According to Maslow’s Theory of Needs, a sense of security comes after food, clothes, and shelter (physical needs). The uncertainty of meeting one’s needs in the present and future creates an economic opportunity in which insurance might help. The insurance business has developed to become one of the non-financial industry components that have ingeniously found their way into the lives of people in Sub-Saharan Africa. Overall, insurance is more than simply a means of paying losses; it is also a means of encouraging loss prevention, which benefits society as a whole.
Vehicle insurance was developed in response to the need to safeguard motorists from large financial losses associated with driving an automobile. Because it is the most prevalent mode of commuting and connecting cities, road transportation has contributed to mortality risk in most nations. Road transportation is the primary mode of transportation in Ghana, as it is in other developing countries. Most people in Ghana rely heavily on road transportation to get to work, distribute raw resources, food items, and go about their daily lives. Commercial drivers carry passengers on a regular basis in what is known locally as ‘trotro’ business.
In Ghana, vehicle insurance is compulsory nonlife insurance. This is stated under section 1 of the Motor Vehicles (Third Party Insurance) Act, 1958 No. 423 as follows:
‘(1) Subject to this Act, a person shall not use, or cause or permit any other person to use, a motor vehicle unless there is in force in relation to the user of that motor vehicle by that person or the other person, a policy of insurance or a security in respect of third-party risks which complies with this Act.’
It is not only mandatory but also a criminal offense to use the road without insurance. This has given the Ghana Police Service a role to inspect vehicle insurance.
The livelihood of many in the local transport business activities depends so much on the smooth functioning of their business. Therefore, to pay a fine or risk seizer of a driver’s license implies that a family’s daily bread is on the line. This renders drivers (private and commercial) vulnerable to police harassment and payment of unofficial fees to police officers who arrest them in default insurance regulation.
Vehicle insurance is in great demand due to legislative requirements. However, because life insurance and other non-life insurance (such as personal accident and general liability) are not mandatory, demand is relatively low. According to Gerald Woods’ 2020 research titled ‘Household Demand for Insurance Policies in Ghana: A Case Study of Selected Insurance Companies in Ghana,’ insurance companies confirmed vehicle insurance policy as the most popular policy in Ghana due to the statutory requirement to have a vehicle insurance policy to cover liability to others as a result of vehicle use.
This makes the development of insurance policies run counter in response to the needs of policyholders. Insurance policies are bought through the collection of premiums periodically. In practice, one gains nothing from an insurance policy until an eventuality occurs. Why should policyholders be making a financial commitment and gain nothing, if for the whole life of a vehicle insurance policyholder undertake his mandated obligation and never gets involved in an accident, where does the investment go? This is an important question that can drive behavioural change in Ghana by incentivizing policyholders with zero-accident records. Insurance policies should holistically help reduce accidents to benefit society as a whole, however, it is perceived differently in Ghana with drivers being the sole focus of insurance regulations.
Driver Mo is an advocacy project aimed to ensure a better vehicle insurance policy in Ghana that can protect the income of policyholders and secure a better future.