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Determinants of Micro-Insurance Demand in Jimma Zone
Abstract
Vulnerability to risk is a constant factor in the lives of the poor and a cause of persistent poverty. Micro insurance offers one approach to mitigate risk, yet demand is relatively low in developing countries. Low demand is a complex issue and many factors influence a households decision to buy micro insurance. Thus, the aim of study was investigating determinants of micro insurance demand in Jimma Zone. The data used in this study was cross sectional data which collected from households using structured questioner and in-depth interview with officials of insurance companies and microfinance institutions that provides micro insurance product. The collected data was analyzed using multinomial logistic regression model. The findings of the study show that household size, employment status, level of education, adequacy of micro insurance supply, delivery channel, premium, monthly income, Insurable asset, financial literacy, trust and risk aversion has significant impact on the demand for micro insurance products, whereas age, gender, adverse selection and moral hazard, religion and peer influence has insignificant impact on households demand for micro insurance products.
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