Determinants Of Comprehensive Motor Insurance Pricing In Ghana

Abstract

The purpose of this study is to identify relevant factors that influence comprehensive motor insurance pricing in Ghana. The study used primary data by way of issuing questionnaires to the underwriting department of 20 insurance companies out of the 29 insurance companies and a sample of 300 individual comprehensive motor insurance policy owners in Ghana. Multiple regression was used to show the impact of the various determinants of premium and how statistically significant they are in predicting premiums. The study further employed quantile regression to further explain the impact of the explanatory variables over different percentiles of the data set. The findings suggest that the relevant determinants of premium includes, the sum insured, the discount percent the cubic capacity and the duration the policyholder has kept of the policy with the insurer. However the study identified that in practice, the age and gender of drivers are not considered in pricing. The National Insurance Commission is recommended to enact regulations to ensure that all relevant and essential risk determinants are incorporated in risk to classification. This is to ensure satisfaction and enhance a good relationship among players in the industry so as to increase the insurance penetration in Ghana. Keywords and phrases: Comprehensive motor insurance, multiple linear regression, simultaneous quantile regression, sum insured.