- To strengthen insurance diffusion
- Offer more protection to workers
- To compensate victims of disasters and accidents
A new insurance bill has been approved by Cabinet to replace the current Insurance Act which has been in existence since 1958 and has lost its credence in modern Ghana insurance practice.
The bill which was submitted by the National Insurance Commission (NIC) if passed into law, will strengthen insurance diffusion as it will add another three compulsory insurances to the already-existing two which are the Motor Vehicles (Third Party Insurance) Act, 1958 (No. 42) and Insurance Act, 2006 (Act 742) – a revision of the former.
The move is anticipated to vitally impact the sector as NIC expects the current insurance penetration rate to increase from 29 per cent to about 40 per cent in the next 3 years. The three new mandatory insurances to be introduced are: Public Liability Insurance, Group life and Professional Indemnity Insurance.
Speaking in an interview, the Deputy Commissioner of Insurance, Michael Andoh explained the importance of these three new mandatory insurances starting with the Public Liability Insurance.
“The Public Liability Insurance will be very critical to the nation. People who are going about their everyday business and other people’s negligence affects them accidentally have to be compensated. Sometimes, the people whose negligence they suffer from don’t have what it takes to look after them; so, should their welfare depend on whether whoever caused that negligence has the ability to raise money to look after them? That is a bit difficult”.
He added that this insurance will be mandatory for certain sectors of the economy in which activities can lead to mass destruction of life and property, should there be a disaster.
“If you have a filling station and it explodes and kills a lot of people or injures a lot of people, you don’t have that kind of money to take care of them all; but should we waste their lives because that has happened? That is why we need these kinds of insurance to protect innocent third parties.”
Citing some previous incidents, he emphasized the need for the enactment of these new policies under the new insurance bill.
“The victims of the Melcom disaster are there; the June 3rd victims are there; the Atomic Gas explosion and Trade Fair gas explosion victims are there with little financial support after incidents which were no fault of theirs. Some of them may be rich and be able to take care of themselves, but some of them will also be going through some hard times and have nowhere to go for support. That is why the new insurance act provides some of these insurances.”
He further indicated that sectors like Fuel and gas stations, stone quarries, among others are expected to compulsorily buy this insurance due to the risk factors and the high probability of unexpected misfortune.
Mr. Andor in explaining the Professional Indemnity Insurance said this is suitable and required of certain kinds of professionals so that victims who may suffer due to their inattentiveness and mistakes may be duly compensated.
Lastly, he indicated that it will be mandatory for all employers to buy Group Life Insurance for employees. This will be an enhancement of the workman’s compensation.
“The workman’s compensation is already there; the issue is that even though it requires employers to compensate employees who die or get injured while doing their job, it doesn’t compel them to insure that liability. What this Act will do is compel employers to cover these liabilities, so that when an accident occurs, they just have to fall on the insurance company to compensate their employee.”
