Impact of Religion on the Purchase of Insurance in Nigeria
CHAPTER ONE
OBJECTIVESOF THE STUDY
General objective
- To make an assessment on factors affecting insurance demand in
- The specific objectives include:
- To study whether the income of an individual affect demand for long term
- To study whether the awareness affect demand for long term assurance
- To study whether religious beliefs affect demand for long term assurance
CHAPTER TWO
LITRATURES REVIEW
- INTRODUCTION
In this section, various writings are organized to describe the theoretical foundations and empirical results of the different factors hypothesized to drive the demand for insurance. It begins by defining life value concept and insurance, its classifications, and its benefits followed by an analysis of related literatures on empirical as well as theoretical concepts of demand for insurance in relation with awareness, religion, and income.
- INSURANCE ANDHUMAN LIFE VALUE
Williams (1984) stated that a human life has value for many reasons. Many of these reasons are philosophical in character, and would lead us into the realm of religion, esthetics, sociology, psychology, and other behavioral sciences. The greatest interest here is economic values, although it is very difficult to separate the discussion in such a way that an economic analysis would have no implications or overtones for other viewpoints. A human life has economic value to all who depends on the earning capacity of that life, particularly to two central economic groups which are the family dependents and the employer to the employees.
Insurance is therefore developed on the concept of human life value. Human life value approach focuses on the economic component of human life. Any event affecting an individual‘s earning capacity, retirement or unemployment. The human life value concept provides the philosophical basis for the insurance, which is a service designed to protect the individual against two distinct risks superannuating and premature death.
There are four main perils that can destroy, wholly or partially, the economic value of a human life which include premature death, loss of health, old age, and unemployment.
Greene (1984) also said that, as a social and economic device, insurance is a method by which a group of people may cooperate to ameliorate the loss resulting from the premature death of members of the group. Insurance compensates designated beneficiaries in the event of the insured‘s death or can constitute a form of retirement fund longevity insurance, in which case the policyholder receives regular payments from the insurance company annuities starting at a specific age and for an indeterminate number of years, in exchange for a single premium payment or a series of prior regular payments.
Insurance can accomplish two objectives: to guarantee the existence of an estate out of which one‘s dependents may meet debts and receive an income if the breadwinner dies which is protection need; and to save money as a part of one‘s own living estate, which is created for future income needs.
CHAPTER THREE
RESEARCH DESIGN AND METHDOLOGY
- RESEARCHDESIGN
This study used a deductive design approach, as it used to test theories which are developed by other researchers at different time. It is a non experimental hypothesis testing research. In analytical research, on the other hand, the researcher has to use facts or information already available, and analyze these to make a critical evaluation. The study is also an explanatory type of research.
- POPULATIONAND SAMPLING TECHNIQUE
Sample design
Population Target:
People who have not bought any type of insurance policy:
- Business owners (who earn their own income/profit)
- Company employees (other than insurance company employees as well as those whose company buys insurance for the employees). The reason is that these groups are fully aware of the benefit and use of insurance.
Sampling technique: non-probability samples are those based on convenience sampling. Population elements are selected for inclusion in the sample based on the ease of access.
Geographic areas covered:
In order to generalize, the research findings to the whole Nigeria, the researcher has selected six major cities in addition to Abuja (capital city of Nigeria), Adama, Hawasa, Dere dawa, Mekele, Jimma, and Bahir dar. These cities have more number of employees in every sector where the long term of individual workers are also at risk. That means individuals working in different factories, for example are at higher risk of death, disability, and illness. The areas under study for Abuja are; Merkato, Laghar, Piaza, Megnagna, Bole, and Saris. This is done because the areas are more condensed with population and business areas.
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
- INTRODUCTION
As previously stated above the main objective of this study is to assess whether awareness, income and religious belief of the people affect demand for insurance by taking a sample of four hundred people who were not insured from all religious groups. The sample was classified under three strata based on the religious belief of the people. The sample size for each religious group was taken based on the percentage of their distribution in the country. In calculating the sample size, the total population of Nigeria above age 18 and less than 65 was taken as discussed under the sampling methodology above. From the total of four hundred questionnaires three hundred ninety one are found error free and used for this study purpose. That means above 97.75% return rate was achieved from the questionnaires distributed to all religious groups. Therefore, the entire analysis given in this study is based on the actual questionnaires returned.
CHAPTER FIVE
SUMMARY OF MAJOR FINDINGS, CONCLUSION AND RECOMMENDATION
1.1. SUMMARY OF MAJOR FINDINGS
This assessment was conducted in order to provide sufficient answer to the research question;
―to what extent awareness, income, and religious belief of the public affect demand for insurance in Nigeria?‖ The relationship between religious groups on each of the three factors was also assessed. The extent of the effect of each factor was analyzed using inferential statistics methods.
The finding proves that there is a strong positive correlation between awareness and insurance demand in Nigeria. The correlation between income and insurance demand was found to be negative but with moderate strength. Two different results were obtained regarding the effect of religion on insurance demand as it was explained in the analysis part. No correlation found between Christianity & ‗Other‘ beliefs in relation to demand for insurance. However, negative correlation between Islamic belief and demand for insurance was found.
1.2. CONCLUSION
Based on the findings of this study, it can be concluded that, awareness, income, and religious beliefs have affected the demand for insurance in Nigeria. However, the extent of effect for the three factors was found different. While the correlation between demands for insurance was found positive and strong, the correlation between income factor and demand for insurance was negative and has moderate strength. Different results were found between religious belief and demand for insurance. While no relationship between religious belief and demand for insurance found for Christians and ‗others‘, a negative but moderate correlation between Islamic belief and demand for insurance was found.
Even though religion is very dominant in the country, its power to influence the purchase of insurance is found very low in case of non Muslims. This is an opportunity that should be taken with granted by the industry. A negative moderate correlation between Islamic belief and demand for insurance was found using spearman‘s correlation. As per the result from Spearman‘s correlation between income factor and demand for insurance, the correlation found not to be strong. Income reason for not buying insurance is not a significant factor. However, awareness was found to be strongly correlated with the demand for insurance. Insurance companies can exert their effort in increasing awareness and benefit from the expected benefits as a result of this assessment.
- RECOMMENDATION
Subsequent to the findings and conclusions, the following recommendations were forwarded in order to include and give emphasize in developing the insurance business in Nigeria. Insurance companies can focus their strategies on the factors identified and enhance the demand for insurance.
The results of this assessment suggest some major implications of insurances business in Nigeria. Even though religious belief and income factor found to correlate moderately with insurance demand, as discussed above, awareness was found to be highly positively correlated with. This is an indication of insufficient communication from the insurance industry for its contribution for lack of understanding of its benefit to society. Lack of understanding of insurance is associated with misunderstanding the service. One of the indications of the misunderstanding of the value and benefit of insurance is the association of insurance against religious belief.
However, insurance does not assure any one against death; it assures from the financial consequence of either dying too soon or living too long. Some of us die young, before we have time to raise our children and do the other thing we plan. Some of us live too long in the sense that we outlive our physical, mental, or financial resource. Healthy
individuals do not look forward to death; it is a subject we all tend to avoid. But it is a universal experience. It is one of the few certainties faced by all humans. Rational minds plan to deal with such certainties. Only Ostriches hide their heads in the sand in the hope that somehow death will pass. Insurance is a rational and objective way of planning for the certainty of death, and it is not until we can face the certainty of our own death that we can fully understand the need for insurance.
Even though this assessment did not look in to the dogma of each religion to examine its relationship to insurance consumption, insurance should be seen as a tool of financial protection of the loved ones and the dependents. Relating religious belief to insurance is a matter of misunderstanding its role and benefit. It is clear that some religions have a principle prohibiting profit from saving interest. However, buying insurance is a matter of protection and saving and not earning extra income from it.
What is needed from insurance companies is teaching people and creating awareness of the role and benefit of insurance. In addition to this, the cost of insurance service should also consider the purchasing power of the person.
An important investment in publicity may result in increased awareness and improved perception. The researcher believes that publicity of the services in order to create awareness is not enough to make business from the insurance service. Because it needs further, to convince them by showing that it is not against religious beliefs, it is a method of securing the financial capacity of the dependents or their legal heirs.
Finally, the researcher believes that the result of this assessment contributes to the growth of insurance business in relation to the economic development of the country at large through provision of valuable information to the society and future interested researchers in the area as well as decision makers in the insurance industry stressing the factors actually affecting the demand for insurance in the future.
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