Low Rate of Penetration for Life Insurance: A Comparison of East African Countries
| International Journal of Economics and Management Studies |
| © 2018 by SSRG - IJEMS Journal |
| Volume 5 Issue 4 |
| Year of Publication : 2018 |
| Authors : Mamta Singh |
10.14445/23939125/IJEMS-V5I4P105
How to Cite?
Mamta Singh, "Low Rate of Penetration for Life Insurance: A Comparison of East African Countries," SSRG International Journal of Economics and Management Studies, vol. 5, no. 4, pp. 33-38, 2018. Crossref, https://doi.org/10.14445/23939125/IJEMS-V5I4P105
Abstract:
As per Ethiopian demography the ratio of dependent population on earning age population is not much different i.e. 41.5 percent people are in 0-14 age category and in the 15-64 age category, there are 55.2 percent people. Certainly the life of this 55.2 percent people is very important for the rest of Ethiopian population and to avoid any uncertainty these working age people must be insured. When we see life insurance sector’s contribution to GDP(penetration rate) its only 0.41 percent, this becomes more disturbing when we see that only 0.1 percent population have access to insurance services (life and general both). Many writings on development studies suggest about the importance of savings and its role in countries growth and development. There are sundry of ways in which saving can be invested, insurance is one of them. By purchasing a life insurance product, the person can save a part of his income and earn interest by foregoing present consumption and at the same time can insure his future. Insurance is the most effective risk mitigation mechanism to remit the vulnerability of the people from the impacts of disease, disability, untimely death and natural catastrophes, in a developing country like Ethiopia the need for such a safety net is much greater particularly at the low income levels where vulnerability to risk is much greater and social security programs are not effective. This study intends to discuss causes for inhibition of life insurance penetration rate, we would also compare life insurance sector’s growth of Ethiopia with other East African nations. This paper is arranged in the following fashion, the first section deals with the background and introduction of the study. Section two will illustrate review of literature and section three will enumerate major findings. Fourth section will discuss conclusion and policy suggestions.
Keywords:
Gross savings, Life insurance, Penetration rate, Per capita income
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