The Effect of Consumer Behavior on Insurance Business in Nigeria

The Effect of Consumer Behavior on Insurance Business in Nigeria

Abstract of The Effect of Consumer Behavior on Insurance Business in Nigeria

This study investigates the determinants of the effect of consumer behaviour on insurance business in Nigeria.  It analyze the interpretation of data collection from respondents.

The research questionnaire were draw to get data from banking, civil service, self-employed, married/single and divorced.  The result of the questionnaire were used for positive correlation co-efficient which means that consumer perception about risk influences the desire to buy insurance.

The study recommends the price of insurance significantly affect the proportion of income spent on insurance consumers.

Chapter One of The Effect of Consumer Behavior on Insurance Business in Nigeria

INTRODUCTION

The aim of marketing is to meet and satisfy target consumers’ needs and wants. The field of consumer behaviour according to Kotler (2003) studies “how individuals, groups and organization select, buy, use and dispose of goods, services, ideas or experiences to satisfy their needs and desires”.

Marketing theories and practices according to Osuagwu (2002) have much to learn from the behavioural sciences but preoccupation with techniques may tempt marketers to ignore the real world situations. Halbert (1965) states that “behaviuoral sciences’ contribution lies in the fact that they require learning to take explicit account of the human social aspects of individual and groups engaged in the marketing behaviour rather than specific tools, techniques or ideas”. Through the behaviuoral science contributions, marketers have come to know that people tend to obey the pleasure pain – principle, using the former and avoiding the latter. A person’s value is as conditioned by his behaviuor as much as that of people around him.

Therefore, any organization unable to provide goods and services that fulfill the needs and wants of consumer has lost its basic reason of distance. This is the crux of marketing concept, which encouraged organization to be consumer oriented in order to survive in a competitive environment.

Consumer behaviour then ”is the behaviour customers or clients display in searching for, buying, using, evaluating and disposing of products, services and idea which they expect will satisfy their needs and wants.  This then makes consumer behaviour a study of how individuals make to spend their resources on consumption related items and their evaluation of such purchase decisions.

However, the service nature of insurance even makes the study of consumer behaviour very important. Insurance according to Oyetayo (2001) can be defined “as the contractual agreement between two parties called insurer and insured whereby the former promises to indemnify the industry that suppose to the virile aspect of any economy has been relegated to the background, this is  however unconnected to the bad consumer attitude towards the purchase of insurance.

The success of any economy is majorly traced to the performance of its industries and business, however, for these industries and businesses to attain good performance, there must necessarily be a good security system to secure lives and properties. Okwo (2005) describes insurance “as the handmaiden of commerce  and industry, suggesting that modern commerce and industry cannot function efficiently without a well planned and organized insurance system.  Moreover, success of the first world countries cannot but be traced to the their well organized security system (insurance) and effective and efficient buying behaviour of the insuring public which has made the business of insurance the forerunner of other industries.

However,  this research work shall consist the

(a)    The study of consumer behaviour of the insuring public in Nigeria

(b)    Approaches of consumer behaviour

(c)     Factors affecting consumers’ attitude

(d)    Levels of business behaiour in Nigeria.

(e)     Consumer decision – making processes in insurance industry and

(f)      Stages of the buying decision process in insurance

STATEMENT OF THE PROBLEM

The attitude of insuring public towards the purchase of insurance products/services has affected the industry in no small measure. Despite the numerical growth and to some extend, expansion in the insurance industry in Nigeria, the insurance market requires a through empirical investigation to determine the cost structure and optimal production levels in which an insurance company can efficiently operate.

Poor perception of insurance service in Nigeria is worrisome. Most insuring public do not believe in insurance. Religious believe that only God insures have affected the industry. They see no reason in buying insurance products or services.

The level of illiteracy also have a negative effect on the buying behaviuor of insurance services. Illiterate according to Oxford Advance Dictionary (6thedition ) “ is somebody or person not knowing how to read and write” But insurance illiteracy goes beyond this reason, even those who know how to write and read still find it difficult to understand what insurance entails, its benefits and importance to individuals and society at large.

The conservative attitude of insurance companies leading to lack of awareness is also worrisome.  There is nothing like aggressive marketing or advertisement to insuring public and also educate them about the workability benefit of insurance services.

Low participation by government and its parastatals also contribute to low consumer’s attitude towards insurance products or services. Government parastatals like NAICOM (National Insurance Commission) can also support the insurance companies in the public enlightment of insurance so as to increase the clients’ base in the industry.

Bad claim experience also has its own negative effect in the industry.  The insurance companies were accused of not paying genuine claims.  This had also contributed to the attitude in the industry.  Whatever name the insurance industry has today was definitely given by those who had been victims of some dubious insurers who defaulted in paying genuine claim at one time or the other.  To streamline insurance business activities and stem the upsurge of the mushroom insurance  companies, insurance capital base was raised from to N2 million, N3, million and N10 million for life business, general insurance business and reinsurance businesses respectively, leaving the industry with 58 registered insurance and reinsurance companies from about 152 insurance and reinsurance companies prior the consolidation exercise.

PURPOSE OF THE STUDY

The purpose of this study are as follows;

(a)     To find out effect of consumer attitude towards insurance business by the insuring public

(b)     To find out if the price of insurance will significantly affect the proportion of income spent on insurance products/services by the consumers.

(c)     To investigate the attitude of consumer towards the insurance business.

(d)     To find out effect of low patronage of insurance products by the insuring public

(e)     To investigate various perception of consumers towards buying insurance policies

(f)       To identify various objectives of insurance companies towards consumers.

(g)     To find out various needs and wants of insuring public and proffering solutions on how to meet these needs and wants

(h)    To investigate government control on protecting the consumers/clients

(i)       To find out the effect of innovation on consumer buying behaviour