Managing Director's Speech at the Gambia


PROMOTING PUBLIC TRUST IN THE INSURANCE INDUSTRY BY BUILDING ADEQUATE HUMAN AND FINANCIAL CAPACITY Presented By Mr. Stephen Oduro Managing Director Of SIC Insurance Company Limited – Ghana at the 2018 Annual General Meeting of the West African Insurance Companies Association in The Gambia.

Mr. Chairman,

The Secretary General and CEO of the West African Insurance Companies Association, Colleagues in the Insurance Fraternity, Distinguished Ladies and Gentlemen, I bring to you greetings from SIC Insurance Company in Ghana and I would like to thank the Association for asking me to present this very important paper on the topic:  “Promoting Public Trust in the Insurance Industry by Building Adequate Human and Financial Capacity”

The insurance business, perhaps more than any other, thrives on trust and commitment.  Any contract between an Insurer and the Insured is a contract of utmost good faith and as such requires honesty and trust from both parties.  For this to happen successfully, the insurance sector must first win the trust and confidence of the insuring public.

Unfortunately, the common challenge facing the industry is low public confidence coupled with a deep seated mistrust of insurance companies.  Some of the reasons for these issues can mainly be attributed to:
1. The very high expectations of members of the public of insurers.
2. Greater awareness of how insurance operates elsewhere in the world;
3. The increasing level of education with its associated awareness of legal rights.
4. Bad claims experiences encountered by policyholders; 
5. Lack of clarity of insurance policy documents,

The above issues provide a perfect environment for breeding suspicion in the minds of clients.  
Mr. Chairman, there are two fundamental questions that if properly addressed will help minimize the erroneous public impressions about the insurance industry.  

These are: 
1. Can insurance companies live by their promises to pay genuine claims promptly? 
2. If a policyholder or claimant is aggrieved, are there provisions or avenues for redress without the need to go through cumbersome legal processes?
My response to these questions is a big “YES”. I believe your response may even be a bigger “YES”. That being so, what then is our problem as insurers? Putting the question the other way round “What then is the public’s problem of insurers?
Mr. Chairman, distinguished ladies and gentlemen. It is a common knowledge that majority of those who purchase insurance products do so either because they:
-   require some form of protection, or. 
-   are compelled (either by law or other contractual provisions/conditions) to buy 

 This form of involuntary buying of a product is what I would like to refer to as “grudge purchase” that is, buying when you would have wished not to buy. By that I mean all things being equal, people would wish they do not have to purchase insurance, except that they feel compelled by circumstance to act against their wishes, and so they grudgingly purchase insurance for say contractual or to meet regulatory requirements. So when their expectations are not met, their level of frustration goes up through the roof. They bad-mouthed all insurers and so provide more fuel to public mistrust of insurance.  

What Is The Level Of Mistrust?
Mr. Chairman, on the part of the insuring public, the level of mistrust is best measured when you sample opinions randomly.
 Comments you hear are like;
- Insurance people are quick to take the premiums but when it comes to paying claims they keep dragging their feet, and sometimes even refuse to pay.
- Insurance people charge huge premiums and only reduce it when another company offers a lower premium for “the same risk”.
- Without a solicitor, you cannot make an insurance claim.
- Once the premium is taken, you do not see them until renewal is due.
From the insurers point, at certain times, we tend to be very rigid with the claims because we suspect the client has likely exaggerated the claim quantum or has faked the entire claim altogether.
How Do We Promote Public Trust In The Insurance Industry?
Mr. Chairman, promoting public trust is a herculean task but not insurmountable.  An effective promotion of the following will be a sure step in the right direction in addressing this critical issue:
- Effective communication at the point of selling and at the time of claim.
- Professionalism in handling clients at both underwriting and especially claims handling stages.
- Changing the attitude of our front line staff, 
- Being innovative in our approach to business by embracing technology to enhance service delivery 
- An effective and robust Regulator to ensure and monitor standardization across the industry as well as create awareness to the public.
Building Adequate Human Resource Capacity
Mr. Chairman, there could be no other effective approach to tackling issues of the industry than building adequate human capacity. A systematic attempt at training and retraining the human resource base across the industry is key to promoting the insurance industry.
This industry approach should cut across the operational triangle of the industry.
The three [3] stakeholders are:
- Insurers 
- Intermediaries
- Regulators
The approach must be holistic and most importantly be on a sustained basis to ensure that technology does not overtake our industry.

It is very critical that the Human Resource base of the insurance industry is well motivated, adequately resourced in terms of job tools and competitively remunerated to ensure they acquire the inner drive to deliver effectively and efficiently.

The doctrine of UTMOST GOOD FAITH which is the operational pillar of insurance must be emphasized at all levels of training. 

Need For Financial Capacity Building
Mr. Chairman, distinguished ladies and gentlemen. In the absence of an adequate and self-sustaining Financial Capacity, no insurance company is able to fulfill its mission for being in business and also to motivate the Human Resource base.
Financial Capacity building for an insurance company implies that the necessary steps that insurers need to undertake in order to have a stronger ability to appropriately manage the expenditure items that befall them. Of particular interest is the organization’s ability to manage its claims and management expenses – especially staff cost, within its own resources without recourse to loans and overdrafts.
Building financial capacity would involve, among others the following:
1. Growing premium income,
2. Taking concrete steps to reduce cash flow-out (e.g. claims payout, management expenses, etc.) 
3. An investment regime that targets putting funds in solid financial systems within the ambit of the regulatory regime.
4. Effective Executive leadership
5. Strategic Board Governance.
The core strategy should involve: 
a. Developing very realistic and accurate overall budget that involves all cost centers of the company to the extent that everyone makes an impact into revenue and expense projections.
b. Periodic financial updates to all parties showing expenses to date matched with actual revenue vis-à-vis the budgetary provisions.
c. Engagement of Management with staff who are already adequately briefed on the financial status so deliberations could bring up what needs to be done to keep the finances on course.
With these strategies in place, it is important the companies put structures in place to check financial leakages in the system to ensure that capacity is sustained. 
Issues to Note
Mr. Chairman, currently, there is a skills gap that needs to be bridged, hence the urgency in building our human resource capacity backed by sustainable financial capacity - a capacity level that can support the existing businesses and new opportunities that will be created. 
It is therefore incumbent on the industry to find creative ways to build up financial capacities devoid of sole dependency on premium income.  Forming partnerships will help spread the cost of innovations and therefore help the bottom line. 
On the human resource front, we need to do a better job in the area of customer-centered processes.  
This will include the following:
a. Delivery and execution by exploring the process of “doing more with less”.
b. Close the skills gap through training and hiring “new generation” staff that understand this tech-generation.
c. Fully understand the customer journey – from information through purchase and claims.
d. Enhancing and understanding the human processes in commerce - this will enable us to travel with the client on his/her journey as a client.
e. Interconnecting the traditional way of doing insurance with digital models including taking advantage of current social media, etc.



Mr. Chairman, to conclude, I dare say that insurers have aided the development of mistrust for the industry from the insuring public. To stay relevant in the competitive environment, the insurance industry must discard the one way approach to issues and embark on multi-disciplinary approach.  This approach will greatly enhance the building of robust human resource capacity.  This approach brings a new perspective for the insurance industry in understanding the importance of investing in individuals and organizational human resources, and the implementation of capacity building strategies.

Finally, Mr. Chairman, distinguished ladies and gentlemen, it is essential to note that it is our responsibility to help educate the general public in order to improve upon the low awareness and understanding of insurance which has led to mistrust.  Also, we need to re-engineer the processes that will build a robust financial capacity to sustain the new opportunities.
Above all, the insurance companies must also manage their operational risks within the framework of Enterprise Risk Management in order to be able to critique the risk areas relating to leakages, and non-performance. For us to see tomorrow, we must first survive today.
God bless the West African Insurance Companies Association (WAICA); God bless our industry, and God bless our individual companies; and bless you all.
Thank you.


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