Factors Affecting the Provisions of Microinsurance in Ethiopia
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Date
2018-06-23
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Abstract
In Ethiopia, the need for enhanced access to insurance at affordable rates to the lower end of the
market is well set out in the National Growth and Transformation Plan II, 2015/16-2020/21.
Access to insurance services is important for low-income groups as they are more vulnerable to
unexpected losses due to natural disasters. Consequently, reaching out to this group and
mitigate the level of risk as it will drive them to deeper level of poverty. To bridge this need, only
five insurance firms have developed products that targeted this section of the market. However,
several challenges affect the success of rolling out the products into the insurance to the market.
This research sought to establish factors affecting the provision of microinsurance in Ethiopia by
focusing on socio-institutional factors as independent variables namely client awareness, trust,
government regulation and technology. The research adopted a descriptive research design
whereby data was collected using a structured questionnaire that was distributed to 130
respondents (supervisors and managers) in the Ethiopian Insurance Companies. The
respondents were selected using purposive sampling technique. The data analysis employed was
descriptive and inferential statistics. Pearson Correlation and Multiple regression analysis were
used to examine the relationship between independent variables and provision of microinsurance
using SPSS20.0 .The result revealed that all independent variables, client awareness,
technology, trust and government regulation showed significant association. Because of the
limited knowledge on the insurance products, there is a need for a rigorous and wellcoordinated
approach on insurance to be offered to the target market and this will rope in the
support of donors, the federal and regional governments .The factors under analysis show
attention to be given to demand and supply sides of microinsurance, individual mindsets and
structural factors that might require systemic intervention by the firms, government and clients.
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Keywords
Microinsurance, Provision of Microinsurance, Factors affecting the provision of microinsurance in Ethiopia