Factors Influencing The Growth Of The Life Insurance Industry In Ghana

ABSTRACT

Growth is an important value driver for life insurance firms. Due to the risk pooling nature of their business it is necessary for their business operations to generate the volume of business necessary to ensure efficient pooling of risks. This study investigated the factors influencing the growth of life insurance business in Ghana. The study is based on panel data of life insurers‘ gross written premium, total assets, age of the business, total commissions earned by their marketers, operational and management expenses, net profit, investment income for life insurance firms covering the period 2007-2012 as well as macroeconomic variables such as interest rate, inflation and real GDP growth rate. The study fitted a random effect regression model. The findings show that total assets, age of the business, total commissions, operational and management expenses, net profit, investment income, interest rate, inflation and real GDP growth rate is positively related to gross written premiums. However, only total assets, operational and management expenses, net profit and investment income showed a significant relationship with gross written premiums. The study, based on the findings recommends a closer supervision of life insurers‘ operations by their regulator and the imposition of stricter sanctions and penalties to defaulting companies to ensure their compliance. It also suggests the organization of seminars and workshops to educate life insurance managers on issues concerning the efficient management of their organizations and the organization of public awareness programmes to educate the general public on the need for insurance and its benefits. It is also recommended that government passes out a law to make some life insurance

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contracts compulsory for the growth of life insurance in the country, the welfare of the society and to boost the economy as well.