Determinants of demand for non-life insurance in Harare

Abstract

Insurance is defined as an economic device to reduce or eliminate risks, by transferring the risks from individuals to insurance companies. The development of the insurance market is important for the economy through protecting assets, capital mobilisation and promoting trade. Knowledge of consumer behavior in the insurance market is important in understanding customer needs and wants. Demand for insurance is driven by many factors across the world, chief among them demographic, social, cultural and institutional factors. While several studies have been conducted to explain demand for life insurance, very little has been done for non-life insurance. Nevertheless, most of the studies to date have been concentrated in developed countries. This research investigates the demand for non-life insurance in Harare, the latter being a developing country set up. The aim of the study is to examine the determinants of demand for non-life insurance. To achieve this, a cross-sectional survey was conducted on 120 respondents drawn from buyers of non-life insurance products from six insurance companies in Harare. The data were collected through questionnaires and analysed using descriptive statistics, ANOVA and Pearson’s correlation coefficient and t-tests using the Statistical Package for Social Sciences (SPSS). The major findings of the study indicate that income, age, education and legal compulsion variables are positively related to demand for non-life insurance. Income was found to be the strongest predictor of the demand for non-life insurance. There is no evidence from the survey on the positive influence of personal and cultural variables. The findings have important implications on policy formulation for both the regulatory authorities and insurance companies, particularly in influencing marketing strategies.