The National Insurance Commission (NIC) of Ghana has come out with a uniform premium computation for Motor Insurance Policies that are for a period of led than one year, which has already taken effect on September 1, 2021.
This is to control the undermining of rates by organizations just like the case before. As of now, the premium of motor insurance policy that are less than a year depends on transient rates rather than favorable to rating the yearly premium.
According to NIC, this approach has the inborn burden of coming about in premiums that are reformatory. Taking into account this, another formula has been introduced.
The premium is to be paid by policyholders when a policyholder demands motor insurance policy for a time of not exactly a year.
All things considered, the premium is to be returned to policyholders when the policyholder seeks to terminate an existing policy; and the premium is to be returned to policyholders when an insurer terminates an existing policy.
In any case, the 130% in the formula is to take into consideration the expansion in policy administration cost as a result of servicing short-term policies as well as serve as an incentive for policyholders to purchase annual policies as opposed to short-term policies.
Also, where a policyholder requests to cancel a motor insurance policy the formula to be applied is the amount of premium to be returned to the policyholder after their request is calculated.
Here, the formula is to allow for the increase in administrative costs of servicing short-term policies as well as a disincentive for policyholders to cancel their policies. In uncommon situations wherein the premium to be returned is negative, no superior will be gotten back to the policyholder.
At long last, when a safety net provider drops a motor insurance policy, the measure of the premium is to be returned to the policyholder. The yearly premium and premium paid in the various formula allude to the Total Risk Premium; that is, the charge before addition of Motor Insurance Sticker fees and Ecowas Brown Card fees.