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Begin New Search Topic Poverty Political Geography Ghana Content Type Working Paper Publishing Institution German Institute of Global and Area Studies

1. Subjective Risk and Participation in Micro Life Insurance in Ghana

Author:
Lena Giesbert
Publication Date:
12-2012
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
This paper analyzes the determinants of households' decisions to purchase micro life insurance, the most common but least investigated type of microinsurance. It uses household survey data collected in southern Ghana in 2009. Insurance participation and extent of coverage are examined against a standard benchmark model, which argues that life insurance uptake increases with risk aversion, the probability of risk, initial wealth, and the “intensity for bequests.” Many of these predictions indeed hold in the case of micro life insurance. However, the results of probit and tobit models show that nonstandard factors also explain the participation decision. Unlike the case with other available types of insurance, there is a significant negative association between households' subjective idiosyncratic risk perception and the uptake of micro life insurance. Additionally, households' micro life insurance participation is strongly related to their relationships with formal financial services providers and their membership in social networks. These findings suggest that poorer households view microinsurance as a risky option.
Topic:
Health, Poverty, and Health Care Policy
Political Geography:
Africa and Ghana

2. Perceptions of (Micro)Insurance in Southern Ghana: The Role of Information and Peer Effects

Author:
Lena Giesbert and Susan Steiner
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
This article investigates the understandings and perceptions of (micro)insurance among low income people in southern Ghana, using evidence from four focus group discussions. It analyzes how the focus group participants think about various types of insurance – among them a micro life insurance product – and how their negative and/or positive evaluations have come about. The evidence indicates that (micro)insurance is mostly positively perceived by the participants of the focus group discussions. However, it is also found that many people's image of insurance is based on incomplete (and sometimes erroneous) information, or even on intuition. In addition, the experiences or opinions of peers turn out to be critical in shaping an individual's perception of insurance. These two factors potentially have a contagious effect, which can lead to unreasonably positive or overly negative ideas about (micro )insurance. Such ideas, in turn, can become detrimental to the further distribution of microinsurance.
Topic:
Health, Political Economy, and Poverty
Political Geography:
Africa and Ghana