On average, about two-thirds of the insurance companies are making sales of barely 50% of what they previously were making says the chief executive of one insurance company who declines to be named.

Insurance companies say they have lost clients who hitherto would negotiate the purchase of insurance cover on credit basis.

"Now, with the new policy in force, they have to pay upfront so some come and say, 'ok let me go gather some and come back', but most of them never return", one insurer says.

The development, according to Kwame Gazo Agbenyadzie President of the Ghana Insurers Association (GIA) has resulted in a switch by some policy holders from comprehensive to third party insurance.

“We had some reports from some companies who have been hit hard by the new policy, especially companies which rely on individual businesses and the motor portfolio.

“Individual policy holders and businesses and have been the most affected as they have converted to third party or suspended renewal of cover till later,” he maintains.

Prior to its introduction, policy holders were buying insurance on credit, in some cases making part payment and paying up the rest usually over a period of three months to one year.

“Previously it was a convention -we took 40% deposit and then the rest was spread over three months so people were able to come up with that 40%, assuming they were coming to make a deposit and spreading the rest,” explains one insurance chieftain.

“In the past the 40% would have given them cover for one year, but they pay up the balance over three months but now they cannot secure any credit. So if you have the 40% then I give you exactly 40% in terms of the period of time that the insurance cover is in force.

“If the holder fails to come to pay up to extend the cover and the 40% premium elapses you don’t have cover anymore.”

Though they all agree it is a good policy, the insurance companies say it is taking a toll on the already low penetration of insurance in the country.

Some companies may not return to top up to 100% coverage, meaning at the end of the year their annual sales would have been reduced and they would actually lose some clients altogether along the way.

They however admit that the present challenges are short term as they trust that with time and with persistent education of the insuring public on the policy, the situation will improve.

Feedback so far received from some clients point to inflexibility on the part of some of the guidelines governing the policy.

The directive frowns upon pro-rata arrangement and demands of those seeking ex-tension of cover for say three months to pay a higher premium than if the duration were to span a whole year.

“In as much as it is good, it is also unfair to clients who genuinely want to extend it for only three months because they need to take certain decisions. It’s not everyone who would be extending for three months because they don’t have or want to pay premium for a full year” complains one user of insurance.

“I have bought insurance three years running; I have paid my premiums all the time; this time round I need to do evaluation or assessment of my risks so I want to extend it for a month or two and you charge me penal rating,” one customer laments.

The National Insurance Commission (NIC), the regulator issued the penal rating directive in May ostensibly to avoid clients rejecting certain insurance companies as some clients could decide to insure only against big risks.

Some insurers are of the view that the directive should rather focus on new policy holders.

“Existing clients who do extensions should be exempted.”

Concurring with the concerns of insurers on the new policy, Kwame-Gazo Agbenyadzie notes that the dip in sales and related issues were expected.

There wasn’t enough time given to the education of the insuring public on the policy so some hiccups were expected, he said.

He is however confident that with time, policy holders will get used to it and will restore patronage. Additionally, the policy will spur on insurers to come up with more innovative products and thus make the industry more competitive than before.

“Companies can no longer use credit as a competitive edge. We have to make sure that we deliver the needed services,” he said.

Mr Agbenyadzie who is also the Chief Executive Officer of Met Insurance Company Limited reminds his colleague insurers that “what we need to do is to make sure that our response to claims is improved otherwise we shall undermine this policy.”