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A case for a New Direction government National Insurance Policy In Sierra Leone

20 May 2019 at 20:02 | 1064 views

A case for a New Direction government National Insurance Policy In Sierra Leone.

By Kortor Kamara, USA

A national insurance policy plan designed with a clearly articulated vision, embracing the central economic development tenets of the government - including its vision of a modern vibrant insurance sector in the pursuit of sustainable financial stability and economic growth - is what Sierra Leone now needs.

Generally, the insurance sector provides the national underwriting capacity for socio-economic and political risks, coupled with its risk pooling ability to mobilize savings for sustainable economic development in modern economic- based societies.

The size of the Sierra Leone Insurance market, as measured by its penetration ratio is approximated at 0.2 percent. The average for emerging markets is 3 percent. The Sierra Leone ratio represents a deficiency in the insurance market environment which can only be addressed through an appropriate governmental policy framework geared towards an orderly industry growth.

There seems to be a greater supply of insurance companies, products and services than demand in the Sierra Leone Insurance market place. This is evidenced by the low penetration rate and the cut-throat competition witnessed among the various carriers.

The rationale for a Sierra Leone National Insurance Policy hinges on such factors as the need to attract foreign direct investments (FDIs), individuals and corporations into an environment where insurance coverage is easily available to mitigate against risks.

Insurance thus as a risk mitigation framework needs to be appropriately articulated, embraced with access deepened and expanded to ensure greater penetration throughout the country.

Moreover, a stable insurance industry provides not only a stable underwriting environment but of greater relevance ensures that stability and business confidence in the nation’s economic system and practices is engendered and unquestioned.

A situational analysis of the insurance and risk management sector’s role and significance in the nation’s economic development requires an adroit understanding by policy makers of the industry’s relevance and importance within the national economy.

Thus, as growth in the Sierra Leone economy and the socio-political risk appetite expectations become increasingly unmanageable, there is bound to be a shift in how the challenges and constraints in the risk landscape are handled by responsible governments.

It is envisaged that with knowledge of the central role insurance and risk management plays in a modern economy, the New Direction government should deem it appropriate to embark on developing a national insurance policy plan to serve as a vehicle for sustainable public - private sector development.

Over the decades several challenges to the insurance sector in Sierra Leone have been identified - including the low usage of insurance services by government and MDAs, low capacity of professionals, low penetration rate of insurance, low underwriting capacity of the industry, the low level of public awareness on insurance products and services and lack of an adequate legal and regulatory framework.

The limited availability of compulsory insurance requirements and regulations, especially in the commercial and public liability line of business is a cause for grave concern.

The adequacy of the third party liability motor coverage currently in force to cover catastrophic injuries and death requires governmental intervention to protect injured parties.

Finally, the goal of the proposed national insurance policy plan, when fully designed and implemented will serve to generate and enhance new business opportunities for the entire insurance and risk management sector.

This policy will provide support to government in the management of the nation’s budget utilizing risk transfers between various insurance mechanisms.

It is also envisaged that implementation of such a policy plan will boost the public image of the insurance sector from its current moribund nadir with concomitant benefits to the private sector with a robust investment environment.

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