Determinants of Demand for Homeowners Insurance Policy in the Ho Municipality in Ghana

Abstract

ABSTRACT The most regrettable feeling by homeowners is to lose their shelter together with its contents to perils such as fire, flood and burglary. Despite this uncertainty, home insurance penetration in the insurance market to indemnify those affected has persistently been poor. In Ghana, even though the demand and purchase of insurance policy have seen considerable attention through new Insurance Act, 2021 (Act 1061) together with targeted public education to improve awareness and confidence, within the insurance industry, there exist only 24 life insurance companies, 29 non-life companies and 7000 insurance agents, recording an extremely low percentage of insurance penetration. This study explores the determinants of demand for homeowners’ insurance policy in the Ho municipality as it seeks to establish socio-demographic and economic factors resulting from risks associated with owning a home. Through descriptive survey, research questionnaires were administered to a sample population of 400 respondents who were homeowners in the Ho municipality. A binary logit model, which is a regression model was used to estimate the mode. Confirming the results, the determinants of demand were identified as level of premium and savings, market rate of interest and the age of a homeowner. The findings unravelled notable reasons for low home insurance patronage by the general public. It is anticipated that the outcomes will address the shortcomings by relevant stakeholders in the industry.