Cabinet has approved a new bill presented to it by the National Insurance Commission (NIC) to replace the current Insurance Act, which has existed since a year after independence and has outlived its relevance in modern insurance practice.
The bill, if passed into law, will deepen insurance penetration as it will add another three compulsory insurances to the already-existing two – a move that is expected to hugely impact the sector as NIC projects the current insurance penetration rate to increase from 29 percent to 40 percent in the next 3 years. The three new mandatory insurances to be introduced are: Public Liability Insurance, Group life and Professional Indemnity Insurance.
Deputy Commissioner of Insurance, Michael Andoh – explaining these three new mandatory insurances, told the B&FT that: “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.
“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 the sectors which will have to compulsorily buy this insurance are Fuel and gas stations, stone quarries, among others.
Explaining what will go into the Professional Indemnity Insurance, Mr. Andor said certain kinds of professionals will be required to buy insurance, so that if they are negligent and make certain mistakes the people who suffer as a result can be compensated in some way.
Also, 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,” Mr. Andoh explained.
Source: The Business And Financial Times