‘Make Life Insurance Attractive’

Life Insurers in Africa have been urged to develop creative products that will appeal to the public. It has been observed that insurance penetration in Africa is low compared to what pertains in the developed world.

Life insurance contributes about 4.5 percent to the Gross Domestic Products (GDP) of countries in Europe and North America, but its contribution in Africa is insignificant.

Speaking at the opening of the 2009 Life Conference of African Insurance Organization (AIO) in Accra, Dr. Kwabena Duffuor, the Minister of Finance and Economic Planning, urged delegates to develop insurance policies that would target the informal sector.

The two-day conference is themed, “Gateway to life”.

According to him, African governments in collaboration with practitioners in the life insurance industry must “as a matter of urgency create an enabling environment for the development of micro assurance products.”

“This would go a long way to increase the contribution of life insurance to GDP in Africa,” he added.

The Commissioner of Insurance, Jospehine J. Amoah criticized the fact that insurers were currently focusing on the educated urban elite, urging African insurance businesses to extend their reach to the low-income earners who were mostly neglected.

Ms. Amoah revealed that micro insurance was one of the most effective tools that could involve low-income earners financially, adding that international donors were also interested in this instrument.

Beside Micro Insurance, the Commissioner noted that Bancassurance, which would be managed by traditional insurance companies, could also serve as a useful channel for distributing insurance products.

Ms. Amoah said, “With creativity insurers, we should be able to come out with simple, affordable and easily accessible life products for both rich and poor.”

The Commissioner urged the enterprises to learn from the global financial crisis and to take urgent steps to forestall any failures in the markets like their counterparts in developed countries.

She noted that insurance companies had performed better because African economies had been only hit indirectly, stressing, “Nevertheless, the insurance company in Africa is not immune from the crisis.”

She emphasized that conventional insurers were in a stronger position at the moment while high risk-taking companies “had their finger burnt.”

Ms Amoah revealed that Enterprise Risk Management (ERM) was necessary and “an important capability that life companies need to acquire.”

Apart from the crisis, she said, life businesses had the potential since “people look for the safety, security and peace of mind in hard times.”

“Using the potential of ERM, Micro Insurance, Bancassurance and Life insurance businesses, Africa will be able to withstand the current crisis and emerge from it even stronger and bigger,” she stressed.

Mahesh Dookhee, Chairman of AIO Life Committee, was optimistic that the deliberation would give the delegates insight on the effects of the global economic melt down for other countries to build solid businesses that can withstand future shocks.

By Daniel Kuehnhenrich & Emelia Ennin Abbey