Regulators urged to improve supervision of Mobile Insurance Market

December 02,  2019

Regulators of the digital finance and Mobile insurance ecosystem has been urged to improve their supervision of the sector to protect consumers against risk of fraud to improve consumer-confidence, experience and preferences to foster growth of the sector for the mutual benefits of all players in the industry. This was disclosed in a research report commissioned by GIZ in collaboration with the National Insurance Commission (NIC), Bank of Ghana (BoG) and Consultative Group to Assist the Poor (CGAP) on Information Disclosure and Transparency, Fraud, Customer Recourse and Client Needs in the Mobile Insurance Market in Ghana and undertaken by CUTS Ghana and Nielson.

Presenting research findings of the survey to stakeholders in the financial and mobile insurance sector, lead consultant and country director for CUTS Ghana, Mr Appiah Kusi Adomako underscored the need for various regulators in the mobile insurance industry to be more vigilant in their supervisory role because Ghana has the potential to emerge as a ‘break out’ country with respect to digital financial services in Africa. “Overall, the Mobile insurance market has collected a total GHS 78 million in premiums in 2018 as against GHS 5 million in 2015. This impressive rise in premium shows that the industry has the potential. In order to tap into this potential there is the need to garner a deeper insight into the underlying conditions for digital finance – including literacy, numeracy, phone ownership, and phone usage – which are yet to be leveraged fully at a large scale.” Mr Adomako added.
According to Mr Adomako findings from the survey revealed that Mobile Money is the most used financial product in Ghana whilst Insurance products comes 3rd. “Among the Digital Financial Products/Services, Mobile Money (96%) is the most popular in Ghana followed distantly by Mobile Insurance (54%). To comprehensively deal with fraud, insurers need to adopt a proactive strategy toward fraud detection by instituting policy frameworks that reflect a fraud-detection strategy through the implementation of processes that identify potential fraud early and provide the ability to move quickly when fraud is detected to protect the interest of consumers” he added.

Mr Adomako also highlighted the urgent need for all players in the industry to strengthen systems and educate consumers during signing on of products to reduce regular complaints due to automatic policy renewals without customer consents, miscommunication of policy terms to customers, misleading of customers into signing on to particular policies or signing customers to multiple packages without their consent, over-deductions, claims processing procedures and claims rejection.
Touching on customer recourse mechanism instituted by M-insurance providers, Mr. Adomako opined that less than two-fifth (39%) of m-insurance providers have documented policies for customer complaints with more than half (58%) of them communicating these policies to staff and agents during training, 19% through brochures, 10% through SMS messages and 5% during staff meetings (5%).

Addressing stakeholders at the workshop, Mr. Gerald Guskowski, Coordinator, and Network for Inclusive Economic development, GIZ said the use of digital technologies in accessing financial products and services is fast becoming the preferred option for many due to the role these technologies are playing in facilitating financial inclusion. Notwithstanding, the associated consumer risks such as fraud and cyber security threats cannot be overlooked and needs to be addressed. He called on all industry players to be vigilant and collaborate with each other to minimize the risk their clients face.

The Commissioner of Insurance at the National Insurance Commissioner (NIC), Mr. Justice Ofori also underscored the role Mobile insurance has played in bridging the financial inclusion gap and enhancing access to insurance and reducing barriers to distribution for the low-income population. “Insurers in partnership with Mobile Network Operators are providing with access to a large, concentrated client base and an established network of distribution points which makes interaction with these clients easier. Through the mobile channel, clients can subscribe for their products, make payment and also make claims without visiting a physical structure. This virtual channel has made micro-insurance more accessible” he added.

Mr. Ofori also said although mobile insurance has displayed a strong viability in increasing penetration of insurance, it has resulted in new risks for the regulators and consumer. He called on regulators to do more in terms of their supervision and collaborate with all players in the financial space to protect consumers from high risk of fraud and others.

The workshop was attended by representatives from the Bank of Ghana (BoG), National Insurance Commission (NIC), Civil Society Organizations, Academia, Insurance Providers, and other financial institutions.

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