The total value of premiums from mobile insurance — one of the components of microinsurance (m-insurance), reached GH₵5million in 2014 from 4.3 million policyholders with experts calling on insurance companies to exploit the huge market potential.
While the insurance sector accounts for about 5 percent of asset ownership in the financial sector, penetration as a percentage of GDP remains below 2 percent in the first quarter of 2016, but experts believe mobile insurance and emerging technologies could be a catalyst for the insurance industry.
In the wake of this, experts in the insurance industry have expressed optimism that with the needed attention, microinsurance would enhance insurance growth, since both the formal and informal sectors are still largely uninsured.
Peter Osei Duah, Executive Director of Allstar Insurance Brokers and former boss of SIC, believes that insurance companies would have to be proactive, especially on the back of the growth of mobile money, which allows for unlimited reach, including to low income earners access to insurance products and services.
“Mobile insurance is the future and we will be seeing more collaborations between telcos and insurance companies. So insurance companies would have to be proactive and embrace emerging technologies like mobile money and electronic payments in selling their products,” he said.
The good thing about emerging technologies, he said, is that they bring convenience to the customer and are able to reach places where insurance companies cannot physically do business.
According to him, the coming years promise lots of excitement, especially on the back of the influx of overseas companies, which he believes could help deepen the market.
Even though there are no current figures on the growth of the sector, the Head of Supervision at the National Insurance commission (NIC), Michael Kofi Andoh said, he expects exponential gains.
On whether telcos pose any future competition to traditional insurance companies, Mr. Kofi Andoh responded in the negative. “We would be seeing closer collaborations between telcos and insurance companies in strengthening microinsurance and insurance penetration.”
Lydia Lariba Bawa, Commissioner of Insurance at a recent peer exchange programme with Tanzania Insurance Regulatory Authority in Accra, said the rapid scaling of digital financial inclusion services call for new thinking on financial consumer protection and market conducts.
In her opinion, there is the need for new regulatory and supervisory approaches to mitigate the risks inherent in such digital financial services which includes mobile insurance products.
“The rapid growth of mobile insurance products challenges us, as regulators to re-examine the consumer protection framework with specific reference to transparency, fairness and client value,” Ms. Bawa said.
She added that the insurance industry is now able to reach out to a significant majority of the insurable population owing to the growth of the mobile financial services. However, she admitted that for most of them, it is their first encounter with insurance, hence the need to effectively explore new opportunities to deepen the insurance market.
B&FT