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Mr Ivan Abubakar Avereyireh, former President, Ghana Insurers Association (GIA), has called for a Gh¢ 1 million penalty payment as a punitive measure to curb undercutting in the insurance industry.
Undercutting, a practice where an insurance company offers lower premium than its competitors to attract more customers, he said, had gained roots in sales of insurance products and must be nipped in the bud.
Delivering a keynote address at the 2025 Ghana Insurance Summit held at Tema, Mr Avereyireh, said the 5000 penalty units which amounts to Gh¢ 60 000 placed on any offender was not deterrent enough since most companies could pay without the knowledge of their boards.
The Summit which brought together industry players and other relevant stakeholders from across the country was on the theme: “Upholding High Ethical Practices: Tracking Undercutting for Long Term Sustainability.” He urged the National Insurance Commission (NIC) to consider raising the penalty payment and pushing for an amendment of the provisions in the Insurance Act, 2021 (Act 1061), which talk about the 5000 penalty units.
“We are saying that after punishing the companies, we should identify the individual who signed that document that undercuts and single him out for punishment. The Chartered Insurance Institute of Ghana (CIIG) should be able to take the culprit out of the books, then people will know that if the undercut happens, they will be punished and will refrain from doing it,” he said.
The former President said undercutting had dire consequences on the economy since the insurance sector served as the backbone of it, adding that the practice was making the companies weaker in terms of charging the right premiums and paying the right claims.
“If you have weaker insurance companies and the unfortunate events take place and we don’t come in to pay the claimants who genuinely came to take the products thinking that when it happens we shall be by their side, then you can imagine how disappointing it will be for them,” he said. Mr Avereyireh who is also a former President of West Africa Insurance Companies Academic Board (WAICA), said the sector players had failed to act right and urged them to use innovations, artificial intelligence (AI) and other technologies to promote their products.
He said: “Let’s be ethical and charge the right premiums that the National Insurance Commission says we should charge. Let’s also use product differentiation, quality service, very good customer service to differentiate us from other insurance rather than trying to cut back on the correct premiums.”
Dr Abiba Zakariah, Acting Commissioner, NIC, said they would be hard on those committing the offence, especially as most people had been yearning for lasting situations, adding that in as much as they sought to enforce the law, they needed to continue having the conversation around it.
“If tougher sanction is what it takes to get the solution, we wound not shy away from doing that. But sometimes, it is not only about the fines and charges but punishing people to the fact that they cannot operate,” she noted. The Acting Commissioner also said one of the ways to curb the practice would be to have industry players undertake fit and proper test to see how professional and ethical they had been.
Source: GNA
