Monetary valuation of microinsurance against fire risk: mixed logit approach

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The non-existence of separate insurance policy for people in the retail sector in Ghana at this moment may be due to supply side problems, such as correlated risks, uncertainty of risks, adverse selection and moral hazard, or because of a lack of demand for insurance coverage. This thesis uses mixed logit estimation methods to examine the e ects of re risk on the demand of microinsurance. The study took place at Kumasi Central Market. The Hierarchical Bayesian was used to estimate the parameters of the mixed logit model. The distribution of the parameters was normal distribution. It was found that positive relationship exist between utility and high damage cost, high re risk and high insurance cover-age, however, utility decline with insurance premium. Also, estimation results support that o ering re insurance may be pro table in the current situation. Stake holders in the insurance industry are therefore recommended to ensure the introduction of separate insurance for the retail sector of the economy of Ghana
A thesis submitted to the Department of Mathematics, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirement for the degree of Master of Science in Industrial Mathematics, 2014