Assessing Risk perception and Insurane Knowledge in Accra, Ghana Literature review

Assessing Risk perception and Insurane Knowledge in Accra, Ghana - Literature review Example Conventional policies have been used even though they are not necessary because the crisis in the Ghanaian insurance industry is not as acute as in some African countries. This has made a majority of the people in this city to participate in large scale asset purchasing and other business ventures with the aim of achieving stabilization in their lives and creation of employment (Buatsi, 2002). It has encouraged these individuals to turn towards the acquisition of insurance policies because of the risks involved in the diverse number of businesses that they are involved in despite the fact that the government policies that have been employed have created significant amounts of uncertainty with regards to their effectiveness hence proving the fact that its policies are not farsighted (Chalfin, 2008). One important channel that has come to affect the insurance policies is the currency value and much evidence shows that the depreciation of the currency value over the history of the count ry has tended to discourage individuals from subscribing for different insurance policies. The insurance policies in Ghana have been made in a manner that is relatively predictable and in asystematic way, the methods of advertising to the public by insurance companies has provided the latter with the necessary knowledge to know what type of policies to select for themselves. The key factors in these policies were aimed at being short term interest rates, and exchange rates together with monetary aggregates that could undergo adjustments in a free manner. One reason why many individuals choose to take insurance policies in this city is not necessarily to secure themselves against any potential losses but as a form of investment where they tend to put their spare money into what they consider to be worthwhile investments (Anim-Odame, 2012). Market expectations may also be considered to be a reason why individuals choose to purchase insurance policies because they believe that if anyth ing happens to the property which they have insured, then they will be able to recover it in a short time span from the insurance company. When normal rigidities in the insurance sector occur, changes in normal returns have an effect on the number of people who are interested in insuring themselves and this has over time been reflected in the economic decisions that were real which included investments and consumptions, as individuals opt to undertake lesser risks rather than purchase insurance policies. This has been observed to have an effect on the insurance sector as insurance companies compete to ensure that they attract a larger clientele than their rivals through the offering of insurance packages which are likely to encourage unlikely insurance policy purchasers to do so. While this has been the case in Accra, one of the biggest effects in the market was the global financial crisis which in the past few years has come to challenge the insurance industry of Ghana in three dif ferent ways. These have come to include financial disruptions that are wide spread, broke arbitrage conditions which hinders policy transmission on the yield curve; there is the presence of heightened vulnerability that leads to freezing of the markets, this is because there is the presence of self-fulfilling equillibria that is badly coordinated, and lastly there is severe recession that pushes the