businesses dominance is in direct contrast to the situation in many developed economies, where the life sector is the dominant one and, as life funds are long term, plays a major role in funding the financial markets. However, even in Ghana, the life industry is now growing much faster with the former proportionate contribution to total insurance premiums rising from 12% in 2000 to about 30% in 2006.
Agrees Gazo-Agbenyadzie: “In terms of contributions to the total market share, there is a tremendous amount of potential in the life market, such as that growth in the insurance industry is being driven by the life sector. Life business has grown by an annual average of 50% over the past five years. This has been achieved as a result of new life products, improved technology and more effective sales teams.”
Actually, the number of varieties of life products available in Ghana have risen dramatically over the past decade. These range from purely protection policies to investment linked products. The challenge now is to reach more people with them.
“Our customers are both companies and individuals says Gazo-Agbenyadzie but he quickly admits that “because of the difficulty in collecting premiums, we usually target individuals in formal employment since it is cost effective to collect premiums at source. In the informal sector, because of the irregularity of incomes, the policyholder may default which will cause the policy to lapse.”
This means there is still lots of untapped potential in the rural areas; the problem being how to unlock it. “The major problem with the rural majority is the irregularity of income” he complains. “However some companies have started micro insurance schemes working with some rural banks. Benefits offered by such schemes are small as premiums are relatively small. This matter is under serious consideration by the industry.”
The insurance group which Gazo-Agbenyadzie heads stands to gain a lot from even faster growth in life insurance. At Metropolitan Life Insurance Ghana, a joint venture between Metropolitan Insurance of Ghana and Metropolitan Holdings of South Africa, a wide range of life policies are on offer. These include the Funeral Provider, Pensions Provider, Financial Provider, Child Study/Educational Provider, Master Plan and Group Benefit Plans among others.
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