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This study examined risk exposure and auto insurance premium determinants in Ghana. We analysed an existing data set of 23 434 policies (without claims = 84.1%, policies with claims = 15.9%; comprehensive policies = 48.0%, third-party policies = 52.0%) applying the Autoregressive Distributed Lag (ARDL) model, controlling for driver demographics, va...
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... Small and Medium Scale Enterprises (SMEs) are crucial to socio-economic growth and development, contribute significantly to global advancement (Kalu, 2022;Azaare et al., 2021, Azaare & Wu, 2020Adjei et al.,2014;Beyene, 2004;Snodgrass et al., 1996). According to the Ghana Statistical Service, there are three components that comprise the SME sector: (i) Microenterprises are businesses with 0-9 employees; (ii) Small businesses are those with 10-99 employees; (iii) Medium-large sized businesses are those with 100 and above employees. ...
... According to (Beyene, 2004;Snodgrass et al., 1996) SMEs play a crucial role in the growth and development of national economies, contributing significantly to market competition, employment creation, innovation, and economic wealth. Implying that, (SMEs) are important in most developed and developing nations (Azaare et al., 2021;Azaare & Wu, 2020;Abor & Quartey, 2010). With Ghana not exception, SMEs are crucial in creating jobs and making a significant contribution to GDP growth (Musah, 2017;Muneer et al., 2017;Karadag, 2015;Jindrichovska, 2013). ...
This study examines computer based record keeping systems among small and medium sized enterprises (SMEs) in the Obuasi Municipality of Ghana. The study surveyed 200 SME owners or managers in the municipality with three years or longer operating history, using purposive random sampling. Furthermore, the study employed both open and closed-ended questionnaires, formal and informal interviews and desktop studies to gather information from owners and operators in SMEs. The interviews focused on record-keeping abilities, attitudes towards accounting, and the impact of record-keeping on business viability and stability. The findings show that SMEs typically use manual financial record keeping. However, daily sales books are the most common method. Nevertheless, most SMEs do not create financial reports using computerized systems, thereby negatively impacting their operations. Therefore, the study suggests that the National Board for Small Scale Industries (NBSSI) should collaborate with charitable NGOs to establish training opportunities that provide basic ICT skills and development programs to SMEs in other to improve their decision-making and overall performance.
... Automobile insurance was introduce to safeguard policyholders from potentially enormous financial losses as well as losses to third parties. However, the premium, which is computed based on the policyholder's risk, can influence the decision to purchase a policy (Alhassan, 2016;Alhassan et al., 2015;Alhassan & Biekpe, 2016a;Azaare et al., 2021;Bu¨lbu¨l & Baykal, 2016;Isotupa et al., 2019). Majority of studies look at premium estimates from a traditional perspective on the basis of claims frequency and severity from policyholders' (Azaare et al., 2022;Deniut et al., 2007). ...
... Classical variables such as the driver's age, experience, career, marital status, gender, and the age of the vehicle, cubic capacity, mileage, garage location, and so on have been used in the priori premium determination setup Bolanc'e et al., 2007;Bu¨lbu¨l & Baykal, 2016). Nonetheless, the literature is not loud on the individual impacts of these classical variables on policyholders' final premium, especially in the Ghanaian market (Azaare et al., 2021). ...
... According to Ayuso et al. (2014), ''policies with these elements are mostly targeted at young drivers, but yet, there is a report on significant differences between novice and experienced young drivers, indicating a heterogeneous risk group among young policyholders.'' Thus, insurers using policyholders age variable could lead to lower premium because older and experience drivers posed lower accident risk (Ayuso et al., 2014;Azaare et al., 2021). There are a number of interesting results when it comes to insurance variables that predict premiums. ...
To better understand the actual rating variables that affects Auto insurance Policyholders’ premium, this paper attempts to provide empirical evidence to justify which ones are significant and needed to be considered by insurers by adopting the autoregressive distributed lag (ARDL) model. In satisfying all the conditions for ARDL application, unit root, Heteroskedasticity, normality, dynamic stability and serial correlation tests were conducted. We estimate the effects of each rating variable on Premium taking into consideration whether the policy of the insured is Third-Party or Comprehensive. These rating variables in the ARDL model serves as the independent variables that establishes the short and long-run relationships between them and the Premium as the dependent variable. The results suggest that not all the classical rating variables used in the market significantly impact Premium. Whiles, to some extent, we found a varying degree of variables impact on Premium depending on the insurance type, the autos cubic capacity, which plays a cogent role on the basic Premium in Ghana, is insignificant. Also, policyholders’ age characteristics are statistically significant but are excluded in the premium calculations. Thus, this paper shows the need to consider all the other possible rating variables, including policyholders’ age into the Ghanaian insurance pricing system, whiles autos cubic capacity considering the weight it put on the basic Premium should be re-examined. This would help to obtain a financially balanced and optimal pricing system for policyholders.
... Information on risk exposure and premiums for (n = 23,434) vehicle insurance policyholders was obtained throughout 2018 from a leading Ghanaian insurance Open Journal of Business and Management company (Azaare et al., 2021). Due to existing market competition, this leading insurer opted to be unanimous. ...
Loss distribution plays an influential role in evaluating risks from policyhold-ers' claims. Nevertheless, the auto insurance market in Ghana pays little attention to policyholders' claims distribution, resulting in the market's inefficiency. This study investigates the type of loss distribution function that best approximates policyholders' claims in Ghana. We applied the Kullback-Leibler divergence, Kolmogorov Smirnov, Anderson-Darling statistical tests and maximum likelihood estimation (MLE) to estimate policyholders' claims. The results suggest that Ghana's auto policyholder's claims are better approximated using the lognormal probability distribution. Through the lognormal distribution , the industry can adequately evaluate policyholders' claims to minimize potential loss. Additionally, this distribution could enable the market reach decisions on premiums and expected profits theoretically.