Notes on
the Insured and Insurer Relationship in an Insurance Contract in Ghana
The relationship between the insured and
the insurer in an insurance contract is built on trust, mutual obligations, and
adherence to the principles of contract law and specific insurance regulations.
In Ghana, the Insurance Act, 2021 (Act 1061) governs this
relationship, alongside general legal principles and oversight by the National
Insurance Commission (NIC). This relationship ensures that both
parties fulfill their responsibilities while safeguarding their respective
rights.
1. Nature
of the Relationship
The insured and the insurer enter into a
legally binding agreement with the following characteristics:
Good Faith: Both parties are expected to act
honestly and disclose all relevant information.
Contractual: The relationship is formalized
through the insurance policy, which specifies terms, coverage,
obligations, and exclusions.
Mutual Dependence: The insured relies on the insurer
for financial protection against risks, while the insurer relies on
accurate information and timely payment of premiums.
2. Duties
and Obligations of the Insured
The insured plays a critical role in
ensuring the smooth functioning of the insurance contract. Their obligations
include:
a. Duty of
Disclosure
The insured must disclose all material facts at the
time of application.
Examples in Ghana:
For health insurance, disclosing pre-existing medical
conditions.
For motor insurance, providing accurate details about
the vehicle's usage and condition.
Failure to disclose may lead to claim denial or
contract voidance.
b. Payment
of Premiums
The insured is required to pay the agreed premium
within the specified time.
In Ghana:
Policies often lapse if premiums are not paid, unless
otherwise stipulated.
Flexible payment options, such as installments, are
increasingly available.
c.
Compliance with Policy Terms
The insured must adhere to the conditions outlined in
the policy.
Examples include:
Regular maintenance of insured property (e.g., fire
safety measures for buildings).
Timely reporting of losses or claims to the insurer.
d. Duty to
Minimize Loss
After an insured event occurs, the insured must take
reasonable steps to reduce further loss or damage.
Example: A homeowner with fire insurance must promptly
call the fire service and try to save unaffected items.
3. Rights
of the Insured
The insured has specific rights that
ensure fair treatment and financial protection:
a. Right
to Compensation
The insured is entitled to financial compensation or
services as specified in the policy, provided all terms and conditions are
met.
b. Right
to Clear Information
Insurers are required to provide clear, unambiguous
information about policy terms, coverage, and exclusions.
The NIC ensures compliance with this obligation.
c. Right
to Dispute Resolution
In Ghana, insured parties can escalate disputes to the
NIC or the courts if they believe an insurer has acted unfairly.
d. Right
to Cancel the Policy
The insured may cancel the policy if dissatisfied,
subject to the terms of the contract.
4. Duties
and Obligations of the Insurer
The insurer is responsible for providing
coverage and ensuring the contract operates fairly and efficiently.
a. Duty to
Honor Claims
The insurer must compensate the insured for valid
claims promptly.
In Ghana:
Delayed claim settlements are a common issue
addressed by the NIC.
b. Duty of
Transparency
The insurer must clearly explain policy terms,
exclusions, and the claims process to the insured.
Example: Clearly defining what constitutes a “total
loss” in motor insurance.
c. Risk
Assessment and Underwriting
Insurers must assess risks accurately and set premiums
accordingly.
d. Duty to
Maintain Solvency
Insurers must maintain sufficient reserves to meet
their financial obligations.
The NIC monitors insurers to ensure financial
stability.
5. Rights
of the Insurer
Insurers have certain rights to protect
their interests and ensure fair dealings:
a. Right
to Premium Payments
The insurer can terminate a policy if the insured
fails to pay premiums.
b. Right
to Accurate Information
Insurers can void policies or deny claims if the
insured provides false or misleading information.
c. Right
to Recover Damages (Subrogation)
After compensating the insured, the insurer can pursue
third parties responsible for the loss to recover the amount paid.
d. Right
to Reject Fraudulent Claims
Insurers can deny claims if there is evidence of fraud
or misrepresentation by the insured.
6.
Challenges in the Insured-Insurer Relationship in Ghana
a. Lack of
Awareness
Many policyholders lack sufficient understanding of
their rights and obligations, leading to disputes.
b. Delayed
Claims Settlement
Delays in claim processing remain a common issue,
often attributed to documentation gaps or insurer inefficiency.
c. Fraud
and Misrepresentation
Fraudulent claims or non-disclosure by the insured
strain the relationship and increase operational costs for insurers.
d. Limited
Accessibility
Insurance services are less accessible in rural areas,
limiting the insured population.
7. Role of
the National Insurance Commission (NIC)
The NIC plays a vital role in
strengthening the insured-insurer relationship.
a.
Consumer Protection
The NIC ensures that insurers treat policyholders
fairly and comply with regulatory standards.
b. Dispute
Resolution
The NIC mediates disputes between insurers and insured
parties to ensure fair outcomes.
c. Public
Awareness Campaigns
The NIC educates the public on insurance policies,
rights, and obligations.
d.
Enforcement of Standards
The NIC monitors insurers to prevent unethical
practices and ensure prompt claim settlements.
8.
Conclusion
The insured-insurer relationship is
central to the success of the insurance industry in Ghana. It is built on
mutual trust, transparency, and adherence to contractual obligations. While
challenges such as fraud, delayed claims, and lack of awareness exist, the
regulatory framework provided by the NIC ensures accountability and fosters
trust. Strengthening this relationship through public education and enhanced
regulatory enforcement is essential for the continued growth and sustainability
of Ghana’s insurance sector.
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