Accra, Sept. 9, GNA - Total market premium of life assurance shot up to 131 billion cedis last year from 20 billion cedis in 1999 as the industry continues to gain grounds.

The industry, which started picking up in 1999 after two decades of decline, has since recorded an encouraging average annual growth rate of about 60 per cent.

However, a lot more needs to be done to bring funds from the industry to desired levels, Ms. Josephine Amoah, Commissioner of Insurance, said on Thursday in Accra.

Delivering a paper on the first of a two-day seminar for senior actuaries on the development of Life Assurance in Ghana, Ms. Amoah said there was an urgent need to develop Life Assurance, identified as one of the major vehicles for the mobilisation of long-term funds.

Life Assurance, unlike the mandatory motor insurance policies, is the taking of a voluntary premium in order to receive compensation in respect of the loss of body parts in accidents other than motor. In the case of death, compensation is paid to the legal next-of-kin.

The seminar, being organised jointly the Ghana Insurers Association (GIS) and the National Insurance Commission (NIC) for actuaries from insurance companies, is discussing factors that inhibit the accelerated development of life insurance investment portfolio and solicit suggestions to improve on the performance of the sector.

Ms. Amoah said the major objectives for the insurance industry under the Government's Financial Sector Strategic Plan was to mobilise long-term funds for investment, establish a strong regulatory framework which instils public confidence in insurance and develop the insurance industry to a level where it could be easily integrated with the international financial sector.

This requires a strong regulatory framework to ensure that an insurance company survives, is financially sound and actually honours its obligations.

Also, given the large sums of monies that insurers handle, it is necessary for somebody to ensure that insurance funds are properly channelled to support government's development efforts. Ms. Amoah said the existing Insurance Law, PNDC Law 227, needed to be updated to bring it in line with current international practices, especially the International Association of Insurance Core Principles on Insurance Supervision.

She said the NIC, in consultation with the Insurance Industry and the government, had drafted a new Insurance Bill, which is currently at the Ministry of Finance and Economic Planning awaiting Cabinet approval. Ms Amoah said the Commission anticipates that a Life Supervision unit would be established at the NIC to supervise Life Companies. Under the new bill the minimum capital required for setting up life business would be seven billion cedis.

Mr Paul Agyiri, Chief Director of the Ministry of Finance, said if the development of the total insurance premium, which now stood at about nine percent, went on for a period of time, it would be at par with the Banking Industry.

Mr Agyiri compared Ghana's performance of Life Assurance to that of South Africa, which adds 20 billion dollars a year to the economy, and said unlike Ghana, more than 85 per cent of the premium market is Life Assurance.

He urged the insurance brokers to read the provisions in the new bill carefully and adopt some research method to impact positively on performance of the Life Assurance business.

Mr Wilson Tei, President of the Ghana Insurers Association, noted with concern that the drift of professionals into other countries, demographic problems, the scourge of HIV/AIDS, high mortality rate among rural dwellers, reducing birth rates in the urban centres and low incomes were some of the challenges to the performance of the Life Assurance business.