Risk management in the Ghanaian insurance industry

Abstract

Purpose -The purpose of this paper is to examine the risk management practices of life assurance firms and non-life insurance firms. Design/methodology/approach -Through a comparative case study methodology, the study assesses the state of risk management in both life assurance companies and non-life insurance firms to determine whether they exhibit different or similar risk management practices. The results of the survey were also analyzed and compared to the principles of good practices in financial risk management. Findings -The findings of the study revealed some differences and similarities in the risk management practices of life and non-life insurance firms. Almost all the life companies have stated their risk appetite levels, which enable them to identify which risks to absorb and which ones to transfer. But non-life insurance firms have not laid down their risk tolerance levels explicitly. The results further revealed that the industry lacks sufficient personnel with the requisite risk management skills and that the sector does not manage risks proactively, rather they do so in a reactive response to regulatory directives. Practical implications -Effective management of risks by insurers will increase the penetration of insurance in Ghana. Social implications -Risk management is a crucial issue, not only for the survival and profitability of the insurance industry, but also for the socio-economic growth and development of the whole economy. As major risks underwriters, insurance companies need to adopt good practices or quality measures in the management of financial risk. This is important, more so, as the industry prepares to re-position itself to underwrite the risks in the emerging oil and gas industry of Ghana. Originality/value -Research into financial risk management in the insurance industry from the Ghanaian perspective is rare. This study is therefore timely and its findings are invaluable for the efficient management of financial risk in the insurance industry.

Financial literacy training and micro insurance on the financial performance of SMEs in the Sekondi-Takoradi Metropolis, Ghana

“…For micro insurance on SME financial performance, Oscar and Abor (2013) posit that micro insurance is very crucial since it insures the activities of microfinance clients. Mathur (2010) explains micro insurance as a low cost product that necessitates diverse plan and delivery systems like premium that is centered on the rate of threat of the community.…”

“…Mathur (2010) explains micro insurance as a low cost product that necessitates diverse plan and delivery systems like premium that is centered on the rate of threat of the community. The savings and credit of clients are incorporated with their insurance by microfinance institutions to ensure a decrease in the credit risk (Oscar & Abor, 2013). Micro insurance covers among other things the following: health, life, health, property and agricultural products of business owners.…”

“…Micro insurance is a product offered by microfinance institutions to protect persons in the low-income brackets against specific disasters in return for regular premium payments equivalent to the probability and cost of the risk involved (Alando, 2014). The risk of the clientele of MFIs is allayed by the incorporation of micro insurance with client's credit and savings activities (Oscar & Abor, 2013). Micro insurance basically offers an avenue for low-income earners to insure themselves against misfortunes that may affect their livelihoods and businesses.…”

The Impact of Microfinance Banks on the Growth of Small and Medium Enterprises in Lagos Metropolis

“…MFBs take care of the Micro savings needs of the small businesses in the informal markets and rural areas to help them save, invest, and grow their businesses (Gyimah & Boachie, 2018). Micro Insurance: This is the insurance of the activities of the customers of microfinance banks (Oscar & Abor, 2013). Mathur (2012) defines microinsurance as a low-value product that requires different design and distribution schemes low premium that is based on community risk rate.…”

Risk Management Practices Adopted by European Financial Firms with a Mediterranean Connection

“…Moreover, the effectiveness and efficiency of appropriate practices in risk management is critical for the continued existence, industry profitability and for the continual development and growth of the whole economy. It is imperative that all organisations adopt good quality practices and measures when managing risks [7].…”