Insurance Sector in Ghana: Overview of Vanguard Assurance Company Limited

Interview with Dr. Gideon Amenyedor, Executive Vice-Chairman at Vanguard Assurance Company Limited

What is your assessment of the sector? What are the trends and major challenges?

Currently, this sector is growing rapidly. In Ghana, commercial insurance, health insurance, and pension are all regulated differently. Insurance penetration in Ghana is less than 2%, so you cannot use this figure to compare. The regulators are doing well by regulating the way that claims are paid. There are clear guidelines on how quickly you can pay claims. When you accept claims, they cannot go beyond a certain number of days. The regulators must put in certain principles and governance, making sure we come to the international level and solvency guidelines. The net effect of all those measures is that the insurance companies in Ghana are efficient. You never hear of a bail out from the regulator because they are already doing what they need to do, unlike the banking sector where we still hear of one bank after another not doing well. The insurance industry has been doing quite well. The major challenge for insurance in general in Ghana is the culture of the people. Here, we have something called reverse insurance. An event happens, and people come to pay on the spot. Insurance is the opposite, though. When an event happens, the regulator pays you. By this arrangement, the event happens, and people come to collect to pay, either a member of the family or church group, etc. This is absent from the traditional insurance from the west, where everyone is there for themselves. If you do not arrange for insurance, you are in trouble. That culture is still there but it is breaking up. Now we are seeing a nuclear family system where people are highly educated. The trend is slowly changing but it is not completely there yet, and it is one of the factors mitigating against insurance. Secondly, unlike the developed world where everyone thinks of insurance as a risk management tool, here, it is still not the preferred course. Because of reverse insurance, the capital increases and it puts a drain on the entrepreneurs because capital is not cheap. Every year, the regulator tries to increase capital, but making a blank across the board is not the way. The risk-based capital which was initiated several years ago has yet to work. Companies are analysing how to bring capital commercially to their level of risk that they put across the portfolio they are pursuing and the claims that are likely to arise. That is what should guide the regulator as to what level of capital should be possible. Now, we have about 20 companies. One company may have to bring 500,000 USD and one may have to bring 2 million USD, depending on the risk available. The levels of capital in Ghana are too high, even 5 million USD over. In South Africa, where it is a bigger market, an insurance company’s capital requirements are less than 1 million dollars. The issue is that we are locking too much capital and that is a big challenge, and something must be done. Currently, the pension law is Tier 2, where they pay a lump sum. There is a new Tier market developing, which was addressed at our last meeting with the Commissioner. The oil and gas industry is also evolving to produce another market. Beyond that, in this year of digital technology, the sky is the limit, but we must make sure that we adopt digital technology to drive the digital business. Digital technology gives the market a huge advantage. Every sector shows a trend where if you are not careful, somebody outside your sector can come in and take over. UBER, for example, has literally taken over the market and even the investment sector. Internally, we are a rich market and the sector has been growing well. 2016 figures posted show we have grown by 24% and we expect the trend to continue. This is a great industry and I am very proud to be part of it.

What are your competitive advantages? What do you bring to the market that is different from your competitors?

We are always open to partners with technology and new finance if they can take us higher or into other areas like oil and gas. We will not shut out opportunities that are out there.

Our competitive advantage lies in the fact that we are the first to innovate. Everyone would agree that the most innovative company in Ghana is Vanguard Assurance. We have introduced a number of products that are tailor made to specific customers, such as Ladies Kitchen Insurance which pays for accidents when you are injured in the kitchen cooking. We were the first to introduce Onboard Protection Plus. During election campaigns, politicians go all over the country and there is a high risk of accident. Beyond policies, we are not only looking for a product line, but we want to make the payment claim process a delight and to start using digital technology. Vanguard has brought two top notch claim policies into place. One is a form of telemarket insurance processing locally. We are the first to bring this to Ghana. By introducing this, we are pushing even higher than the international market. You fit a tracking device in your car and when there is an accident, the impact will automatically send an SOS to the company. There is no need for the client to send us a notification. We have gone beyond that and developed an app where with just a click, the app sends that notification. For the first time in the insurance industry worldwide, Vanguard has developed what we call the Fire Alert app where we collaborate between Vanguard and the fire service. When there is a fire at your building, you click on that app and it sends an immediate notification to Vanguard and the fire service at the same time. The launch was very successful. The effect is that it is not just calling on your insurance in times of difficulty, you are also calling the fire services to rush to your scene. Fire services will come and put out the fire and, on your part, Vanguard will also be there to work and make assessments. One of the documents we require from clients when there is a fire is the fire services’ report. In Ghana it could take an average of three months to receive it, and that delays your claim. With this arrangement, we cut that down to three days, only 72 hours. It makes your claim go much faster. The broader goal of Vanguard Assurance is to make sure the claim process is a delight. On the motor side, when you have the digital auto insurance from Vanguard Assurance, you do not have to give the traditional notification because when there is an accident, a letter will automatically be sent to us. Vanguard dispatch will be on the scene to assess the loss and take pictures. You do not have to give us a police report because we have seen everything. We are now pursuing a process where we do not even have to send an assessor to the scene, but we will use digital technology and send drones. We had some roadblocks concerning security challenges nationally, so we have dropped that project for the moment. We have seen a lot of drone companies coming up, so we will pick that up again very soon. Our goal is to get to the highest level using digital technology. And we even want to get the writing in claims process digitalized in the future. It will make it more accurate and eliminate human error. Those are our long-term goals. By doing this, we are already the most innovative and efficient company.

Are you looking for partnerships?

Right now, we have been talking to one particular partner in South Africa. If everything goes well, by the end of May they will be partners with us. We need a lot of partnership in this area. We have what it takes but we want to become world class. We want something that will be Ghanaian or African, but something that will also be world respected. We are not only looking at something small, we want people to come all over the west to study what we are doing here. In addition, our reinsurance is doing well. We are the biggest reinsurance provider worldwide. We have two here, Africa Re and Ghana Re. We will also work with others who know that they want to come with us in the same direction. Once we talk and we realize that we have the same vision, we welcome them onboard.

How are you looking for partnerships financially?

Financially, we are doing well. We meet the regulatory requirements. We are always open to partners with technology and new finance if they can take us higher or into other areas like oil and gas. We will not shut out opportunities that are out there.

You are currently number three or four in the country. Geographically, how does Vanguard stand?

We have branches all over Ghana. Ghana has ten regions and we have branches in nine. The tenth region is not well developed, so it is serviced by the ninth branch. Insurance deals with a high level of commercial activity. We have agents and now that we are digital, you do not need to have a physical presence. You can assess us on the web by downloading our app to do business quickly.

In the medium term, two to three years’ time, what would you like Vanguard to be if everything goes according to plan?

In the medium term, we want to become number two in terms of market share and number one in terms of profitability. We want to use technology to drive insurance far better than any African country, at a level higher than even South Africa. With your mobile phone, you should be able to buy insurance and process claims. For us, insurance is not just about purchasing the product. Until you can do that quickly and feel like you are being compensated, we are not finished. Our goal is to drive insurance using digital technology, not only getting people to buy insurance but getting their claims paid. We will also focus on profitability and market share.

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