Wednesday, April 25, 2012

WAICA needs ethical practice to build public trust

L-R: Fatai K Lawal, Dawda Sarge & WAICA SG William B. Coker
Insurance practitioners in the West Africa sub-region gathered in the Gambian capital, Banjul to discuss professionalism and ethical practices in the industry needed to build public trust.

The professionals believe the insurance industry has been taint by unprofessional and unethical insurance institutions and individuals practitioners, thus bringing about growing public mistrust and as well a slow growth and development of the industry in the sub-region.

From April 15-17, 2012, the Insurance Association of the Gambia, IAG, played host to the 34th yearly general meeting and educational conference of the West African Insurance Companies Association (WAICA) on the theme “Professional and Ethical Behaviour in the Insurance Industry.”

The discussions were centered two topics: “Professionalism in a highly competitive environment and practice of ethical behaviour in the development of insurance industry: The role of management; and Professional insurance under writing and marketing: A must for growth and sustenance of the insurance industry in West Africa.”

“The theme of the conference is indeed interesting and appropriate considering the scale and scope of professional deception and ethical misconduct in the financial system in recent times,” said IAG president and WAICA vice president, Mr. Dawda Sarge, who warn that “the consequences of bad business practices could very well jeopardize the collective efforts to sustain economic growth, employment creation and poverty alleviation.”

He admits that the insurance industry continues to be challenged with issues relating to public confidences and trust. Therefore, one way to reassure society is to prove that an insurance contract “is not about buying wind but creating energy.”  

Sarge noted that an insurer’s reputation is enhanced when he meets his obligations under the insurance contract and tarnished when he fails to deliver.  

However, he noted that the industry is not all plagued by malpractices; hence, insurance market activity contributes to economic growth through financial intermediation, risk transfer and indemnification.  

“It promotes entrepreneurial activity and economic stability by enabling businesses to operate with less volatility.  Insurance also serves as an important source of long-term finance for initiatives in infrastructure improvements as well as a vector for development,” he said.

Despite these attributes, the insurance profession and industry continues to suffer from an image blur, caused in part, by questionable practices and ethical violations. 

He opined that a handful of reasons could be responsible for this such as the proliferation of misleading adverts, mis-selling of insurance products by poorly schooled agents, contract ambiguities, unfair claims administration and payouts.

Mr. Sarge, who was later handed WAICA presidency, observed that the long term profitability and survival of the insurance industry will be at risk if society continues to take a dim perception of the professionalism and ethical conduct of insurance practitioners.
He exhort insurers to instill customer trust in insurance through the promotion of a culture of fair dealing which should transcend the mere compliance with statutory requirements and global accounting codes like the International Financial Reporting Standards (IFRS).

“Fair dealing with customers should be an attitude that springs from ethos and values of our institutions and industry.  It should be a culture that puts the consumer first, that is focused on doing what is right and places a high premium on integrity and decency,” added Mr. Sarge, before concluding that “the insurance profession and industry can be the fulcrum of any financial system by raising practitioners’ awareness and acceptance of professional and ethical behaviour.”

Minuscule growth 

The growth of the insurance industry in Africa remains minuscule despite the fact that insurance has been practiced on the continent for more than 100 years.  

Gambia’s Finance Minister Mambury Njie, whose statement was delivered by the First Deputy Governor of the Central Bank of the Gambia, CBG, Mr. Basirou Njie, said Africa has an insurance penetration of roughly 1%, and less than 10% of the insurable population is actually insured. 

South Africa alone accounted for 70% of African insurance market.  

Notwithstanding, he said the potential for growth of the insurance industry is huge, but warns that “the industry must offer the right products to the right segments of the market, leverage on technology to increase outreach, explore market consolidation in order to reap the benefits of economies of scale and equally important, formulate and rigorously implement code of good practices.”

He repeated the industry’s potential to catapult economic growth and development, saying “the health of a country’s insurance industry is closely linked to the health of its economy and in addition to providing risks transfer services, insurance facilitates trade and commerce, mobilizes saving for investment, and ensures efficient allocation of capital.”

He argues that the Gambia is “unreservedly committed” to the development of the Gambia insurance industry, citing the 2007 CBG’s regulatory policy of raising the capital requirement of insurance companies. 
This, Mr. Njie said helped strengthen the risk bearing capacity of insurance companies in the country and enhance their ability to underwrite “big ticket” risks. “To protect policyholders and ensure that business is conducted safety and soundly, the industry would continue to be regulated, but in a manner that does not stifle innovation.”

Speaking earlier, the outgoing president of WAICA, Mr Fatai K Lawal, whom Mr. Sarge succeeded, said this year’s conference is very important in the history of the association as it focus on the profession and ethics of the insurance practitioners with a view to sanitize the industry. 

He thanked the executive committee of WAICA for the support given to him during his tenure as the president while urging them to give similar support to his successor.

The WAICA annual general meeting and educational conference brought together some 200 insurance practitioners from all the English speaking countries of West Africa – The Gambia, Nigeria, Liberia, Sierra Leone, and Ghana – that founded WAICA in 1973.

Written by Modou S. Joof

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