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What accounts for the high underwriting losses in the Ghanaian insurance industry?

Joseph Oscar Akotey (Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana)
Godfred Aawaar (Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana)
Nicholas Addai Boamah (Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana)

African Journal of Economic and Management Studies

ISSN: 2040-0705

Article publication date: 5 September 2022

Issue publication date: 24 February 2023

181

Abstract

Purpose

This research explores to answer the question: What accounts for the substantial underwriting losses in the Ghanaian insurance industry?

Design/methodology/approach

Thirty-four (34) insurers' audited financial reports covering the period of 2007 to 2017 were analysed through dynamic panel regression to uncover the underlying causes of high underwriting losses in the Ghanaian insurance industry.

Findings

The findings indicate that efforts at increasing market share by overtrading add no value to insurers underwriting profitability. The underwriting risk suggests that the industry charges disproportionately too small premiums for the risks it underwrites. This may indicate under-pricing by some insurers to grow their customer base.

Practical implications

The findings have implications for managerial efficiency and risk management structures that align compensation with underwriting efficiency.

Originality/value

The association between managerial preference and the underwriting performance of insurers in emerging markets has rarely been researched. This study responds to this knowledge challenge.

Keywords

Citation

Akotey, J.O., Aawaar, G. and Boamah, N.A. (2023), "What accounts for the high underwriting losses in the Ghanaian insurance industry?", African Journal of Economic and Management Studies, Vol. 14 No. 1, pp. 34-52. https://doi.org/10.1108/AJEMS-12-2021-0546

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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