Factors influencing the consumer's choice of insurer when purchasing insurance risk products.
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Date
2014
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Abstract
South African insurance industry research conducted by KPMG (2014), indicates that
the number of South Africans who own insurance risk cover is lower than the expected
number, yet the insurance industry is one of the largest contributors to the South
African economy. Research conducted by the Association for Savings and Investment
South Africa (2013) cited in (Van der Merwe Life, 2013) revealed that South Africans
were underinsured for death and disability by 60%. The shortfall between the
consumer owned disability and life risk benefit and the actual risk benefit requirements
of employed South Africans amounts to R24 trillion. This amounts to a risk benefit
shortfall of R700 000 on average, per employed consumer.
The gap and shortfall due to South Africans being underinsured is a concerning one
as the payment of policy benefits and claims by insurance companies stimulates the
economy and facilitates financial markets. Insurance cover permits individuals and
businesses to recover after life changing events. Insurers use factors within their
control such as product assortment, advertising and pricing to influence customers’
buying behaviour.
The aim of this research is to understand which factors influence consumer’s choice
of insurer when purchasing risk benefits. Under this study the main focus is to identify
whether consumers are influenced by product features, advertising, pricing or brand
relationship with insurance companies.
A random sample of 150 participants was drawn consisting of individuals who are 20
years or older; who have bought a risk insurance benefit and those that have not
bought, but qualify to do so. From the sample, 90.12% own a risk benefit and 9.88%
do not. An electronic questionnaire was developed by the researcher as a tool for data
collection for this study. The statistical analysis revealed that there is a significant
relationship between age and premium as well as a statistical relationship between
income and advertising as a factor that influences consumer’s choice of insurer. The
statistical analysis further revealed that of the four factors: premium, advertising,
product feature and brand image; brand image is considered by the participants of this
study as the most influential factor when choosing an insurer from which to purchase
a risk benefit.
Description
Master of Business Administration. University of KwaZulu-Natal, Durban 2014.
Keywords
Insurance--South Africa., Consumer preferences--South Africa., Insurance companies--South Africa., Theses--Business administration.