ASSESSING INSURANCE AWARENESS IN GHANA

Microinsurance Conference 2012University of Twente

Charles Ackah and Adobea Owusu Institute of Statistical, Social and Economic Research (ISSER)

University of Ghana, Legon.

RESEARCH PROBLEM

Insurance coverage in Ghana is low - 4.1% in 2010 (excluding public health insurance).

Lack of knowledge about the concept of insurance and poor attitudes towards insurance may account for the low uptake of insurance.

However, there is lack of evidence on the level of insurance awareness in Ghana.

This study seeks to gain insight into the current situation regarding insurance awareness (defined as a combination of knowledge and attitude) in Ghana.

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RESEARCH QUESTIONS

What is the level of knowledge and attitude towards insurance in Ghana?

What factors determine the level of insurance knowledge and attitude towards insurance in Ghana?

Does a household’s insurance awareness score correlate with its uptake of insurance?

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DATA Main topics covered:

Insurance knowledge (products, concepts, etc); Attitude towards insurance (trust, perception,

risk aversion, risk pooling, etc); Insurance practice (actual use of products/non-

use);Alternative forms of financial cushioning.

Sample: Qualitative - 6 FGDs: 3 agents/staff, 2 clients, 1

non-clients;Three MI schemes involvedQuantitative – 303 respondents (173 insured,

113 uninsured, 17 undisclosed status).4

RESULTS: QUALITATIVE

Most Ghanaians, especially those in the informal sector, do not take up insurance.Ghanaian culture does not promote insurance:

‘We are what we think and better are we by focusing on the positive side of life as having evil thoughts invite evil to befall us’ [Agents, Company 1].

‘…..Our culture does not make us think of these misfortunes. We think of what to eat today and not what misfortunes/evil will happen to us and so we don’t prepare for such misfortunes [Staff/agents, Company 3].

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RESULTS: QUALITATIVE CONT’D

‘when you begin thinking of insurance or getting insured, you are having evil thoughts. There is no need to get insured because when you do that you are inviting evil’ [Non-insured group, Kumasi].

  ‘It is not part of the Ghanaian culture to prepare

ahead for misfortunes’ [Agents and Staff of Company 1, Accra; Agents of Company 2, Accra].

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RESULTS: QUALITATIVE CONT’D

There was the general consensus that the vast majority of Ghanaians have heard about insurance.

Yet, it was generally agreed that the vast majority do not understand the concept of insurance.

‘-- I have heard about it but I don’t know its nature, as to whether it’s slit (long skirt) and kaba or blouse. I don’t really know how it is done and what it entails’ [Non-insured respondents, Kumasi].

The study revealed that the concept of insurance is colored by the concept of Susu (micro savings) and many cannot differentiate between the two.

impression: insurance companies will eventually renege on their promises

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Ghanaians generally have a poor attitude toward insurance. This situation stems from two main reasons: There is a very great misconception of and mistrust

about the operations of insurance companies in Ghana. Several reasons were given to explain why: the

operations of the insurance companies are not transparent, making claims from them is difficult, they are corrupt, etc.

‘My uncle’s nephew had an accident. For six years, they had to travel to Accra frequently to their office in order to make their claims. Even through this travelling, one of them had an accident and died. With this, I will say that the insurance was not beneficial’ [Non-insured persons, Kumasi].

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RESULTS: QUALITATIVE CONT’D

RESULTS: QUANTITATIVE (KNOWLEDGE) We tested insurance knowledge with six T/F and

MC questions. The insurance knowledge index is the sum of correct answers. Greater Accra respondents had the lowest score. Richer households were relatively more

knowledgeable.

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Table 1: Knowledge of Insurance, by Gender of Household Head Mean Male Female Types of insurance known (MC) 0.37 0.43 0.32 Insurance is for free (T/F) 0.83 0.83 0.84 No need to pay regularly (T/F) 0.82 0.83 0.81 Get money back if no claim (T/F) 0.77 0.77 0.78 Contribute specific amount (MC) 0.78 0.81 0.76 Life insurance (MC) 0.33 0.47 0.20 Insurance Knowledge Index 0.65 0.69 0.62

RESULTS: QUANTITATIVE (ATTITUDE)

Respondents were asked to give their opinions on several items related to their attitude about insurance.

The results show that regardless of region or gender, most people have a high level of confidence in the insurance providers. This finding contradicts the results of the

qualitative study. We also constructed an index to measure

attitudes towards insurance using the Likert scaling method.

The attitude index is the mean of favourable and non-favourable attitudes towards insurance.

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RESULTS: QUANTITATIVE (ATTITUDE)

The index is constructed from the subjective responses to trust, perception and importance questions on insurance firms and their products.

The more positive towards insurance the higher the index. The mean attitude is 0.74 . Male respondents scored higher than females

on the attitude index. The young (18-34) scored better than the

elderly.Respondents residing in Greater Accra had the

worst attitude towards insurance. Finally, the rich scored relatively better than

their poorer counterparts.11

RESULTS: MULTIVARIATE

Insurance knowledge was relatively higher for households headed by males, ceteris paribus.

Interestingly, female-headed households scored better than male-headed households on the attitude index.

Households with higher levels of income had significantly higher insurance knowledge and better attitudes.

Respondents with more than a senior high school education had higher levels of insurance knowledge and favourable attitudes.

Finally, we find that a household’s awareness of insurance positively correlates with the likelihood of insurance uptake.

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RESULTS: MULTIVARIATE

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Table 2: Determinants of Awareness of Insurance and Insurance Uptake

Attitude index Knowledge index Insurance Uptake

Age of household head -0.000297 -0.00014 0.0117* Female head 0.0191* -0.0441* 0.187 Rural -0.00057 0.00579 0.00503 Junior secondary 0.0135 0.042 0.414* Senior secondary 0.0377** 0.104*** 0.844*** Formal wage employment 0.00827 -0.00418 0.333* High socio-economic status 0.0368* 0.0792* 0.148 Insurance awareness index

2.301***

Observations 283 283 283

IMPLICATIONS: POLICY AND PRACTICE

NHIS has both + and adverse effects on insurance awareness in Ghana. Mistrust for insurance informed mostly by fall-out from

NHIS. NHIS has increased the knowledge of the concept of

insurance. NHIA should reorganize and work on negative image of

scheme; Micro insurance providers should do same. Respondents have favourable perception of

insurance concept but not how it is provided in Ghana: With increased insurance education, positive image of

MI schemes, better state oversight, uptake could increase greatly.

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NEXT STEPS

Ongoing research sponsored by GIZ Ghana: A more comprehensive and representative market survey is underway for generalizability and to relate awareness to behaviour.

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THANK YOU