Formalising operations

Case study 9: Unique - Ghana

ICMIF and its member Zenrosai of Japan assisted the Labour Enterprise Trust Company Ltd to undertake a feasibility study and provide insurance experts to support the necessary groundwork to set up a co-operative insurance company. The trade unions and co-operative union collected regular premiums of $1 from each of its members and by 1999 raised sufficient capital (1 million USD) to make an application for an insurance license. During 2000, annual premium income of Unique Insurance company was about 350 thousand US dollars. In January 2001, the Co-operative Credit Unions Association (CUA) of Ghana approached ICMIF for assistance to provide formally acceptable insurance services to credit union members. CUA had introduced an informal risk management program in 1986, in which some 120 of the 160 credit unions in the country received credit life insurance and savings life insurance. An agreement was reached to pursue a partnership between CUA and Unique sponsored by ICMIF and the Canadian Co-operative Association (CCA).

The consultants mission was to

• identify the administration, information systems, accounting, actuarial and marketing requisites of the joint program;
• design and implement the needed management information system and database; and
• ensure the program’s adherence to current and anticipated legal and government requirements.

The first step is to transfer the CUA credit life business to Unique, this needed a product to be developed from scratch as Unique did not have an existing credit life product, requiring the following steps:

* finalising the product itself, i.e., all the specifications;
* designing the procedures and forms, health declaration forms and certificates of insurance;
* arranging for reinsurance;
* developing the actuarial rates and reserve calculations;
* drafting the master contract; and
* modifying the administration/actuarial/reinsurance software.

The general arrangement of the partnership is for the individual credit unions to sell the product to their members, collecting data, and handling the applications and health declarations. The CUA markets the products to credit unions, codes the data and undertakes general administration in return for a profit share. Unique will bear the risk, provide actuarial and software support, obtain reinsurance and pays claims.

The credit life product will be piloted in four credit unions to generate live data. The second product, savings life insurance will be transferred in 2002. A broader objective of the CCA-ICMIF project is to use the risk management, insurance and reinsurance elements of this model agreement to assist credit union organizations and co-operative insurers in other countries to develop and maintain sound insurance services for their members.