The National Insurance Commission (NIC), has stated that processes towards the passage of the new Insurance Act to replace the current one which has outlived its relevance in modern insurance practice, have not been abandoned.
The current Insurance Act, 2006 (Act 724), has been in existence for more than ten years since it replaced the Insurance Law, 1989 (P.N.D.C.L. 227).
According to the Commission, Cabinet has already approved the Insurance Bill 2020, and meetings have begun with the Finance Committee of Parliament to discuss the Bill.
Speaking at the Annual Conference and Fourth Annual General Meeting of the Chartered Insurance Institute of Ghana, the Head of Supervision at the NIC, Seth Eshun, outlined the need for a new Insurance Act.
“Why do we need a new Insurance Act? We’ve issued a number of documents that we call guidelines. Technically, guidelines don’t have force of law, but we have been able to work with it for this far. We’ve issued things like the Sovereigncy Regime. All those things are guidelines and technically, they need to be within an Act or framework for it to work. So we are introducing a new law because all those things were issued because there were gaps in our legislation so we needed to fill those gaps.”
“…So the first thing is that, it is making some of these things we have been applying and using for a while, to give it a better legal grounding to be able to stand. The other thing is that we issued this Act 724 in 2006, and since then, there have been a number of improvements in legislation in international best practices. So we want to move ourselves and try applying what we call international best practices. And the other key reason is that we want to see our insurance industry grow,” he explained.
The Insurance Bill, if passed, will among other things, deepen insurance penetration as it will add two mandatory insurances to the already-existing three.
The two new mandatory insurances the NIC seeks to introduce are Professional Indemnity Insurance and Group Life Insurance.
The NIC also seeks to increase the scope of regulated entities in the space through the passing of the Bill.
The new Act would also help improve the fortunes of the local marine and group life insurance businesses, while the development of the annuities market would help pensioners to secure decent incomes in their old age.
NIC pushes for review of Motor Insurance Act
The National Insurance Commission had earlier been asking for a review of the portion of the Motor Insurance Act, 1958, which exempts government registered vehicles from buying insurance policies.
According to the Commission, the Act in its current form, does not offer adequate protection to persons who may suffer damages when they are hit by state-owned vehicles, hence the need for the review to make it compulsory for government agencies to insure all their vehicles.