Determinants of Non-life Insurance Buying Behavior: A Study on Consumers of Selected Insurance Companies in Addis Ababa

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Addis Ababa University


This paper deals with the examination of insurance consumer behavior in Addis Ababa. The purpose of the work was to determine the factors that explain the insurance service purchase decision of consumers of non-life insurance buyers. Accordingly, six factors were proposed and identified. They were Attitude, Perception, Income, Price (Premium), Culture and Legal Liability and a research model composed of these six independent variables and one independent variable was formulated. To this end, a structured 5-point Likert scale questionnaire-based survey is employed to collect data. For this reason, 400 questionnaires were distributed to customers of five insurance companies found in Addis Ababa and 331 (82.75 %) were returned back for analysis. The relationship and impact of the factors was analyzed using Pearson correlation and multiples regression. Descriptive statistics and sample t-test is also conducted in the research through the aid of statistical package for social science (SPSS) version 20.0 software. The results show that five of the factors i.e., Attitude, Perception, Income, Culture and Legal Liability influences significantly the purchasing decision of non-life insurance consumers. The leading factor that most contribute in determining the non-life insurance consumers is the Perception of customers towards insurance and risk. And also according to the research findings, premium (price) of service non-life insurance service could not determine the behavior of customers significantly. Consequently, the researcher recommendation is forwarded to marketers of non-life insurance services switch their strategy on working the above statistically significant factors especially in creating awareness and influencing customers’ perception about insurance services, not merely on price



insurance services, consumer behavior, insurance buyers