Insurance Ecosystem: A Sustainable Approach to Premium Financing

By John Baffour Awuah Barnes (ACIIG, ACIM-UK)

The world stands at a pivotal moment in its efforts to combat climate change and protect the global economy. From the early days of Captain Planet to the present, the development of the United Nations Sustainable Development Goals (UN SDGs) has been a continuous journey. 

Various sectors of the global economy such as mining, agriculture, real estate, manufacturing, energy, entertainment, football, automobiles, banking, aviation, hospitality, education, science, health, telecommunications, and others have adopted practices that positively impact our planet. 

In the insurance industry, global underwriting and risk management guidelines have been established to address the diverse effects of climate change. The National Insurance Commission of Ghana has implemented comprehensive guidelines to maintain the industry's sustainability in several areas: 

• Environmental factors, include climate change, greenhouse gas emissions, air and water pollution, biodiversity, deforestation, energy efficiency, waste management, and water scarcity. 
• Social considerations focus on customer satisfaction, data protection and privacy, gender and diversity, employee engagement, community relations, human rights and labor standards, and cybersecurity.

• Governance considerations involve board composition, audit committee structures, bribery and corruption, executive compensation, lobbying, political contributions, and whistleblowing. 

Increasing insurance penetration, eradicating poverty, and promoting environmental sustainability through effective waste management are crucial goals. The insurance industry in Ghana must innovate beyond traditional cash payments of premiums to a model that allows premium payments through waste collection. 

Currently, the industry operates in close collaboration with financial institutions and allied sectors, including telecommunications and government agencies, but has not fully incorporated waste management into its business model. 

To create an ecosystem that is environmentally friendly, cashless, and collaborative, the insurance industry must embrace innovative ecosystem modeling. 

Partnering with waste management companies, financial institutions, telecommunications firms, manufacturing companies, and the general public can lead to a system where premium financing is provided through the collection of waste products such as plastics, coconut husks, and other materials. These collected items can be delivered to designated points, and the cash generated from them can be used for premium payments for motor insurance, health insurance, and life insurance. 

This innovation can significantly enhance public perception of insurance companies and their commitment to environmental sustainability. The insurance industry has already seen various innovations aimed at addressing social needs, including life, general, and health insurance products. 

These innovations respond to the specific needs of insurance buyers in the market. In Ghana, insurers have introduced products such as the third-party Xtra and Combo Plus, which cater to the interests of third-party policyholders by relieving them of additional costs associated with insured vehicles. 

A well-designed ecosystem model can also enable insurers to provide compensation equivalent to a commercial vehicle's daily sales when it is involved in an accident. By continuously collecting waste plastic materials, clients can accumulate cash points that can be redeemed for various insurance products, including health, life, or general insurance. 

Through these innovative strategies, the insurance industry can meet the needs of clients while simultaneously working towards a more sustainable future.

By  John Baffour Awuah Barnes (ACIIG, ACIM-UK)

Strategic Innovation Expert and Branch Manager, 

Provident Insurance Limited Company