The Effect of Insurance on Economic Growth in Ghana
CHAPTER ONE
Objective of the study
The research objectives are;
- To identify the role insurance play to the economy of Ghana.
- To assess the awareness among the general public about insurance in Ghana
- To find out the problems facing the insurer and the insured in Ghana
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
In this context, literature review is all about people’s opinion about insurance. Other related issues concerning the topic under discussion such as the role of insurance services rendered to the general public by insurance, and problems facing insurance in Nigeria among others will be taken into consideration.
Definition of Insurance
The term insurance has been defined by various authors and stakeholders.
According to Greene and Trieschman, (1985) insurance is “An economic institution that reduces risk by combining under one management a group of objects so situated that the aggregate accidental losses to which the group is subjected become predictable within narrow limits”.
Insurance can be said to include certain legal contracts under which the insurer, for consideration, promises to reimburse the insured or render services in case of certain described accidental losses suffered during the term of the agreement”.
The definition stresses how the main economic function performed by insurance such as risk reduction is accomplished. The emphasis is on the word “usually” which implies that not all insurance is affected by means of a legal contract.
To the socialist, insurance is a mechanism, modern society use to reduce social impact in financial terms of losses or damages suffered by the victims of accidental misfortunes.
In addition Steven Dracon and Trevor Watkins (1987) defined insurance as “ an agreement by which one party, the insurer promises to pay another party the insured or policy holder, a sum of money if something happens which causes (or has potential to cause) the insured to suffer a financial loss”
From the definition, it means that the adverse effect of the loss on the insured is mitigated to the extent that it is offset by the benefit received from the insurer, thus the primary service provided by the insurer is a guarantee of payment of a valid claims, benefits on the accordance of an accidental loss or event covered by the policy.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
To do a successful research work, there is the need to gather or collect data. However, this data collection can only be successful if certain methods or procedures are put in place to ensure smooth collection of the relevant data, its presentation and analysis.
The chapter deals with the methods used to collect the data for the study. Some of the important issues to be addressed under methodology are study area, research design, the study population, sample size sampling techniques, data collection methods, and data analysis tools.
.Population
The population for this study includes the customers of Donewell Insurance Company (DIC), the staff and management of DIC and the community, that is the general public. The management and staff are those who ensure the smooth day-to-day running or administration of DIC. In all a total number of hundred and ten (110) formed the study population. Of this, (20) were management and staff, (30), customers and sixty (60) people from the general public. The researcher distributed questionnaires to the officials of DIC, staff, customers and the general public. . This is because the researcher believes that the number is enough to provide the needed information for the attainment of the research objective.
CHAPTER FOUR
ANALYSIS AND INTERPRETATION OF DATA
Introduction
As suggested by the caption, the researcher analyzed and interpreted the data collected from the field in this chapter. The researcher in doing this distributed questionnaires to the respondents of the study and interviewed some of them. The data the researcher collected were entered in a Statistical Package for Social Science (SPSS) which generated tables and charts for the analysis and interpretation. The researcher, therefore, only explained the tables which were generated by the SPSS.
CHAPTER FIVE
FINDINGS, RECOMMENDATION AND CONCLUSION
INTRODUCTION
The main focus of this study was to develop findings and conclusion from the study. The chapter also included recommendations that could be helped to address the problems identified from the study. In effect, this chapter discussed the findings, conclusion and recommendations of Insurance Company of Ghana Donewell Insurance Company).
FINDINGS
The researcher was able to come out with the following findings from the study:
Research finding revealed that the role played by insurance to the organization was the development of trade and the mobilization of fund. Moreover, it was also revealed that people are not aware of the roles insurance play and so people do not see the need to take insurance policy.
Moreover people see insurance as cheat to them because when they insure their properties against some uncertainty and it doesn’t happen, their monies go waste. Also people see insurance to add more to cost in that drivers who insure their cars end up repairing their own cars when they get accident with the idea that if they report it to the insurance companies, they will go through a lot of procedures which will waste their time and therefore they don’t see the need for it if it is not by law to take insurance.
The research findings revealed that, the type of insurance people know is motor insurance this is because it is by law for everyone owing a car to insure the car. Most of the client fails to pay their premiums on regular basis as they are supposed to do and this really affects the activities of the organization Also the Frequency of claims from policies particularly motor insurance policies is a major problem thus insurers must be liquid and ready to pay from the moment a new policy is issued and cannot develop virtually all of its incoming premium receipt to long-term investments. Five people noted that financial problem is a problem facing insurance companies to the insured. This is because sometimes the insured is suppose to pay money every month as a premium but there are situations where they might not get the money to pay if deduction is not done from source and even if it is deducted from source it sometimes create hardship for the insured.
The role played by insurance to the economy development of Nigeria was payment of loses and indemnity.
Additionally, most respondents revealed that to assess the role play by insurance, the policy should ideally be relevant. A very high percent (86.7%) of respondents revealed agreed that insurance companies contributed significantly to the economy development of Nigeria. Furthermore, finding also revealed that the contribution of insurance companies is a key indicator in the growth of Ghana’s economy for the past ten years. It was also found that the major contribution of insurance to the economy of Ghana and businesses was offering of employment.
Coupled with this, it was also revealed that the result after insurance companies have significantly contributed to their customers in the various forms was positive
RECOMMENDATION
The following are the necessary recommendations made from the study:
There should be collaboration between the company and the mobile telecommunication networks since almost every Ghanaian is using these networks it will be a very good platform to make insurance popular and sell well the insurance products.
Good, attractive and innovative policies which will encourage savings should be introduced so that many people will find it necessary to take insurance
The insurance companies must give policies which they can pay for to the insured since there is a problem of payment.
Funds should be made available so that all policies holders can be indemnify on time.
The insured must pay their premium on time so as to keep the policy alive. This is the only way they can be paid on time when the event occurs.
The terms of the insurance must be made clear to all so that in times of the occurrence, problems should not arise.
Management of insurance companies should periodically assess the policy to put every on schedule.
Qualified persons with very good insurance background should be employed to work with the company to avoid the problem inherited by the insurance.
Since the policy guarantees the insured of lump sum payment in the future should the event occurs, the policy holders must also carry his/her obligation in good faith.
Proper account of the event must be made available to the insurance company. That is, if fire catches your house, you must tell the company that it was fire.
Seminars should be organized to educate the policy holders about the benefit, effects, and other issues concerning insurance.
CONCLUSION
The term insurance perceived by most Ghanaian as the source of fund after the occurrence of the act insured is not like that. It helps pool risk, provide job to both the country and give credit facilities to businesses if applicable. .
It should also be understood that, insurance itself is a contract between the insured and the insurer. Under this contract one party, the insurer agrees to indemnify the other party, the insured, against losses arising from the happening of uncertain event. For example, fire, theft or to pay lump sum of the happening of certain event like death although the latter class is more usually called assurance, it involves the offer of a policy for purchases by a given insurance company and the buying of the said policy by an individual or a corporate body.
Insurance is that policy which pays of a small but certain expense to avoid a large expense which will be experienced if certain events take place.
The contract of insurance is generally shown by a document which is known as the policy which is signed by the insurer or his/her agent at the full of the policy from which practice, the term underwrites is derived. The consideration for the granting of a policy is a premium paid by the insured, and upon the happening of the event insured against, the insurer must pay to the insured either the indemnity required under the policy or lump sum of the happenings of the specified event.
The principles of insurance identified in the study are utmost good faith, subrogation, proximate, and insurable interest.
It can be inferred from the forging that insurance is not necessarily an investment from which are expects to get one’s money back nor it is gambling. A gambler takes risk while insurance offers protection against risks that already exist; meaning of insurance is a way to share risks which offers, sharing of the loss of few between the many.
References
- (2016). Waves of change: revisited. Insurance opportunities in Sub-Saharan African. [Online] Available at: https://www.bog.gov.gh/privatecontent/Research/Articles/rpaper9.htm [Accessed 16 June 2018].
- Financial Inclusion Insights. (2015). National Survey. CGAP: Washington DC. [Online] Available at: http://finclusion.org/uploads/file/reports/2014%20InterMedia%20FII%20GHANA%20National%20Sur vey%20Report.pdf [Accessed 12 May 2018].
- Ghana Statistical Service. (2008). Ghana Living Standards Report Round 5. Ghana Statistical Service: Greater Accra, Accra. [Online] Available at: http://cleancookstoves.org/resources/87.html [Accessed 12 May 2018].
- Ghana Statistical Service. (2014). The Ghana Living Standards Survey Round 6. Ghana Statistical Service: Greater Accra, Accra. [Online] Available at: http://www.statsghana.gov.gh/docfiles/glss6/GLSS6_Main%20Report.pdf [Accessed 1 April 2018].
- Ghana Statistical Service. (2017a). Integrated business establishment survey phase II: Summary report. [Online]. Available at: http://www.statsghana.gov.gh/docfiles/publications/IBES/IBESII/IBES%20II%20Summary%20%20Rep ort.pdf [Accessed 27 April 2018].
- Ghana Statistical Service. (2017b). GDP Quarterly Bulletin December 2017. Ghana Statistical Service: Greater Accra, Accra. [Online] Available at: http://www.statsghana.gov.gh/gdp_bulletin.html [Accessed 12 May 2018].
- National Insurance Commission (NIC) & GIZ. (2015a). Mobile Insurance and Risk Framework in Ghana. [Online] Available at: https://a2ii.org/sites/default/files/reports/2015_mobile_insurance_risk_assessment_ghana.pdf.
- National Insurance Commission (NIC) & GIZ. (2015b). The Landscape of Microinsurance in Ghana 2015: Supply and Demand Side Report. NIC: Greater Accra, Accra. Available online: http://www.microinsurancecentre.org/resources/documents/market-development/demandstudies/the-landscape-of-microinsurance-in-ghana-2015-supply-and-demand-side-report.html [Accessed 22 May 2018].