Paper Topic; Insurance Market Penetration in Ghana Case study Vanguard Assurance Company Limited

Insurance market penetration in Ghana case study Vanguard Assurance 1
University of the People
Master’s in Business Administration
Course: BUS 5910: Managing Capstone
Capstone Project
Course Instructor: Dr. George Conley Jr.
Date; 03/19/2020
Paper Topic; Insurance Market Penetration in Ghana Case study Vanguard Assurance
Company Limited
Keywords; Market penetration, Vanguard Assurance, Insurance, Ghana.
Presented: Newton Bezeng
E-mail: newtonbezeng@outlook.com
Tel: (+233) 0592065528

Table of contents
Pages
Cover page
………………………………………………………………………………………………....….……...…. 1
Table of Contents
……………………………………………………………………………………….…….….…....… 2
Abstract
……………………………………………………………………………………….…….…....……..…......…. 3
Introduction
…………………………………………………………………………………….……….……...…….…. 4
Company description and major issues ……………………………………………………...………….……...…....….
4
Section A; Problem Statement for the Low Insurance Penetration………………………………....….…...…….....…..
6
i) The realities about the insurance market in Ghana ……………………………………………….…….....….....……
6
ii) Analysis and statistics on the insurance trend in Ghana …………………….………………………… ……..….…
6
Section B; Statement of Cause(s) for the low insurance penetration
……..………………...……………….…...…..…7
i) The causes of low insurance penetration by Vanguard Assurance ………………….….……...……….…….
….…..7
i) The downplay of ethics and its effects on Vanguard Assurance insurance
penetration……………………....……...7
The neglect of strategic human resource development (motivation) vis-a-vis Vanguard Assurance Ghana’s
employees
…………………………………………………...………………………………………………………...….8
Section C; Possible Alternatives Solutions to guarantee insurance penetration in Ghana ………………....….... ….. 9
i) Mergers and Acquisitions
..………………………………………………..…………………………….……......…... 9
ii) Vanguard a Copycat innovator and stay away from copyrights infringements
………………………….….…….10
Section D; Recommended action plans practically applicable to boost insurance Penetration
……………………………………………………………………………………………………………….........…….
..12

i)The introduction of microinsurance insurance by Vanguard Assurance Ghana
…....…………..…………..….……12
ii) The payments of insurance premium through mobile wallets using the Unstructured Supplementary Service Data
(USSD)network
…………………………………….…..……………………………………………………..………..13
iii) Managerial remedies for Vanguard Assurance to attain its market penetration
objectives………………………………………………………………………………………………….…….……....
14
Conclusion
………………....……………………………………………………………………………….…….…..…15
References
………………………………….……………………………………………………………..…….……….16
Abstract
This case study will be centered around examining the principle of market penetration with
regards to the insurance industry in Ghana. In particular, I will be using the case study of
Vanguard Assurance Company Limited to critically examine this principle and see how its
operation in the insurance industry has been affected positively or negatively by the principle of
market penetration and the way forward concerning their activities. Possible alternatives
solutions to guarantee insurance penetration in Ghana and recommended action plans that may

be applied to boost insurance Penetration looking at Vanguard Assurance Company Limited as a
case study.
Introduction
Market Penetration has been the major objective for small or giant companies, national or
multinational organizations with the aim to gain a greater portion of the market share. Market
penetration can be obtained successfully if an organization exploits the principle as a competitive
advantage with respect to its competitors. According to Will, (2019), Market penetration is a

measure of how much a product or service is being used by customers compared to the total
estimated market for that product or service. Market penetration can also be used in developing
strategies employed to increase the market share of a particular product or service. The overall of
this paper is to provide an analytical presentation of what the Insurance market penetration in
Ghana looks like. Our choice of Vanguard Assurance as a case study for this analysis is because
it is one of the oldest indigenous insurers therefore suitable for the purpose.
Company description and major issues
Vanguard Assurance Company Limited began operations in October 1974 as a composite
insurance company and has the enviable record of being the first private indigenous insurance
company in Ghana. At inception, Vanguard offered only two classes of business - Life and Fire.
Over the years, the company diversified its product portfolio into a one-stop composite insurance
company underwriting all the major classes of Life and Non-Life insurance, (Vanguard
Assurance, n.d.).
Today, Vanguard Assurance is a subsidiary of the Vanguard Group underwriting only non-life
insurances. As a pacesetter, Vanguard Assurance played a leading role in the establishment of
the following successful companies such as; -Vanguard Life Assurance Company Limited
-Ghana Leasing Company -CAL Bank -Vanguard Properties Development Company Limited
-Juaben Rural Bank, (Vanguard Assurance, n.d.).

Vanguard Assurance has a vision; to be the preferred Insurer fulfilling our customer needs and
aspirations, a mission; to offer financial security through innovative insurance solutions that
delight our customers and finally with the values that; believing the customer is always right,
esteem in integrity and honesty, rewarding productivity and innovation and considering both the
insurer and the insured are one family, (Vanguard Assurance, n.d.). With all these fine visions,
mission, value why is market penetration or consolidating the Ghanaian insurance market still a
problem with Vanguard Assurance Company Limited?
The National Insurance Commission has increased the minimum capital requirement for
insurance companies in the country from ¢15million to ¢50 million (approximately
$9,269,790.27). According to a statement from the NIC, insurance companies have up until June
30, 2021, to meet the new minimum capital requirement, (Joseph, 2019). Vanguard as all the
other insurance companies in Ghana have a huge financial challenge to raise funds to meet with
the minimum capital demand.
Section A; Problem Statement for the Low Insurance Penetration
(i) The realities of the insurance market in Ghana
According to market professionals, the low insurance penetration rate (less than 3%) in Ghana is
accounted for by the public's lack of awareness on the importance of insurance, (AtlasMagazine,

2020). A GhanaWeb confirms the fact that; ‘the country’s Insurance penetration rate has dropped
to 1 percent from the previous rate of 1.12 percent, the 2018 report of the National Insurance
Commission has revealed’ (GhanaWeb, 2019).
(ii) Analysis and statistic on the insurance trend in Ghana
Year Year Premium income (GHS) Growth rate (%)
2013 1,052,090,981 24
2014 1,239,853,442 18
2015 1,560,679,185 26
2016 1,928,838,573 24
2017 2,400,000,000 18
2018 2,937,534,716 29
Table 1: Insurance growth rate from 2013 to 2018 (National Insurance Commission, n.d. Pp,9.)
The market insurance growth rate in Ghana has no consistent trend rate. It has neither been
growing in arithmetic nor in a geometric rate, showing there is a problem with the market
penetration as it has been influenced by the incoherence of the figures in the table above.
Section B; Statement of Cause(s) for the low insurance penetration
(i) The causes of low insurance penetration by Vanguard Assurance Company Limited
The causes of the low insurance penetration by Vanguard Assurance Ghana, in general, are the
causes for the low insurance penetration in Ghana which ranges from; studies which suggest the
lack of knowledge about insurance products by the population, majority low-income earners,
challenges faced by insurers in marketing the insurance products, Vanguard Assurances Ghana,

has a common challenge which is low public confidence coupled with a deep-seated mistrust of
insurance companies, (National Insurance Commission, n.d. Pp, 17-19.).
(ii) The downplay of ethics and its effects on Vanguard Assurance insurance penetration
The essence of ethics is knowing is right and wrong, and then doing what is right. Moral and
ethical principles are based upon values such as integrity, honesty, justice, and trustworthiness,
(Affordable CE-USA, 2013. Pp, 3). Some of the area’s most companies including Vanguard
Assurance will go unethical contrary to the code of conduct set by the regulator(s) for example
National Insurance Commission (NIC) of Ghana is; misrepresentation, altering applications,
premium theft, unlicensed sales, forgery, misleading sales techniques, illegal rebates, untruthful
policy replacements, discrimination, untruths advertising practices, (Affordable CE-USA, 2013.
Pp, 6-9). Commonly found during financial auditing there are huge figures patterning to
‘business acquisition fee’ an unethical practice that gives managers the right to offer financial
compensations to other corporate executives for offering/facilitating business contracts awards a
practice that is killing the industry.
(iii) The neglect of strategic human resource development (motivation) vis-a-vis
Vanguard Assurance employees
Our analysis will be based on the school of thought of Soft human resource management (HRM)
techniques that focus on employees; training, development, commitment and participation in the
organization, (Senyucel, 2009. Pp, 16.). Vanguard has to ensure that HRM techniques are

adaptable to industrial and societal trends to give her competitive advantage against her
competitors through training and development which eventually leads to commitment and
participation. Commitment and participation can also be boosted by the theory of motivation.
Senyucel, (2009. Pp, 23-24), points out that; our economy depends on our motivation and
commitment of employees and it is the heart of the central feature that distinguishes HRM from
traditional personal management and also a major player for motivation is money (employees’
remuneration). When the training, development, and motivation is well instituted by the HRM
strategically, the intrinsic, extrinsic and social motivators of the theory of work is established
which becomes a competitive advantage to the company, ‘even though a pitfall of management
approaches is that no management style can stand-alone’ (Laegaard & Bindslev, 2006. Pp,119.).
Section C; Possible Alternatives Solutions to guarantee insurance penetration in Ghana
One of the aspects plaguing the penetration of insurance products to the masses is negative
publicity some insurers have portrayed such as unwilling to pay claims adequately on time or go
bankrupt which may be as a result of bad faith on the part of the insurer or in inadequate funds to
meet claims premiums. 'As such the NIC together with the Ministry of Finance and Economic
Planning, the regulator discussed in 2017 implementing another significant rise in the minimum
level of funds companies will have to keep on their books. While the official decision has yet to
be announced as of February 2018, suggested levels have reached as high as GHS50m ($10.8m),

with more recent reports putting the proposed change at GHS30m ($6.5m)', (Oxford Business
Group, 2019). Section 69 (1) (a,b) of the Insurance Act of Ghana stipulates that; (1) An insurer
shall ensure that its capital is maintained in an amount which is not less than (a) The minimum
capital applicable to the insurer as stated in the Second Schedule, or (b) The amount that the
commission may by notice direct under subsection(2). Regulators are aimed at wiping out this
stigma by creating an enabling and conducive business climate for insurers.
i) Mergers and Acquisitions (M&A)
'There are essentially two kinds of mergers and acquisitions: strategic and financial. A financial
merger or acquisition is pursued, as the name implies, for financial reasons often to pick up some
quick cash or as an investment. Strategic mergers and acquisitions offer a solution to a different
business problem. Perhaps the acquirer is looking to grab a new product line, add some
additional facilities, enter a new market, or gain expertise and intellectual property,' (Lee, 2020).
Our focus on Vanguard's case will dwell on both financial and strategic mergers and
acquisitions. This is because Vanguard aimed to penetrate the market and expand its market
share. Vanguard merging and or acquiring smaller grassroots brokerage insurance firms and
agencies will give her an entering step into mass insurance which is one of the solutions she can
rely on to stay on top of the market. Implementing M&A Vanguard will gain the following
advantages as pointed out by Lee Frederiksen (2020), in his article ‘professional services

marketing today’; Fills critical gaps in service offerings or client lists, Efficient way to acquire
talent and intellectual property, Opportunity to leverage synergies, Add a new business model,
Save time and long learning curves.
ii) Vanguard a Copycat innovator and stay away from copyrights infringements
To stand as the pacesetter in the market that is to say coming up with innovations and staying at
the top is challenging because it entails huge finances. Looking at our case study Vanguard
Assurance with her problem to top up her minimum operational capital as stated by the National
Insurance Commission (NIC) it would not be a good venture setting the pace by investing more
finance on innovative ideas geared towards insurance penetration. Vanguard Assurance should
copy from competitors and tailor to their own strategies.
Dr. Yew Kam Keong, Ph.D. had suggested that 'the act of adopting a solution that has been
used successfully in another industry or profession, is a more reliable, affordable route to
innovation. Copycat innovation is about adapting a proven solution to come up with an
innovation, thereby minimizing risk and optimizing success. Yew further explains that Coming
up with breakthrough ideas and innovations is indeed tempting and glamorous. Success could be
market domination. However, this strategy carries the biggest risks and demands massive efforts
and resources. It is an activity that is complex, costly and with very little promise of a return on
investment. Work on the successor of the successful product has to start immediately, which

means that the successive research budget must be increasingly higher than the original
innovation. In the same light in Yew's article; Accenture, the largest business consulting
company in the world, published an article entitled Leading by imitation in their Outlook
advising that “more and more businesses are grabbing great ideas wherever they can get them
elsewhere in their industries or beyond. But the true high performers are actively creating
systemic competitive advantage by elevating their imitation game.” The prestigious journal
Harvard Business Review, in its April 2010 issue, also endorsed the view that imitation is more
valuable than innovation. The finding in the article is that “imitation is underappreciated. It can
be a more important growth than innovation is. Imitation is not mindless repetition; it’s an
intelligent search for cause and effect.”
Section D; Recommended action plans practically applicable to boost insurance
Penetration
i) The introduction of microinsurance insurance by Vanguard Assurance Ghana
Microinsurance aims to cover lives and protect the assets of low-income individuals and families
from natural disasters, illness, death, accidents and crop failure among others. By doing so, it
enables low-income individuals to manage their risks better by providing them with a safety net
that can stop them from falling back into poverty, (Camilo, n.d.).

A higher proportion of household members in urban areas do not have a policy (60.5%)
compared to the rural areas (39.5%), (National Insurance Commission,n.d.). With the low rate,
Vanguard has a great opportunity to increase her market share through copycat mass insurance, a
product she is exploiting partially of which this research paper is aimed at encouraging Vanguard
Assurance to get fully involved in mass insurance exploitation. The mass insurance project
should be accompanied by the use of Insurtech which 'insurance companies across the globe are
highly investing in digitization to simplify the transaction process and improve the functionality
of the insurance payment system. The adoption of insurance technology has allowed businesses
to assess risks related to the market, counterparty credit, operation, and liquidity. Insurtech also
allows insurance companies to improve customer engagement and provide faster services', Grand
View Research, (2019).
ii) The payments of insurance premium through mobile wallets using Unstructured
Supplementary Service Data (USSD) network
'Voice is the most obvious of these channels, and it is widely used by insurers today to
communicate with clients. SMS is more complex to implement typically requiring integration
with an SMS aggregator but it can be an extremely cost-effective channel for, for example,
reminding customers when premium payments are due because sending such reminders can be
entirely automated. The USSD (Unstructured Supplementary Service Data) protocol allows for

secure, interactive sessions that can be suitable for policy enrolment and administration, and it is
accessible on even very low-end handsets. However, insurers must typically negotiate directly
with mobile operators in order to gain access to this channel' (Camilo, n.d.).
Vanguard basing her strategy on our copycat strategy she can roll in one or all of the already
existing microinsurance products in the market that some competitors are providing already for
example; "Kilimo Salama (Safe Agriculture) is a weather-index microinsurance product
designed to protect farmers from the risk of drought and of excess rain. It was launched in
partnership between UAP Insurance, the Syngenta Foundation for Sustainable Agriculture
(SFSA), and Safaricom. Globe in the Philippines has piloted the Hospital Benefit Plan, a
loyalty-based hospital insurance scheme specially designed for all qualified recipients of
GCASH remittances. Notwithstanding Vanguard already provided a microinsurance life product
with Tigo Ghana with the support of Bima and microEnsure”, (Camilo, n.d.). Our focus is for
Vanguard to gain more market share by introducing the other microinsurance products that exist
already in the market.
iii) Managerial remedies for Vanguard Assurance to attain its market penetration
objectives
Business ethics should be one of the aspects Vanguard must institute in its penetration strategy to
be able to meet with her market expansion goals. Business ethics examines a business situation,

activities and decisions where the issues of right and wrong are addressed. Where right and
wrong are defined as morally right or wrong rather than financial or business strategy, Sarna,
2012).
Also, for Vanguard to succeed in such a venture employee motivation should be at the top of
the company's agenda. ‘The dominant motivating factor for productivity is money. Vanguard
Assurance growth depends on the motivation and commitment of employees’, (Senyucel, 2009.
Pp 23). Employee motivation can be measured using nonfinancial performance measures such as
the balanced scorecard. The balanced scorecard is used to measure employees’ motivation and
evaluate their performance using financial, internal business processes, learning and growing
customer expectation, (Heisinger. & Hoyle, 2012. Pp 1098).
Conclusion
In an attempt for Vanguard Assurance Ghana to gain market shares in an already tied
competitive market, there are a number of strategies I have proposed making it easy and feasible
such as Vanguard getting into merger and acquisition, or becoming a copycat. In order to make
her penetration more practicable, she is obliged to get into microinsurance insurance using the
Unstructured Supplementary Service Data (USSD) network with the application of some
managerial remedies as prescribed. Market Penetration has been the major objective for small or
giant companies, national or multinational organizations with the aim to gain a greater portion of

the market share. The insurance industry in Ghana has been a very sensitive player in society.
The actors in the industry are striving to gain the market by instituting the principle of market
penetration. We use the case study of Vanguard Assurance to illustrate the shortcoming faced in
access to a greater share of the market through market penetration.
References
Affordable CE-USA (2013). Insurance Ethics and Responsibilities. Successce.com website.
https://www.successce.com/Documents/InsuranceEthicsandResponsibilities.pdf

AtlasMagazine, (2020). Ghana: Insurance education included in school curricula. AtlasMagazine
Website.
https://www.atlas-mag.net/en/article/insurance-education-included-in-school-curricula
Camilo, T. (n.d.). Emerging Practices in Mobile Microinsurance. gsma.
https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2012/07/MMU_m-insurance-
Paper_Interactive-Final.pdf
Joseph, A.D, (2019). NIC increases minimum capital requirement for insurance companies to
¢50m. Joyonline website.
https://www.myjoyonline.com/business/2019/June-20th/nic-increases-minimum-capital-require
ment-for-insurance-companies-to-gh50m.php
GhanaWeb, (2019). Ghana’s insurance penetration rate drops to 1 percent. Ghanaweb website;
https://www.ghanaweb.com/GhanaHomePage/business/Ghana-s-insurance-penetration-rate-dro
p s-to-1-percent-779592
Grand View Research, (2019). Insurtech Market Size, Share & Trends Analysis Report By Type
(Auto, Business, Health, Home, Speciality, Travel), By Service (Consulting, Support &
Maintenance), By Technology, By End Use, And Segment Forecasts, 2019 - 2025
. https://www.grandviewresearch.com/industry-analysis/insurtech-market

Heisinger, K., & Hoyle, J. B.(2012). Accounting for Managers. Saylor Foundation. Creative
Commons by-nc-sa 3.0.
file:///home/chronos/u-4262280f73db2dbc7e929a419d8b37f4b536f481/MyFiles/BUS%20591
0%20Managing%20Capstone/BUS%205910%20Text%20books%20&%20Readings/Week%
204/BUS5110%20Accounting%20for%20Managers.pdf
Laegaard, J. & Bindslev, M. (2006).Organizational Theory. Bookboon.com
%20Managing%20Capstone/BUS%205910%20Text%20books%20&%20Readings/Week%202/
TEXT%20Organizational%20Theory%20chapter%201-2.pdf
National Insurance Commission, (n.d.) Increasing Insurance penetration in Ghana; The
challenges and strategies. NIC website;
http://nicgh.org/wp-content/uploads/2019/11/Insurance-Penetration-strategies-112019.pdf
Lee, F. (2020). Professional Services Marketing Today. Hinge website.
https://hingemarketing.com/blog/story/mergers-and-acquisitions-as-part-of-your-growth-strategy
Oxford Business Group. (2019). Insurers in Ghana adhere to rising minimum capital
requirements.
https://oxfordbusinessgroup.com/analysis/adequate-measures-raising-minimum-capital-requirEm
ents-boost-capacity

Sarna, L. (2012). Law for Business Students. Bookboon.com
law-for-business-students.pdf
Senyucel, Z. (2009). Managing the Human Resource in the 21st Century. Bookboon.com.
BUS5511.Senyucel.Managing.HR.pdf
Insurance Act, (2006). National Insurance Commission. National Insurance Commission
Website.
http://nicgh.org/wp-content/uploads/2016/07/Insurance_Act_724_2006_CV_toC.pdf
Yew, K.K. (n.d.). Copycat Innovation: A Practical Route to Profitable Innovation. Innovation
Management Website.
https://innovationmanagement.se/imtool-articles/copycat-innovation-a-practical-route-to-profitab
le-innovation/
Vanguard Assurance, (n.d.). History. From the Vanguard website.
https://www.vanguardassurance.com/aboutus/history.php
Will, K. (2019). Market Penetration. Investopedia website.

https://www.investopedia.com/terms/m/market-penetration.asp

Paper Topic; Insurance Market Penetration in Ghana Case study Vanguard Assurance Company Limited

Recommended

Recommended

More Related Content

Similar to Paper Topic; Insurance Market Penetration in Ghana Case study Vanguard Assurance Company Limited

Similar to Paper Topic; Insurance Market Penetration in Ghana Case study Vanguard Assurance Company Limited (20)

More from Newton Bezeng

More from Newton Bezeng (8)

Recently uploaded

Recently uploaded (20)

Paper Topic; Insurance Market Penetration in Ghana Case study Vanguard Assurance Company Limited