Abstract
This study was intended to evaluate the effect of insurance on economic growth in Ghana. This study was guided by the following objectives; to identify the role insurance play to the economy of Ghana, to access the awareness among the general public about insurance in Ghana, to find out the problems facing the insurer and the insured in Ghana.
The study employed the descriptive and explanatory design; questionnaires in addition to library research were applied in order to collect data. Primary and secondary data sources were used and data was analyzed using the t-test statistical tool at 5% level of significance which was presented in frequency tables and percentage. The respondents under the study were 30employees of Donewell Insurance Company. The study majorly focuses on the role of insurance companies in the economic development of Ghana.
The study findings revealed that the role played by insurance to the organization was the development of trade and the mobilization of fund; based on the findings from the study, efforts should be made to improve insurance in Ghana.
Chapter one
Introduction
1.1Background of the study
The current greatest problem is making a property economy for a nation that may function a model for alternative economies worldwide. Most governments focus their efforts on achieving and sustaining this property growth and development so as to satisfy this challenge and guarantee the next normal of living for his or her citizens.
Not solely is risk absorption, allocation, and transfer necessary to the insurance business, however thus is that the mobilization of money for the monetary markets to use as associate degree incentive for investment and growth. Despite the clear economic edges that insurance firms give, insurance penetration in African nations continues to be quite low. Not solely will this stop the continent from increasing the advantages of insurance activities to people and businesses, it additionally reduces these rising nations’ capability to mobilize funds from the insurance business to be used by monetary markets. Between 1997 and 2004, there was associate degree eighty two increase in international insurance premiums, with rising markets accounting for fifty seven of the increase as hostile developed nations’ twenty seventh. (Arena, 2008). This demonstrates the increasing significance of the insurance sector as a supply of wealth accumulation, notably in rising nations. As a result, educational academics’ attention is currently centered on examining however insurance affects economic process. Authors embody Ward and Zurbruegg (2000), Webb et al. (2002), Liedtke (2007), and Arena (2008).
Studies on the connection between insurance penetration and growth have yielded conflicting results, very like those on the monetary sector and stock markets. whereas some studies (Ward and Zurbruegg, 2000; Ghosh, 2013; Yangtze River et al., 2013) found a causative relationship between insurance and growth, others (Horng et al., 2012; Yangtze River et al., 2013) found a causative relationship between growth and insurance, with some studies finding proof of a bi-directional causative relationship between insurance penetration and growth (Ward and Zurbruegg, 2000, Lee, 2011, Yangtze River et al., 2013). No proof of causing has additionally been uncovered in alternative investigations (Chang et al., 2013). though risk management services provided by insurance square measure essential for the steadiness of economic establishments, very little is thought concerning however this business is said to growth in Africa. the bulk of analysis (Adjasi and Biekpe, 2006; N’Zue, 2006; Odhiambo, 2007; Seetanah, 2009; Ahmed and Wahid, 2011, Kagochi et al., 2013) gazing the finance-growth nexus in Africa have focused on the increase of banks and stock markets. Despite the actual fact that there are few analysis on the African nation insurance market (Akotey et al., 2011, Akotey et al., 2013, Ansah-Adu et al., 2012, Akotey and Dafla, 2013), they need primarily focused on small level characteristics. The association with economic process, in addition to the association between them, has not nevertheless been examined in any of the analysis. As a result, this study may be a pioneer within the field of insurance analysis on Ghana’s economic development. To the author’s data, no study has examined the causing between insurance and growth within the African nation setting, despite the actual fact that the insurance-growth nexus has been studied otherwise in industrial countries. Therefore, this study aims to shut this obvious gap within the empirical literature by activity a lot of proof of the causative relationship between insurance penetration and economic process in Gold Coast. supported this context, the study seeks to see however insurance affects Ghana’s economic enlargement.
Statement of the problem
Due to the vital and important function insurance businesses play in providing security in the growth of their economies, many countries are switching in the twenty-first century from placing their security with banks to insurance companies.
Although these insurance companies have contributed tremendously in the aspect of security to the development of the Ghana economy, and with all the efforts being made in creating awareness, most Ghanaians are still reluctant to take insurance because they do not see the need for it. The difficulty nature of the insurance industry towards the payment of claims makes it unattractive for third party insurers (commercial vehicles) to undertake insurance policy. This has really affected their growth and the roles they play in the development of the Ghanaians economy, hence the need to carry out a study into the roles insurance play in the contemporary Ghanaian economy and assess the awareness of insurance among the public.
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
Research question
The following research questions will be formulated;
- What role does insurance play in the Ghanaian economy?
- What is the level of awareness among the general public about insurance in Ghana?
- What are the problems facing e insured in Ghana?
Significance of the study
The findings of the study will provide an input to the government in the formulation of laws on the financial services industry. The study will uncover and bring the important role being played by insurance economic growth and development.
Furthermore, it will be of much use to students who are undertaking research work on similar issue. It may serve as a reference for them and also for students studying courses in finance and insurance.
Lastly, recommended solutions will help management in this sector to contain, problems confronting the industry.
Scope of the study
The research covers only the Donewell Insurance Company (DIC) of Ghana. The researcher chose Donewell Insurance Company (DIC) of Ghana because of the easy assessment of information
Limitation of the study
The researcher in an attempt to gather data for the research work faced the following difficulties. The researcher faced a problem of time management. This is because combining lectures and other academic commitments with this study which should be completed within three months will really be a very hectic a task and can affect the findings of the work.
The researcher also face financial problem. The researcher has to use part of her pocket money to collect and process the research data gathered from the insurance company and this can have effect on the findings of the work. Also some respondents were reluctant to answer some questions because they were confidential.
Another hectic problem is that, respondent to questionnaires and interviews not willing or ready to give the researcher all the necessary cooperation. This can affect the findings of the work. By ignoring the researcher completely, others may also give misunderstand responses or do “go and come later attitudes. All these constraints may affect the result of the study in one way or the other.
Definition of terms
Insurance: Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an insurer, an insurance company, an insurance carrier or an underwriter.
Insurer: The insurer is the company that provides you with financial coverage in case of specific, unfortunate events listed in your insurance policy. An insurer can be an insurance company as well as an underwriter.
Economic growth: Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over a certain period of time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP
This material content is developed to serve as a GUIDE for students to conduct academic research
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