A SSESSING INSURANCE AWARENESS IN GHANA Microinsurance Conference 2012 University of Twente Charles Ackah and Adobea Owusu Institute of Statistical, Social and Economic Research (ISSER) University of Ghana, Legon.

R ESEARCH 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. 2

R ESEARCH 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? 3

D ATA 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 involved Quantitative – 303 respondents (173 insured, 113 uninsured, 17 undisclosed status). 4

R ESULTS : Q UALITATIVE 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]. 5

R ESULTS : Q UALITATIVE 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]. 6

R ESULTS : Q UALITATIVE 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 7

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]. 8 R ESULTS : Q UALITATIVE CONT ’ D

RESULTS : Q UANTITATIVE ( 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. 9

RESULTS : Q UANTITATIVE ( 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. 10

RESULTS : Q UANTITATIVE ( 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 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

R ESULTS : 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. 12

R ESULTS : MULTIVARIATE 13

I MPLICATIONS : 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. 14

N EXT STEPS Ongoing research sponsored by GIZ Ghana: A more comprehensive and representative market survey is underway for generalizability and to relate awareness to behaviour. 15 T HANK YOU