Dr Kwabena Duffuor, Minister of Finance and Economic Planning, on Monday called on players in the insurance industry to work hard to restore public trust and confidence in their operations.
He said premium undercutting, unbridled granting of credit that resulted in unethical competitive practices that limited the insurance company's ability to meet claim obligations and improved services had resulted in serious "reputational challenges and mistrust" for the insurance industry.
Dr Duffuor said this in a speech read on his behalf at the opening ceremony of the two-day West African Insurance Companies Association (WAICA) 2012 Educational Conference held in Accra.
The conference, dubbed: "WAICA Accra-2012" aims at encouraging the development of the insurance market in each member country on sound and technical basis and to stimulate exchange of business among member companies operating within West Africa.
Members of the WAICA include Ghana, The Gambia, Sierra Leone, Liberia and Nigeria.
Dr Duffuor, however, expressed dissatisfaction at efforts made by the insurance companies to comprehensively introduce and popularize micro-insurance products that target the informal sectors.
"If we continue to pay lip service to these critical segments of our economy and society, we will continue to record low insurance penetration which has been the experience in all WAICA member countries and the rest of Africa for all these years, except South Africa", he said.
Touching on life insurance policies, Dr Duffuor stressed that more could be done through innovative product designs, adoption of effective marketing strategies and the reliance on mobile telephony services for the collection of premiums and other related service.
He expressed the optimism that foreign direct investment both in the insurance sector and in other productive sectors of the economy would improve the capital base and the financial capacity of insurance companies to underwrite bigger risks as well as create more insurable businesses for insurance companies.
Mrs Nyamikeh Kyiamah, Commissioner of Insurance, explained that the presence of foreign companies on the Ghana Insurance Market have had undesirable effects adding that the influx of the companies had led to fierce competition for growth and survival.
"It is rather sad to note that some of the companies have resorted to unethical marketing and underwriting practices as well as bad credit management practices to manage the competition", he added.
Mrs Kyiamah said some companies conducted their businesses in a manner that led to premium flights saying "in a number of instances, huge premiums which hitherto had been retained in Ghana and can be retained are sent overseas through pseudo reinsurance arrangements of some foreign insurance companies".
She called for a regulatory and supervisory system that addressed the increasing presence of insurance groups, financial conglomerates and financial convergence.
Mrs Kyiamah said "this is necessary in order to harmonize regulatory practices and avoid or minimize regulatory arbitrage".
She called for supervisors in the West African sub-region to increase their collaborative efforts to ensure that regulated entities were effectively supervised for the protection of the interest of policyholders.
Mrs Kyiamah added that "this will also ensure that the insurance industry in West African sub-region remains stable, that the risk of contagion from one country to another is minimized, that supervisory gaps are reduced, and that unnecessary supervisory duplications are avoided".
Mr Kwame-Gazo Agbenyadzie, President of the Ghana Insurers' Association, called for a strong, efficient and effective national and sub-regional associations as well as local and regional co-operation.
"We must build the financial capacity of our local and regional insurance institutions by ceding more business to them and ensuring prompt payment of reinsurance premiums to them as we do to international reinsurers", he said.
Mr Agbenyadzie said "by so doing we would be helping them to help us when we need them to support us meet our obligations to our clients when they are in distress".
The conference would be on the theme: "Harnessing the effects of Foreign Direct Investments for the Development of the Insurance Industry in West Africa."
It is being organised by the Ghana Insurance Association in collaboration with WAICA, NIC and Ghana Insurance Brokers Association.
WAICA was formed in May 1973 to foster collaboration and co-operation among insurance companies in English speaking West Africa countries.