THE ROLE OF INSURANCE COMPANIES IN THE ECONOMIC DEVELOPMENT
The present biggest challenge is developing an economy of a country’s sustainable growth and development to serve as a benchmark for economies the world over. In order to live up to this challenge, most governments’ direct their efforts towards obtaining and maintaining this sustainable growth and development to ensure a better standard of living for their people. Ghana, as well as any other, has always strived to improve her status in the global economy. This can be proved by the measures being put in place by past and present governments since independence. This has most of the time been in the form of policy documents containing the development aims and aspirations of the nation. The most recent policy document is the vision 2020 development programmed document which spells out the long term development objective of Ghana over a period of 10 years (2010 – 2020). It seeks to establish where she wants to be in the future and the way forward and where on the development ladder Ghana lies as a nation. In this chapter, some of the topics to be discussed are background of the study organizational profile, problem statement, objectives of the study, research questions, scope of the study, and significance of the study and limitation of the study.
1.1 Organizational Profile
The insurance industry has emerged prominently to serve as an institution meant to provide services aimed at security industries against the various risk inherent in their operation. Prominent and premier in the industry in Ghana is the Metropolitan Insurance Company (MET). It was incorporated in February 1962 by Executive Instrument (EI) No. 17 which was passed under the statutory Corporation Act, 1962 (Act 232). However, on August 28, 1995 it was converted into a Public Limited Liability Company renamed Company Limited of Ghana as it is now called.
Metropolitan Insurance Company has it as its mission to providing innovative, flexible and competitive financial products and services to its customerâ€™s general public through quality services, extensive research and product management coupled with commitment to ensuring financial liability. Despite the little attention given by the government, the insurance industry has been playing a very important role in ensuring some degree of security in industry and commerce. It is thus observed that insurance industry when given the necessary attention could play a stranger complementary role in ensuring growth and hence national economic and development. However, the Koforidua branch of the Metropolitan Insurance Company was opened in 1976 with the Regional Office in the main market which is opposite the All Nations University. But on 15th May, 1987 the Metropolitan Insurance Company was moved from the old premises to their new office complex located at the main commercial Centre of the town which is opposite the central mosque.
1.2 Background of the Study
Several indicators have shown that, the insurance industry is at the preliminary stage in that there are a lot of competition and risk. According to Rayness, H.E (1976), we can see that insurance started thousands of years ago but still it is at the preliminary stage as compared to the banking industry. It appears that people are not patronizing insurance in Africa due to several reasons. There is not enough education about insurance; people see it as a cheat on the society. Most of the insurance activities are directed mostly to the monthly income earners and government workers leaving the petty traders aside. Although it is by law that every car owner will have at least some sort of insurance cover for the car that is the third party insurance which seek to provide insurance for the innocent pedestrian and other cars. Even this, people are running away from it but thank God the law will deal with people who do not have insurance coverage for their cars. A whole building will be there without any insurance coverage. People feel reluctant to go for insurance because when they see the kind of stress people go through before claiming their claims, it does not encourage them to take insurance policy.
Insurance plays some vital roles in economic development. Due to the changing needs of the economy of Ghana, there is the need to ensure that proper education on insurance is taken into consideration; the Government must also broaden the laws on insurance by adding more to the motor insurance. This study therefore seeks to find answers to the questions and to assess the role played by the insurance in the economic development.
1.3 Statement of the problem
In the 21st century, many Countries are moving from entrusting their security with the Banks to the Insurance companies because of the dynamic and significant role Insurance Companies play in ensuring security in the development of their economy. Although these insurance companies have contributed tremendously in the aspect of security to the development of the Ghanaian economy, and with all the efforts being made in creating awareness, most Ghanaians are still reluctant to take insurance because they do not see the need for it. The difficulty nature of the insurance industry towards the payment of claims makes it unattractive for third party insurers (commercial vehicles) to undertake insurance policy. This has really affected their growth and the roles they play in the development of the Ghanaian economy, hence the need to carry out a study into the roles insurance play in the contemporary Ghanaian economy and assess the awareness of insurance among the public.
1.4 Objectives of the Study
The study into the assessment of the roles being played by the insurance in the economic development of Ghana seeks to achieve the following objective:
i. To identify the role insurance play to the economy of Ghana.
ii. To assess the awareness among the general public about insurance in Ghana.
iii. To find out the problems facing the insurer and the insured in Ghana.
1.5 Research Questions
The followings were the research questions:
i. What role does insurance play in the Ghanaian economy?
ii. What is the level of awareness among the general public about insurance in Ghana?
iii. What are the problems facing e insured in Ghana?
1.6 Scope of the Study
The research covers only the Metropolitan Insurance Company (MET) of Ghana, Koforidua branch. The researcher chose Metropolitan Insurance Company of Ghana Koforidua branch because it is close to the school and the researchers could get easy access to information.
1.7 Significance of the Study
The findings of the study will provide an input to the government in the formulation of laws on the financial services industry.Â The study will uncover and bring the important role being played by insurance economic growth and development. Furthermore, it will be of much use to students who are undertaking research work on similar issue. It may serve as a reference for them and also for students studying courses in finance and insurance. Lastly, recommended solutions will help management in this sector to contain, problems confronting the industry.
1.8 Limitation of the Study
The researcher in an attempt to gather data for the research work faced the following difficulties. The researcher faced a problem of time management. This is because combining lectures and other academic commitments with this study which should be completed within three months will really be a very hectic a task and can affect the findings of the work.
The researcher also face financial problem. The researcher has to use part of her pocket money to collect and process the research data gathered from the insurance company and this can have effect on the findings of the work. Also some respondents were reluctant to answer some questions because they were confidential. Another hectic problem is that, respondent to questionnaires and interviews not willing or ready to give the researcher all the necessary cooperation. This can affect the findings of the work. By ignoring the researcher completely, others may also give misunderstand responses or do â€œgo and come later attitudes. All these constraints may affect the result of the study in one way or the other.