Microinsurance in Ghana: investigating the impact of Outreville's four-factor framework and firm and product characteristics on adoption

Abstract

Microinsurance is a risk management tool for low-income households. However, its adoption is low in Ghana. This study examines the determinants of microinsurance adoption in Ghana, analysing primary data from 1453 households across six key markets and three regions. We also gathered secondary data from 14 microinsurance firms and 47 microinsurance products between 2017 and 2021. We estimate the critical factors influencing microinsurance uptake using robust probit, fixed-effects and panel-corrected standard error models. Our findings indicate that income levels, trust in financial institutions and participation in community risk management groups and the national health insurance scheme are the key determinants affecting microinsurance adoption. Firm- and product-specific factors such as affordability, outstanding claims, risk premiums and benefits paid to microinsurance participants also influence adoption. This study also highlights the crucial role of structural, social and economic factors in predicting demand for microinsurance, utilising Outreville's four-factor insurance demand framework.