Why Ghana’s Insurance Regulations Still Fail Claimants, According to New KNUST Research

Ghana’s mandatory motor insurance regime, designed to protect road users and compensate victims, is failing due to deep-seated enforcement gaps and “bad-faith” practices by insurers. According to new research from the Kwame Nkrumah University of Science and Technology (KNUST), the problem lies not in the absence of laws, but in their implementation and the lack of accessible redress mechanisms for the average citizen.

Introduction

Motor insurance is meant to be a safety net—a legal requirement that ensures victims of road accidents receive compensation without financial ruin. However, for many Ghanaians, this safety net is riddled with holes. A recent doctoral study conducted by Dr. Edmund Nelson Amasah at KNUST sheds light on why Ghana’s insurance coverage regulations continue to fail claimants despite legislative efforts.

This article explores the research findings, dissecting the systemic failures that allow insurance companies to deny claims in “bad faith.” We will examine the personal motivations behind the study, the specific regulatory loopholes identified, and the practical advice for stakeholders ranging from policymakers to the everyday driver.

Key Points

Background

The study, led by Dr. Edmund Nelson Amasah, a doctoral researcher at KNUST, was born out of personal adversity. “My interest in insurance was shaped by personal experience,” Dr. Amasah revealed. He recounted a distressing incident involving his grandmother, a road accident that exposed the fragility of Ghana’s third-party insurance system.

Dr. Amasah witnessed firsthand how the system fails those who are uninsured or unlicensed, and more importantly, how difficult is difficult for victims to navigate the claims process. This experience catalyzed his resolve to investigate the chronic regulatory failures within the industry.

His research moves beyond traditional legal analysis. Recognizing that the victims of insurance malpractice are often the least educated about their rights, Dr. Amasah adopted a mixed-method approach. He combined qualitative interviews with digital tools like Google Forms to reach communities with limited literacy, ensuring that the research captured the authentic voices of those affected.

Analysis

The core of Dr. Amasah’s findings points to a paradox in Ghana’s legal framework. While the insurance industry operates under a guise of regulation, the actual mechanisms to discipline bad actors are either dormant or toothless.

The Regulatory Paradox

Two major pieces of legislation sit at the center of this analysis: the Insurance Act of 2021 and the older Legislative Instrument (LI) 1502 of 1990.

Parliament has acknowledged that claims delays can stretch for years, a problem the 2021 Act was supposed to address. However, Dr. Amasah’s research highlights a glaring omission: the Act introduced no specific, enforceable timelines for settling claims. Without a strict deadline, insurers have little incentive to process claims promptly.

Conversely, the older LI 1502 contains punitive measures specifically designed to penalize irrational claims denial or undue delay. Dr. Amasah notes that this tool remains “dormant.” He asks, “Where is the LI? It hasn’t been repealed, but it’s not being used either.” This suggests a regulatory inertia where the tools for justice exist on paper but are not wielded by the authorities.

The Problem of “Bad Faith”

In insurance terms, “bad faith” refers to the insurer’s failure to honor a valid claim. In Ghana, this often manifests as stalling tactics or denial based on technicalities that are not the fault of the claimant. The research indicates that these practices are rampant because the cost of doing so is low.

Dr. Amasah’s investigation reveals that the lack of accessible redress mechanisms empowers insurers to act in bad faith. When a claimant challenges a denial, they face a labyrinth of bureaucracy and legal jargon.

The Knowledge Gap

A significant finding of the study is the “intimidation factor.” Insurance contracts are complex. Dr. Amasah found that to bridge the gap between complex concepts and community understanding, he had to use everyday analogies.

For instance, he described bad faith as paying “five cedis instead of ten without reason,” or deducting premiums “without authorization.” This pedagogical approach highlights a systemic failure: the industry relies on the policyholder’s lack of technical knowledge to minimize payouts. The study concludes that consumer protection cannot exist without consumer education, but education alone is insufficient without legal backing.

Practical Advice

Based on the KNUST research and the current landscape of Ghanaian insurance law, stakeholders can take specific actions to mitigate these failures.

For Policymakers and Regulators

• Revive and Enforce LI 1502: There is no need to reinvent the wheel. Authorities must dust off the 1990 L.I. and apply its punitive measures to insurers who delay claims unreasonably.
• Amend the Insurance Act 2021: Legislation must be updated to include strict, statutory timelines (e.g., 30 days) for the acknowledgement and settlement of claims.
• Establish an Independent Ombudsman: As recommended by Dr. Amasah, an independent insurance ombudsman is crucial. This body would provide a low-cost, non-judicial avenue for dispute resolution, holding insurers accountable without forcing claimants into expensive litigation.

For Policyholders (Drivers)

• Verify Your Policy: Ensure you are buying insurance from a licensed insurer. Use the National Insurance Commission (NIC) portal to verify the authenticity of your policy document.
• Document Everything: In the event of an accident, document the scene, police report, and all communication with the insurer immediately. Written records are vital if a claim is denied in bad faith.
• Know Your Rights: Do not accept jargon-filled rejections. If an insurer denies a claim, request the specific clause in the policy that justifies the denial. If unsatisfied, escalate to the NIC immediately rather than giving up.

For Insurance Companies

• Adopt Plain Language: To build trust, insurers must rewrite policy documents in clear, accessible English (and local languages) to ensure customers understand what they are buying.
• Internal Compliance: Proactive compliance with LI 1502 is a reputational asset. Companies that settle claims swiftly will eventually win the market share in an industry suffering from a trust deficit.

FAQ

Conclusion

The research from KNUST paints a sobering picture of the state of motor insurance in Ghana. It reveals a system where regulations exist but are rendered ineffective by a lack of enforcement and a culture of “bad faith” among some insurers. Dr. Amasah’s work emphasizes that while public education is helpful, it is not a substitute for robust regulatory reform.

To restore trust and ensure that insurance fulfills its social purpose, Ghana must bridge the gap between legislation and practice. This means enforcing dormant laws like LI 1502, amending the 2021 Act to include strict timelines, and establishing an independent ombudsman to protect the vulnerable. Until these structural changes occur, claimants will likely continue to face an uphill battle for compensation.

Sources

• Primary Source: MyJoyOnline. (2025, December 22). “Why Ghana’s insurance regulations still fail claimants, according to new KNUST research.”
• Researcher: Dr. Edmund Nelson Amasah, Doctoral Researcher, Kwame Nkrumah University of Science and Technology (KNUST).
• Legal Framework: Insurance Act, 2021 (Act 1061); Legislative Instrument 1502 (1990).