All for Insurance and Insurance for All

In March of 2021, the National Insurance Commission (NIC), outlined a series of proposals to expand access to insurance in the wake of Ghana’s current No Premium, No Cover landscape.

Unfortunately, to most Ghanaians the sentence above makes little sense. Insurance knowledge and coverage are highest only among the highly educated, professionals, those from households in the richest wealth quintile and urban residents. That is to say, many Ghanaians do not know: what insurance is, what premiums are or even what the NIC is. Planwell wants to change this narrative one newsletter at a time.

Let’s start with insurance. Let’s say you only have GHS 1.00 left after life’s expenses every month and that a sudden medical bill has you in need of GHS 1000. If someone told you that if you gave them GHS 1.00 every month for one year or GHS12.00 (lump sum), they would give you GHS1000.00 in return to cover a sudden medical expense, would you take their offer? You should because one, medical bills are not cheap and two, buying GHS 1000.00 at a price of only GHS 1.00 a month is a fantastic deal. That is insurance in a nutshell. The GHS 1000.00 is the money you suddenly need and do not have (your insurance). The GHS 1.00 is the money you give up every month to access the money you do not have should you suddenly need it (your premium).

In the insurance world, the more money you give up means the more money you get in return. Giving up anything is hard in a growing economy that is fighting its share of unemployment, inflation, and COVID-19 pressures, among other things. So, let’s say after personal expenses you only had 99 pesewas left. In the previous example that wouldn’t quite get you the GHS 1000.00 you suddenly need – you are one pesewa short. Well, this is even worse if you had only 75, 50 or 25 pesewas left and so on. This doesn’t feel quite fair and may leave you disappointed because maybe you didn’t even want all the GHS 1000.00; perhaps only GHS 900.00 or even GHS 100.00 was more than enough. Maybe you only wanted to give up your GHS1.00 for only three months and not a year. In this setup everyone loses:

• The Industry suffers from a low insurance participation rate – not enough people have insurance.

• The Insurance companies wouldn’t have your pesewas, and so cannot give you better deals.

• And unfortunately, you don’t have the money you suddenly need.

These series of losses illustrate a world where many people with less than GHS 1.00 may have been covered but are not and that is Ghana’s insurance industry today. The issue here is not if people can pay their premiums (given the opportunities they would), but rather, giving them more opportunities to access insurance. More access means some good things: higher industry participation rates, more competitive insurers and brokers, better deals from insurers and their brokers, and ultimately many more Ghanaians who can sleep better at night. Planwell, sees a future where insurance expands to cover everyone, those above and below GHS 1.00.

Now, the elephant in the room, how do we tell Ghanaians that things have changed? Watch this space.