Insurance disputes arise when there is a
disagreement between the insurer and the insured regarding the terms,
conditions, or execution of an insurance contract. In Ghana, these disputes
often stem from a lack of understanding of insurance policies, procedural
errors, or deliberate actions by either party. Resolving these disputes is critical
to maintaining trust and stability in the insurance industry.
I.
Misrepresentation and Non-Disclosure
Policyholder Misrepresentation
When an applicant provides inaccurate or false
information during the application process, such as overstating the value
of assets or omitting relevant details.
Example: Failing to disclose a pre-existing health
condition for a life insurance policy.
Non-Disclosure of Material Facts
Policyholders may omit crucial information that could
influence the insurer's decision to issue coverage.
Insurers may deny claims based on such omissions.
Insurer Misrepresentation
Occurs when insurers fail to clearly explain policy
terms or make misleading statements about coverage benefits.
II. Policy
Interpretation Issues
Ambiguities in Policy Language
Vague or technical terms in insurance policies may
lead to different interpretations by the insurer and the insured.
Example: Disagreements over what constitutes
"accidental damage" in a motor insurance claim.
Disputes Over Exclusions
Insurers may deny claims based on exclusions outlined
in the policy, which policyholders may argue were unclear or not properly
communicated.
Coverage Limits
Policyholders may expect full compensation, only to
discover that the policy has financial caps on certain claims.
III. Claim
Processing Delays
Prolonged Investigation
Insurers often delay claim settlements to investigate
the circumstances of the claim, particularly in cases of suspected fraud.
Delays frustrate policyholders, leading to disputes.
Administrative Bottlenecks
Inefficiencies in the claims processing system, such
as missing documentation or procedural errors, cause delays and
dissatisfaction.
Failure to Respond Promptly
Insurers’ failure to provide timely feedback on
claims creates uncertainty and leads to disputes.
IV.
Fraudulent Claims
Policyholder Fraud
Submitting exaggerated or entirely false claims to
obtain unwarranted compensation.
Example: A motorist staging an accident to claim
insurance benefits.
Insurer Fraud
Allegations of insurers unfairly denying legitimate
claims to reduce payouts or inflate premium rates.
Third-Party Fraud
Fraud involving collusion between claimants and
external parties, such as repair shops inflating costs in motor insurance
claims.
V. Breach
of Policy Terms
Failure to Pay Premiums
Policyholders who miss premium payments may face
disputes when attempting to make claims.
Example: A life insurance claim being denied because
the policy lapsed due to unpaid premiums.
Violation of Policy Conditions
Policyholders may fail to comply with specific
conditions, such as maintaining security systems for insured property,
leading to claim denial.
Late Notification of Claims
Insurers may reject claims if the policyholder delays
reporting an incident within the specified timeframe.
VI.
Disputes Over Valuation
Underinsurance
Disagreements occur when the insured value is deemed
insufficient to cover the actual loss.
Example: Insuring a building for GHS 100,000 when its
market value is GHS 200,000.
Overinsurance
Insurers may challenge inflated valuations during the
claims process, suspecting fraud or misrepresentation.
Disputes Over Loss Assessment
Policyholders may dispute the insurer's assessment of
the value of the loss, especially in cases of partial damage.
VII. Subrogation
and Third-Party Liability
Subrogation Conflicts
Disputes may arise when an insurer seeks recovery
from a third party responsible for the insured's loss.
Policyholders may feel they are entitled to
compensation before subrogation actions are concluded.
Third-Party Claims
Motor insurance often involves disputes with third
parties over fault and liability.
Contribution Claims
When multiple insurers provide coverage for the same
loss, disputes may arise over which insurer bears the primary
responsibility.
VIII.
Regulatory Non-Compliance
Failure to Follow NIC Guidelines
Insurers may violate provisions of the Insurance
Act, 2021 (Act 1061), leading to disputes with
policyholders.
Example: Delaying claims beyond the statutory
timeframe for settlement.
Consumer Complaints
Policyholders may lodge complaints with the National
Insurance Commission (NIC) about perceived unfair practices
or poor service delivery.
IX. Case
Studies in Ghana
Motor Insurance
A policyholder disputes the insurer's refusal to
cover repairs, citing an exclusion clause for reckless driving. The NIC
intervenes, and the dispute is resolved through mediation.
Life Insurance
A beneficiary challenges the insurer’s denial of a
death benefit, claiming that the deceased met all policy conditions. The
court rules in favor of the beneficiary after interpreting the policy’s
ambiguous clauses.
Strategies to Prevent Insurance Disputes
Clear Policy Communication
Insurers should provide plain-language explanations
of policy terms and conditions.
Consumer Education
Public awareness campaigns by the NIC can educate
policyholders on their rights and responsibilities.
Efficient Claims Processing
Streamlining administrative processes and adhering to
timelines reduces the likelihood of disputes.
Effective Dispute Resolution Mechanisms
Strengthening alternative dispute resolution (ADR)
options, such as mediation, to address conflicts promptly.
Regulatory Oversight
The NIC must ensure compliance with legal standards
to prevent unfair practices by insurers.
XI.
Conclusion
Common causes of insurance disputes in
Ghana include misrepresentation, policy interpretation issues, delays in claim
processing, and fraud. These disputes undermine consumer trust and highlight
the need for robust regulatory oversight, effective communication, and
streamlined claims handling processes. Addressing these challenges is essential
to fostering confidence in Ghana’s insurance industry and ensuring equitable
treatment of all stakeholders.
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