Factors influencing consumer choice in the medical insurance industry.

Abstract

Background

The medical schemes industry has been characterised by extreme uncertainty in recent

times. Industry turbulence can be attributed to a number of factors that have impacted

on the manner in which business is conducted. Amongst these the most significant is

the change in legislation that has occurred in the laws governing the administration of

medical schemes. The industry is characterised by an increasing number of schemes

competing for a finite number of profitable customers. In light of these changes, it

was thought prudent to investigate the consumer behaviour characteristics

surrounding this industry.

Objectives

The objective of the study was to determine the factors that influence consumers to

choose particular medical schemes over others. To this end it was hypothesised that

four factors, namely price, benefits offered, ancillary benefits and broker influence

played significant role in the decision making process of consumers .

Methods

Data was collected using a research questionnaire. This questionnaire was issued to

respondents who had recently purchased, or attempted to purchase medical cover.

Contact was made with the respondents via a snowball sampling method, using

insurance brokers as points of contact. The questionnaire was composed of a mixture

of open ended, dichotomous and disconfirmation scale type questions .

Results

Of the four factors that were hypothesised to significantly influence consumers in

their choice of medical schemes, it was found that two were proved correct. These

being, the benefits offered and the price of the offering respectively. The third

hypothesis, the effect of an ancillary benefits programme was found to influence the

consumer in their choice, however respondents did not regard the programmes as

vital. They did however indicate that they tried to purchase cover that included an

ancillary benefits programme. The final hypothesis was disproved as it was found that

consumers did not always follow the recommendations of the broker in choosing a medical scheme. They were however found to consult extensively with vanous

brokers regarding the types of cover that are available. The final choice between

medical schemes were however made by the consumer independently of the brokers

influence.

Conclusion

It is recommended that further research be conducted to ensure that consumer needs

harmonize with the medical schemes product offerings. The importance of the various

factors that compromise the purchasing process should be measured against each

other to determine the importance that consumers place on a specific factor. This

prevents medical schemes from placing emphasis on unwanted product features and

thereby wasting valuable resources. Further investigation into the topic should

encompass all aspects that are deemed relevant, as well as a cross tabulation between

the variable factors influencing consumer choice and consumers demographic

information. This would further aid the organisations to firstly create more efficient

market segments, and secondly to more effectively match product offerings with the

given segments.