Guidelines for insurance premium collection out soon
By Elorm DESEWU
The National Insurance Commission (NIC), the statutory regulator of Ghana’s insurance industry, the Ghana Insurance Association (GIA) and the Ghana Insurance Brokers Association (GIBA) are currently developing premium collection guidelines for the insurance industry.
The guidelines, which are intended to provide a framework for insurance companies to adopt a standardized approach in premium collection, would be ready this year, BusinessWeek has learnt.
Currently, the NIC is in discussions with other major stakeholders with regard to fixing the rates on the premiums.
Insurance chieftains that BusinessWeek spoke to say the guidelines would increase the level of transparency as well as ensure policyholder’s protection in the country.
Currently, up to 50% of premiums recorded by general (non-life) insurance firms as having been generated through insurance policies they draw up are not actually collected.
In effect, such policies are drawn up and issued on credit, much of which is never actually paid.
Under the new guidelines being drawn up, to avert the situation, premiums charged on the two compulsory classers of insurance, motor and fire (for commercial buildings) respectively would have to be collected strictly on cash basis, i.e. no credit terms. For all the other classes of general insurance, at least 40% of the premium charged would have to be collected at the time the policy goes into force.
An insurance premium refers to the amount of money that is stipulated by an insurance company that a policyholder must pay in order to maintain the active coverage of the insurance.
Insurance premium are usually collected in various schedules. One can opt to pay it monthly, quarterly, semi yearly or yearly.
However, a policyholder who fails to make the scheduled payment is in danger of having his insurance policy cancelled by the insurance company.
By Elorm DESEWU
The National Insurance Commission (NIC), the statutory regulator of Ghana’s insurance industry, the Ghana Insurance Association (GIA) and the Ghana Insurance Brokers Association (GIBA) are currently developing premium collection guidelines for the insurance industry.
The guidelines, which are intended to provide a framework for insurance companies to adopt a standardized approach in premium collection, would be ready this year, BusinessWeek has learnt.
Currently, the NIC is in discussions with other major stakeholders with regard to fixing the rates on the premiums.
Insurance chieftains that BusinessWeek spoke to say the guidelines would increase the level of transparency as well as ensure policyholder’s protection in the country.
Currently, up to 50% of premiums recorded by general (non-life) insurance firms as having been generated through insurance policies they draw up are not actually collected.
In effect, such policies are drawn up and issued on credit, much of which is never actually paid.
Under the new guidelines being drawn up, to avert the situation, premiums charged on the two compulsory classers of insurance, motor and fire (for commercial buildings) respectively would have to be collected strictly on cash basis, i.e. no credit terms. For all the other classes of general insurance, at least 40% of the premium charged would have to be collected at the time the policy goes into force.
An insurance premium refers to the amount of money that is stipulated by an insurance company that a policyholder must pay in order to maintain the active coverage of the insurance.
Insurance premium are usually collected in various schedules. One can opt to pay it monthly, quarterly, semi yearly or yearly.
However, a policyholder who fails to make the scheduled payment is in danger of having his insurance policy cancelled by the insurance company.
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