Differences in how much consumers are willing to pay for microinsurance across Ghana’s regions could complicate efforts to expand insurance coverage, raising questions about how insurers can balance affordability with the commercial viability of serving different markets.
Findings from the National Insurance Commission (NIC) and Youth Employment Agency (YEA) Graduate Programme on Insurance Awareness and Risk Perception show that respondents in Ashanti, Greater Accra and Bono recorded the highest median weekly willingness to pay for microinsurance at GH¢30, compared with GH¢10 in the Northern and Volta regions.
The regional variations point to different potential price points for insurance products, suggesting that a uniform pricing approach could create affordability challenges for some customers while failing to fully reflect the willingness to pay recorded in other markets.
The findings could have implications for insurers seeking to expand their reach among traders, drivers, artisans and other informal-sector workers, many of whom depend on daily earnings to sustain their businesses and households.
For the industry, the challenge is to design products that respond to differences in customers’ willingness to pay without compromising the adequacy of coverage or the financial sustainability of insurance operations.
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The survey recorded a median weekly willingness to pay of GH¢25 in the Upper East and Western regions, while respondents in Central, Eastern and Upper West recorded GH¢20.
The Northern and Volta regions recorded the lowest median at GH¢10, a third of the GH¢30 reported in Ashanti, Greater Accra and Bono.
The figures represent respondents’ stated willingness to pay rather than verified household incomes or actual insurance expenditure. They therefore provide an indication of potential price preferences, but do not establish the amount consumers can consistently afford.
Pricing decisions could shape market expansion
For insurance companies, the regional differences raise a commercial question about whether the same premium and benefit structure can effectively serve customers across different markets.
A product priced beyond the amount consumers are willing to pay may struggle to attract customers, even where the risks being covered are significant.
Conversely, premiums set too low without corresponding adjustments to coverage, operating costs and risk exposure could make products difficult to sustain.
Insurers may therefore need to consider different benefit packages and payment arrangements that reflect customers’ preferences while maintaining clear policy terms and adequate protection.
For example, lower-premium products could offer more limited coverage for clearly defined risks, while higher-priced packages could provide broader benefits where commercially viable.
Such differentiation would need to be based on sound actuarial assessments, customer needs and transparent product design rather than regional willingness-to-pay figures alone.
The findings do not establish that insurers should charge different prices solely because customers live in different regions. Any pricing structure would also need to account for the risks insured, claims experience, distribution costs and applicable regulatory requirements.
Informal businesses face the affordability question
The findings are particularly relevant to informal-sector workers whose businesses depend on daily sales and whose capacity to absorb unexpected losses may be limited.
Market traders, drivers and artisans can face risks such as fire, theft, illness and damage to business assets. Insurance can help eligible policyholders manage specified losses, but only when premiums are affordable and the coverage meets their needs.
For workers with irregular earnings, the timing of premium payments can be as important as the amount charged. Weekly or flexible payment arrangements could help align insurance contributions with cash flow, provided the arrangements are operationally viable and clearly explained to customers.
The regional findings offer insurers a basis for investigating whether product design and payment methods should be adapted to different customer groups.
However, the lower willingness to pay recorded in the Northern and Volta regions should not automatically be interpreted as evidence of lower incomes or weaker demand. Further research would be needed to establish whether the differences reflect affordability, perceptions of insurance, levels of awareness, occupational risks or other factors.
Digital distribution could help manage costs
The pricing challenge also places a premium on efficient distribution.
The wider survey findings identify mobile phones and mobile money as the preferred channel for accessing microinsurance among 61.4% of respondents, while insurance agents recorded 48.4%.
Digital distribution could provide insurers with an opportunity to reach customers without relying entirely on physical offices and face-to-face transactions.
For lower-premium products, controlling the cost of customer acquisition, premium collection and policy administration will be important to making the business commercially viable.
Mobile channels could support enrolment and payments, while agents and community-based organisations could help customers understand policy benefits, exclusions and claims procedures.
Whether this model reduces costs sufficiently would depend on technology expenses, transaction charges, customer service requirements and the ability to process claims efficiently.
Insurers need evidence beyond willingness to pay
The regional findings provide a useful starting point for product development, but translating them into commercial decisions will require additional evidence.
Insurers would need to establish whether stated willingness to pay translates into actual policy purchases and renewals, and whether customers understand the benefits offered at different premium levels.
They would also need to assess the costs of serving different locations and the risks associated with the products being offered.
For policymakers and the insurance industry, the broader issue is how to expand access without creating products that are either unaffordable to customers or commercially unsustainable for providers.
The survey suggests that consumers do not express the same willingness to pay across all regions. The next step is to determine what drives those differences and how insurance products can respond.
Ultimately, expanding microinsurance will depend not simply on setting lower premiums, but on finding a workable balance between price, meaningful coverage, efficient distribution and customers’ ability to maintain protection over time.
