Importance of Insurance to Businesses and Individuals

Insurance has evolved as a process of safeguarding the interest of people from loss and uncertainty. It may be described as a social device to reduce or eliminate risk of loss to life and property. The insurance has been useful to the business society also. Some of the uses are discussed below:

Read Also: List of Insurance Companies in Ghana

                   What is insurance?

Medical support

A medical insurance considered essential in managing risk in health. Anyone can be a victim of critical illness unexpectedly. And rising medical expense is of great concern. Medical Insurance is one of the insurance policies that cater for different type of health risks. The insured gets a medical support in case of medical insurance policy.

Business Continuation

In any business particularly partnership business may discontinue at the death of any partner although the surviving partners can restart the business, but in both the cases the business and die partners will suffer economically.

The insurance policies provide adequate funds at the time of death. Each partner may be insured for the amount of his interest in the partnership and his dependents may get that amount at the death of the partner.

With the help of property insurance, the property of the business is protected against disasters and the chance of disclosure of the business due to the tremendous waste or loss.

Provide safety and security

Insurance provide financial support and reduce uncertainties in business and human life. It provides safety and security against particular event. There is always a fear of sudden loss. Insurance provides a cover against any sudden loss.

For example, in case of life insurance financial assistance is provided to the family of the insured on his death. In case of other insurance security is provided against the loss due to fire, marine, accidents etc.

Enhancement of Credit

The business can obtain loan by pledging the policy as collateral for the loan. The insured persons are getting more loans due to certainty of payment at their deaths. The amount of loan that can be obtained with such pledging of policy, with interest, thereon will not exceed the cash value of the policy.

In the case of death, this value can be utilized for setting of the loan along with the interest. If the borrower is unwilling to repay the interest, the lender can surrender the policy and get the amount of loan and interest thereon paid.

The redeemable debentures can be issued on the collateral of capital redemption policies. The insured properties are the best collateral and adequate loans are granted by the lenders. 

Source of collecting funds

Large funds are collected by the way of premium. These funds are utilised in the industrial development of a country, which accelerates the economic growth. Employment opportunities are increased by such big investments. Thus, insurance has become an important source of capital formation. 

Life insurance encourages savings

Insurance does not only protect against risks and uncertainties, but also provides an investment channel too. Life insurance enables systematic savings due to payment of regular premium. Life insurance provides a mode of investment. It develops a habit of saving money by paying premium. The insured get the lump sum amount at the maturity of the contract. Thus life insurance encourages savings.

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Businesses Lament Over 25.5 % Policy Rate

Private sector businesses and economists want the Bank of Ghana to review its stance in pegging the policy rate at 25.5 percent in January 2017.

They argue that the development is less likely to compel commercial banks to adjust their respective rates on loans and advances to customers.

The Monetary Policy Committee of the central bank in its first meeting for 2017 kept the policy rate unchanged at 25.5 percent.

Governor of the Central Bank, Dr. Abdul Nashiru Issahaku cited concerns over inflation outlook and exchange rate volatility.

But reacting to the position, Economist Professor Godfred Bokpin described the Bank of Ghana’s decision as a clear indication of the central bank’s pessimism of the performance of the economy.

“I think that looking at the stance that the MPC has taken over the last couple of months, it is not surprising because they seem to be a bit more pessimistic about the economy than the other data seem to suggest and for which reason they have decided to keep the policy rate at 25.5%.” he said.

According to him, prevailing economic conditions such as a drop in inflation should have prompted a drop in the policy rate to ease cost of accessing credit by businesses.

“Ideally, if they had reduced it even marginally, it would have been consistent with what we are observing. But I think that with the new government and the goodwill, I want to believe that we are better positioned to be able to contain the threat of inflation better than we have seen in the time past and therefore the inflation expectation would not be that high.”

Meanwhile the Private Enterprise Federation has insisted that the rate is still high.

The CEO of the Federation, Nana Osei Bonsu explains that the figure must be reviewed downwards to support private sector growth.

“For the policy rate, I think it is misguided; uncalled for and it should be reviewed in prudent manner where it allows private sector to get the liquidity to do their investments.”

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Ghana Will Re-negotiate IMF Deal – Osafo-Maafo

senior minister Osafo Maafo

Senior Minister Designate Yaw Osafo -Maafo has stated that the new government will re- negotiate  Ghana’s deal with the International Monetary Fund (IMF).

”Now the IMF program will certainly be reviewed and there are two main reasons why the IMF program must be reviewed I have already hinted to one of the bosses of the IMF. Now President Nana Akufo-Addo came out with a manifesto and in that manifesto he needs fiscal space to move it.

The current program literally squeezes all the fiscal space out and therefore from the point of view of the program of the NPP, the IMF program must be reviewed”.

Ghana in 2015 signed onto a 918 million dollar extended credit facility program with the fund.

Ghana has so far received a total of about US$464.6 million as disbursements from the IMF. The latest was on September 28, 2016.

The program aims to restore debt sustainability and macroeconomic stability in the country to foster a return to high growth and job creation, while protecting social spending.

The deal which was not approved by Parliament has been heavily criticized by the new government, raising concerns that it will be reviewed under their tenure.

Calls for the renegotiation of the deal however has attracted mixed reactions from economists.

While some have welcomed the move others say it is needless.

Economist with the Institute of Fiscal Studies (IFS) Dr Adu Sarkodie for example believes that  the new government must restructure the deal to grow the economy.

“We must renegotiate certain parts of the IMF deal. One of the items that have contributed to the slow effectiveness of the program is that they have front loaded the policies and programs and have kept the money.

So in other words I go into a deal with you, I expect you to take certain good steps before I hand you the money but it has not been the case in the previous IMF programs.”

He added, “So I think that this time round the IMF should rather front load the money.

They should frontload about 70% of the remaining 50% for us to stabilize because the macroeconomic stability is the most important thing.”

While an economist at the University of Ghana Business School, Dr. Lord Mensah has stated that renegotiating the deal is not needed because the IMF programme is yet to mature and the deal must be allowed to mature before any changes could be made to it.

“Personally, I don’t think it is something that we need to consider — we have to allow it to roll, let’s realise its maturity, when it comes to the IMF and its allied agencies, it is not the government that goes into negotiation, but it is the country. The government which was voted by the people, always in such case, represents the country; so a new administration does not mean that the agreement has to be cancelled.”

But speaking to Law makers during his vetting as Senior Minister Yaw Osafo -Marfo said the new government will not abrogate the deal but will re-negotiate it to fit into its targets and objectives.

”Now the IMF program works along achieving targets and the targets set between the government and the IMF, so far most of the targets have been missed therefore whether we even ask for it or not the IMF will themselves want the program reviewed, because if we talked about ensuring that your growth end of the year is 5.3% and your growth end of the year is 3.3% its way out.

If we want to talk about deficit being not more than 5% and everybody thought deficit was about 5% ……figures I’m seeing from Bank of Ghana deficit is getting between 8 and 9% then it is enough for the IMF itself to request for a review because you can’t go on when you haven’t met the targets, going on with what .

Therefore the program will certainly be reviewed from two angles from the targets angle and from our own need to factor in our manifesto and objective in governance”. Mr Osafo -Marfo stated.

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The Benefits of Social Media to Marketers

There are many benefits to companies and marketers for taking advantage of the services that social media sites offer. SwiftFoxx Business is one of those companies that have started taking advantage of social media to reach more users. The following are just some of these benefits:

• People are finding it easier to switch off or ignore traditional advertising, particularly through traditional media environments such as television or radio.

Social media give brands the opportunity to interact with customers through targeted communications that customers can choose to engage with on their terms. For example, a consumer may visit a branded YouTube channel as opposed to deliberately ignoring advertisement breaks on television.

• Social media’s potential to go viral is one of its greatest benefits; if users like the content, then they will share it with their communities.

• Social media allow you to create an online community for your brand and its supporters.

• Social media can tie in nicely with any of your other online marketing tactics; a holistic e-marketing strategy is always the best strategy.

• Social media allow you to engage with an online community and allow you to connect your brand to the appropriate audience.

• Social media have created a forum for brand evangelists. Companies (Swift Foxx) should embrace as well as monitor this, as users with negative opinions of your brand have access to the same forum.

• The various platforms allow you to access a community with similar interests to your own, that is, networking without borders.

• The numerous interactions allow you to garner feedback from your communities.

• Feedback from social media sites helps drive both future business as well as marketing strategies.

• The range of media enables you to learn more about your audience’s likes, dislikes, behavior, and so on. Never before has this much information been available to marketers; market research just got a whole lot cheaper.

• Niche targeting just got a whole lot easier.

There are huge risks as well as opportunities. Social media facilitate a two-way conversation between customer and company. This necessitates that the company shifts approach from “deploy and watch” to one of constant involvement with the audience.

Source: SwiftFoxx

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