Insurance sector reform is long overdue

Governor Amadou Colley this week told the PAC/PEC committees at the National Assembly that a lot of reforms are required in the industry to make it an “effective industry”.

In this vein, the CBG will work with stakeholders to implement “the agreed agenda of reforms”.

Although we don’t know what the agreed agenda of reforms are, we can say for certain that the insurance industry needs a lot of reform for it to play its rightful position in the economic development of The Gambia.

Although the business of insurance has evolved over the years, the state of the industry in The Gambia is still very much young and virgin.

The growth of the industry remains small though its potentials for growth are huge.Therefore, it is imperative that key operational areas of the business be reviewed for sustainable growth.

First and foremost, there is need for reform in the area of legislations; enacting legislation that will help the industry to grow considerably and by extension the entire economy of the country.

Examples of such possible legislations are compulsory local marine cargo insurance on imports and exports; compulsory fire insurance for public buildings, and a compulsory national health insurance scheme.

These legislations, when implemented, will have the potential to generate billions of dalasis in income for the insurance industry, the tax aspect of which could contribute immensely to the national budget.

There is also need for reform in the area of competition.Right now, there is serious unhealthy competition in the industry.Companies fight each other by undercutting their premium to the extent that it is even affecting the growth of the industry.

In a nutshell, the industry has continued to be faced with serious challenges caused by unhealthy competition among companies, and it has got to a point it is affecting the general growth of the industry.

Another area that needs urgent attention is that The Gambia has the lowest tariff for motor insurance in West Africa; yet most of the claims the industry is struggling with are those that emanate from motor insurance.

There is, therefore, need to review and have a standard tariff for motor insurance as the cost of spare parts is skyrocketing, whilst third party injury and death claims are mounting.

Apart from putting in place regulations, the government should also ensure timely payment of claims by insurance companies, which in effect will ensure credibility of the industry to the people.

There is need to reform insurance regulation by jettisoning the role of insurance regulation from the Central Bank of The Gambia, which is currently mandated to supervise the financial industry.

There is also need to establish an autonomous insurance commission.

Presently, The Gambia is the only country in Anglophone West Africa without an independent insurance commission.

Ghana, Sierra Leone, Nigeria and Liberia have all removed insurance regulation from under the purview of their central banks.

These reforms are indispensable and long overdue, and will scale up the growth rate of the country’s insurance industry to a fascinating level.

“If a child, a spouse, a life partner, or a parent depends on you and your income, you need life insurance.”

Suze Orman