Friday, December 10, 2010

Insurance Industry Plagued by Unethical Practices

http://inwent-iij-lab.org/Weblog/2010/06/09/insurance-industry-plagued-by-unethical-practices/

June 9th, 2010

Delegates of the recently concluded 37th African Insurance Organisation (AIO) annual conference and general assembly have admitted that the insurance industry has been plagued by unethical practices over the years, thereby giving a low image of the industry in Africa.
The conference was held in Banjul, The Gambia from May 24 to 27 where more than 500 delegates drawn from state owned insurance companies, broking firms, insurance supervisory authorities and training centres in Africa, including associate international members attended.
The main objectives of AIO are the promotion of inter-African co-operation and development of a healthy insurance and reinsurance industry in Africa. The theme for this year’s Conference was ‘Survival of the African Insurance Industry in the Face of Global Financial Crisis.”

However, at the end of the conference the delegates resolved that the survival, growth and development of the insurance industry in Africa will be greatly enhanced if they effectively deal with unethical practices like undercutting, premium purchase, undermining each other etc.
This, the AIO delegates said have plagued the industry over the years and have contributed to low capacity, low profitability, poor claims settlement and generally low image for the industry in Africa.
In order to effectively deal with unethical behaviors, delegates stressed that they must formulate a unified code of conduct agreeable to all practitioners as a tool for the regulation of the industry and put in place appropriate sanctions to deal with those in breach of the codes.
In a fourteen point resolution, the AIO pointed out that they must also recognise the role of stakeholders such as the judiciary, governments, customers and the public in the enforcement of the code of ethics and work in concert with all to ensure adherence to ethical and highly professional behavior.
AIO members also said micro insurance presents a blue ocean of opportunities fro African insurance industry to reach out to the poor and vulnerable who forms the majority of our societies. “Micro insurance products demand innovativeness in both product design and channels of distribution and premium collection,” the resolution said.
It also said that a well managed micro insurance regime would not only result in long term profitability but would also involve the delivery of corporate social responsibility to the poor and vulnerable in society, thereby going a long way in enhancing their individual corporate and industry image.
The also resolve that effective and efficient management of human and financial resources are critical factors to the survival, growth and continuous development of the continent’s insurance industry.
To this end, they stressed that insurance companies must take urgent steps to put in place human resource management policies that will ensure the recruitment of the right caliber of personnel, whose continuous training and professional development will be supported by attractive remuneration and other incentive packages that will ensure retention and high level performance and loyalty.
Rebuilding credibility
AIO also said in its resolution that the survival of the industry in Africa especially after what they called “the disastrous effects” of the financial crises hinges on the rebuilding trust and confidence among consumers. “No efforts should be spared to achieve this,” the AIO said.
Beside the various things they have to do to improve their operational efficiency and effectiveness is to attract and manage consumer trust and confidence by acting in responsible ways.

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