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Fatai Adesina Badru PL ISSN 0239-8818 HEMISPHERES No. 28°, 2013 Socio-Cultural Factors Affecting Insurance Patronage in Lagos State, Nigeria: An Exploratory Study Abstract Risk occurrence is a phenomenon that affects human lives. Risk avoidance helps individuals to cope with the tragedies of life. Insurance patronage in sub-Saharan Africa (with the exception of South Africa) is abysmally poor. Empirical studies on the impact of socio- cultural factors on insurance patronage are slim. Besides, meanings attached to modern insurance concepts such as accident and disasters are culturally constructed. This study, as an exploratory work, investigated some of the socio-cultural variables that shape insurance patronage among Nigerians using Lagos State as a focus. Such variables act as agents of socialization through which people receive the norms and values that shape and modify their attitudes and behavior. The research design was a cross-sectional survey, exploratory in nature, using structured questionnaires to collect primary data. Variables were created for both univariate and bivariate data and analyzed with the Statistical Package for Social Sciences (SPSS). Findings from the survey suggest that many users of insurance in Lagos understood the language of insurance policies, have positive values and norms, and that their religious persuasions do not impact negatively on insurance patronage. It is thus possible to motivate Lagosians in particular and Nigerians in general to patronize insurance services. Other feasible measures to boost patronage were recommended for practitioners and policy-makers. This study is a platform for broader research in future. Keywords: insurance, insurance patronage, risk, culture, socio-cultural factors, Nigeria. Introduction Risk occurs inevitably in one form or another, and affects human lives. Risk avoidance helps individuals cope with the tragedies of life. Insurance has a positive role to play in this regard. Insurance is a social device, in which a group of individuals (called the insured) transfer risk to another party (called an insurer) in order to combine loss experience, which permits the statistical prediction of losses and provides for payments of losses from funds contributed (premiums) by all members who transferred risk (Yusuf et al.) 1 . Yusuf et al. assert that insurance patronage in sub-Saharan Africa, with the exception of South Africa, is abysmally poor. The Swiss records for 2008 confirm this by posting figures of 0.8% and 0.9% for Nigeria and Kenya respectively. The Nigerian insurance industry is today ranked 65 th globally in terms of size, and 6 th out Tajudeen Olalekan Yusuf Wakeel Isola 1 T. O. Yusuf, G. Gbadamosi, D. Hamadu, Attitudes of Nigerians towards Insurance Services: An Empirical Study, African Journal of Accounting, Economics, Finance and Banking Research, Vol. 4 (4), 2009, pp. 3446.

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Page 1: Socio-Cultural Factors Affecting Insurance Patronage …cejsh.icm.edu.pl/cejsh/element/bwmeta1.element.deskli… ·  · 2015-01-31Socio-Cultural Factors Affecting Insurance ... No

Socio-Cultural Factors Affecting Insurance Patronage in Lagos State 5

Fatai Adesina Badru PL ISSN 0239-8818HEMISPHERES

No. 28°, 2013

Socio-Cultural Factors Affecting Insurance Patronagein Lagos State, Nigeria: An Exploratory Study

Abstract

Risk occurrence is a phenomenon that affects human lives. Risk avoidance helps individualsto cope with the tragedies of life. Insurance patronage in sub-Saharan Africa (with theexception of South Africa) is abysmally poor. Empirical studies on the impact of socio-cultural factors on insurance patronage are slim. Besides, meanings attached to moderninsurance concepts such as �accident� and �disasters� are culturally constructed. This study,as an exploratory work, investigated some of the socio-cultural variables that shape insurancepatronage among Nigerians using Lagos State as a focus. Such variables act as agents ofsocialization through which people receive the norms and values that shape and modifytheir attitudes and behavior. The research design was a cross-sectional survey, exploratoryin nature, using structured questionnaires to collect primary data. Variables were created forboth univariate and bivariate data and analyzed with the Statistical Package for SocialSciences (SPSS). Findings from the survey suggest that many users of insurance in Lagosunderstood the language of insurance policies, have positive values and norms, and thattheir religious persuasions do not impact negatively on insurance patronage. It is thuspossible to motivate Lagosians in particular and Nigerians in general to patronize insuranceservices. Other feasible measures to boost patronage were recommended for practitionersand policy-makers. This study is a platform for broader research in future.

Keywords: insurance, insurance patronage, risk, culture, socio-cultural factors, Nigeria.

Introduction

Risk occurs inevitably in one form or another, and affects human lives. Riskavoidance helps individuals cope with the tragedies of life. Insurance has a positiverole to play in this regard. Insurance is a social device, in which a group of individuals(called �the insured�) transfer risk to another party (called an �insurer�) in order tocombine loss experience, which permits the statistical prediction of losses and providesfor payments of losses from funds contributed (premiums) by all members whotransferred risk (Yusuf et al.)1.

Yusuf et al. assert that insurance patronage in sub-Saharan Africa, with theexception of South Africa, is abysmally poor. The Swiss records for 2008 confirmthis by posting figures of 0.8% and 0.9% for Nigeria and Kenya respectively. TheNigerian insurance industry is today ranked 65th globally in terms of size, and 6th out

Tajudeen Olalekan YusufWakeel Isola

1 T. O. Yusuf, G. Gbadamosi, D. Hamadu, �Attitudes of Nigerians towards Insurance Services:An Empirical Study�, African Journal of Accounting, Economics, Finance and Banking Research,Vol. 4 (4), 2009, pp. 34�46.

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6 Fatai Adesina Badru, Tajudeen Olalekan Yusuf, Wakeel Isola

of the 8 largest markets in Africa. The sector has contributed less than two percentto the Gross Domestic Product (GDP) due to systemic failures of regulation andsupervision. Other countries in the region have fared no better in the global table.Much research has been conducted on what has engendered this state of affairs(Criel2, Becker et al.3, Yusuf et al.4).

There is no gainsaying that man is a social being and his social nature begins withhis incorporation into a society where he gains identity and recognition. Societies, onthe other hand, are created from a cultural framework because culture is a man-madecreation which informs the coming together of individuals in order to make a society.Durowade5 asserts that the things that make up culture are, therefore, created by manand a person absorbs many parts of a culture by living amongst it. Culture, accordingto Edward Tylor6, refers to �that learned complex of knowledge, belief, art, morals,law, custom and any other capabilities and habits acquired by man as a member ofsociety�.

In the same vein, culture influences most of the activities of our daily lives includingour dispositions, decisions and even our attitudes. This study seeks to investigatesome of the socio-cultural factors that influence insurance patronage among Nigerians,using Lagos State as a case study. Such factors act as agents of socialization throughwhich people obtain the norms and values that shape and guide their attitudes andbehavior.

The literature contains very limited work on the impact of culture on insurancepatronage. Furthermore, the meanings ascribed to modern insurance notions suchas �accident�, �risk�, �disasters� are culturally constructed and assimilated. Perhapsthe essence of planning ahead to insure unforeseen risks that may befall one�s property,ships, personal accident, and life as well as liabilities might have a linguisticinterpretation not contemplated by marketers of insurance.

Few articles have addressed this area, in general ignoring differences along specificand socio-cultural dimensions. Hence, the purpose of this study is to examine thesocio-cultural variables impacting insurance service patronage in the study locationand filling the gap in knowledge.

Statement of the problem

The fact that we live in a world of risk strengthens the importance of insurance.Death, calamities and other forms of contingency can befall anyone without prior

2 B. Criel, �District-based Health Insurance in Sub-Saharan Africa�, Studies in Health ServicesOrganisation & Policy, Vol. 9, 1998.

3 G. Becker, R. J. Gates and E. Newsom, �Self-Care among Chronically Ill African Americans:Culture, Health Disparities, and Health Insurance Status�, American Journal of Public Health, Vol.94 (12), 2004, pp. 2066�2073.

4 Yusuf, Gbadamosi, Hamadu, �Attitudes of Nigerians��, p. 2.5 Isaac Durowade, �People, Diversity and Culture in Nigeria�, in Sociology for Beginners Lagos,

L. Olurode, O. Soyombo (eds.), Lagos: John West Publications, 2001.6 Edward Tylor, Primitive Culture, Vol. 1, London: John Murray, 1871.

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Socio-Cultural Factors Affecting Insurance Patronage in Lagos State 7

notice. Damages and losses are a part of everyday life, and one must be ready forthe occurrence of such. One of the best ways to ensure that the victims orsuccessors continue to live a happy life in case of death is to be insured. It isunlikely that banks that have been victims of serious robbery would continue tooperate if they were not insured. Agricultural enterprises are usually faced withmany risks and uncertainties, some of which are natural hazards such as floods,drought, fire outbreak, diseases and pest attacks. It thus becomes pertinent toinvestigate the socio-cultural variables that affect people�s patronage of insurancecompanies. Such variables include religion, gender, education, ethnicity, languageand cultural beliefs, among others.

General research objective

The general objective of this study is to investigate the socio-cultural variablesaffecting insurance patronage in Lagos State, Nigeria.

Specific objectives:

1. to explore the impact of religion on insurance patronage in the study location;2. to interrogate the effect of gender on insurance patronage in Lagos State;3. to examine the impact of educational attainment on insurance patronage in

Lagos State.

Significance of the study

It is indisputable that the cultural factor should not be swept under carpet. Thematerial and non-material aspects of culture, when properly explored theoreticallyand empirically, may illuminate some of the cultural inhibitions of low insurancepatronage in Lagos State in particular and Nigeria in general. Such study is likely tocorrect the wrong impressions people have about insurance; it would inform themthat insurance is not all about �calamities�. The findings would open the floodgatesof opportunities that insurance marketers have ignored or paid little or limited attentionto, thus leading them to higher returns on investment and an increase in the marketshare of insurance services. Students of insurance, marketing, economics andsociology among others will find the findings useful, while insurance theorists,academics, insurance and marketing practitioners, insurance brokers and regulatorswill be given further insights into the respondents� cultural perception of risks andinsurance services.

Brief review of pertinent literature

The insurance marketing literature documents several examples of the inter--connectedness between insurance and culture. If the business of insurance is toprotect people against the financial consequences of unforeseen risks, the marketingside of that business depends on dramatizing the risk in the minds of potentialcustomers.

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8 Fatai Adesina Badru, Tajudeen Olalekan Yusuf, Wakeel Isola

Platteau and Peccoud7 queried whether culture was an obstacle to African economicdevelopment. Borrowing from Guiso�s et al.8 definition of culture as �those customarybeliefs and values that ethnic, religious, and social groups transmit fairly unchangedfrom generation to generation�, Platteau and Peccoud argued that SSA�s badperformance on the level of its institutional environment must be traceable to factorsspecific to the region that do not lie within the sphere of geography. He concludedthat religion, which often becomes an escape route from ethnic restriction, could bemade to instill �values and norms that violate customs with adverse effects on capitalaccumulation and entrepreneurship�.

Chui and Kwok9 examined the way national culture affects consumption patternsof life insurance across countries. Life insurance is a service that is abstract, complex,and focused on unsure future benefits. Because of the uncertainty and ambiguityinherent in the life insurance product, consumers are more likely to respond accordingto their cultural prescriptions. Their findings show that individualism indeed has asignificant, positive effect on life insurance consumption, whereas power distanceand masculinity/femininity have significant negative effects. The results are robust,even after controlling for economic, institutional and demographic determinants.

Theoretical perspectives

According to Albrow,10 no research can work without theory, even when it deniesit has any. Theory simply means the connection of ideas; even counting is theory. Itrequires us to connect ideas of unity, identity, repetition and sequence, which is whyit takes some time to learn. This also refers to abstractions, speculations, ideas andconceptual constructions which are tentative and attempt to make a causal explanationor descriptive illustration of a particular phenomenon. In this work, we shall alludeto two salient theoretical postulations: the Theory of Consumer Behavior and theSocio-cultural Model.

Theory of Consumer Behavior

The traditional theory of consumer behavior assumes that the consumer or decisionmaker is certain of the outcomes arising from alternative acts or decisions. However,many choices made by consumers take place under conditions of uncertainty. Inthis section, we explore how the theory of consumer choice can be used to describesuch behavior following the ground breaking work of Neumann and Morgenstern.11

7 Jean-Phillipe Platteau, Robet Peccoud, Culture, Institutions and Development: New Insightsinto an Old Debate, New York: Routledge, 2011.

8 Luigi Guiso, Paola Sapienza, Luigi Zingales, Does Culture Affect Economic Outcomes?, London:CEPR Discussion Papers, 2006.

9 Andy Chui, Chuck Kwok, �National Culture and Life Insurance Consumption�, Journal ofInternational Business Studies, Vol. 39, 2008, pp. 88�101, doi:10.1057/palgrave.jibs.8400316.

1 0 Martin Albrow, Sociology: The Basics, New York: Routledge, 2003.1 1 John von Neumann and Oscar Morgenstern, Theory of Games and Economic Behavior,

Princeton: Princeton University Press, 1994.

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Socio-Cultural Factors Affecting Insurance Patronage in Lagos State 9

Suppose a consumer initially has monetary wealth W. There is some probability pthat he will lose an amount L. For instance, there is some probability his house willburn down. The consumer can purchase insurance that will pay him q naira in theevent that he incurs this loss. The amount of money that he has to pay for q naira ofinsurance coverage is ðq; while ð is the premium per naira of coverage.

Thus, this situation can be characterized as a game of chance, as follows:

(W � L � ðq + q, W � q), (p, 1�p) (1)

If we consider a special scenario of this lottery, where he fully insures risk; i.e.,where q = L, with full insurance, state contingent wealth is W � ðq regardless ofwhether a state contingent loss occurs; thus he exchanges an uncertain loss (L) fora certain loss (ðq).

We assume that this individual has a von Neumann-Morgenstern utility functionU(W). Thus U(W) is continuous and twice differentiable; i.e., marginal utility ispositive and decreasing in wealth. Given these assumptions, insurance will bepurchased if and only if a q exists such that the expected utility of being insured ishigher than the expected utility of being uninsured; i.e.,

pU(W � ðq � L + q) + (1 � p)U(W � ðq) > pU(W � L) + (1 � p)U(W) (2)

How much coverage will the consumer have and purchase can be analyzed bysolving the utility maximization problem thus:

max E(U(W)) = max pU(W � L � ðq + q) + (1 � p)U(W � ðq) (3)

The solution to this maximization problem (among other factors) depends onthe individual�s attitude to risk. If the consumer is strictly risk-averse he willcompletely insure himself against the loss L. A person is a risk averter relative toa lottery if the utility of its expected value is greater than the expected value ofits utility. Such a person prefers a certain outcome to an uncertain one with thesame expected value. On the other hand, a person can be risk-neutral relative toa lottery if the utility of the expected value of the lottery equals the expectedutility of the lottery.

Such a person is only interested in expected values and is totally oblivious to risk.In the same vein, a person can be a risk lover relative to a lottery if the utility of itsexpected value is less than its expected utility. However, sociologists have offereddifferent theoretical explanations for this attitudinal behavior. This takes us to theSocio-cultural School.

Socio-cultural School

One theory that informs people attitude towards insurance is the social action.The social action theory by Max Weber12 explains that human actions are meaningfuland that certain reasons push people into various kinds of actions. To Weber, thereare three kinds of action: traditional (based on customs and habits); affective (based

1 2 Max Weber, Economy and Society, Vol. 1, Berkely: University of California Press, 1924.

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10 Fatai Adesina Badru, Tajudeen Olalekan Yusuf, Wakeel Isola

on the emotional state of the individual at a particular time); and rational (based on aclear awareness of a goal) (Haralambos & Holborn)13. This also implies that certainfactors tend to influence one�s behavior towards insurance. People might choose tohave a preference for insurance due to intuitive or cultural underpinnings. On theother hand, people can rationally decide to have an insurance policy for clearlyeconomic reasons.

Marketing of insurance

Marketing is the management process responsible for identifying, anticipating andsatisfying customer requirements profitably (Chartered Institute of Marketing).14

Marketing is the process of planning and executing the conception, pricing, promotion,and distribution of ideas, goods, and services to create exchanges that satisfy individualand organizations� objectives.

Here we will attempt to borrow from Petrescu and Pop�s15 description of the maincharacteristics of five key elements of holistic marketing in the insurance industry:relationship marketing, integrated marketing, internal marketing, social responsibilitymarketing and international marketing.

The globalization of the insurance market is a fact that cannot be contested, andan international approach to the marketing activity becomes more and moreimportant. There are two approaches to the international marketing activity in theinsurance sector: multicultural marketing and global marketing (Keegan & Green16).The multicultural marketing accounts for differences in consumers� perception,attitudes and behavior in different cultural areas (Mueller & Gelbrich17). There arespecialists that have noticed even the appearance of so-called emotions marketingin insurance � a type of marketing necessary as a consequence of increasinglysensitive consumer behavior. Nowadays consumers are trying to build an identitythrough various consumption activities, and consequently a consumer will choosethe product / service / company brand that has an image in accordance with theideas the person holds about himself/herself � the choice being indicative of thetype of image the consumer desires. Multicultural marketing recognizes that thecultural heritage is a decisive factor for the success or failure on internationalmarkets, and insurance companies are trying to adapt their activity to the specificconsumer behavior.

1 3 Mike Haralambos and Martin Holborn, Sociology: Themes and Perspectives, London: HarperCollins Publishers, 2004.

1 4 Chartered Institute of Marketing, 2000.1 5 Eva-Cristina Petrescu and Nicolae Al. Pop, �Particularities of the Marketing Activity in the

Insurance Industry�, Annals of Faculty of Economics, Facultatea de Stiinte Economice, Vol. 4, No. 1,2009, pp. 788�792.

1 6 Warren Keegan, and Mark Green, Global Marketing (5th ed.), London: Pearson EducationInternational, 2008.

1 7 Stefan Mueller and Katja Gelbrich, Interkulturelles Marketing, Muenchen: Vahlen Verlag, 2004.

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Socio-Cultural Factors Affecting Insurance Patronage in Lagos State 11

Research methods

Research design: The research design that was employed in the study was across-sectional survey, exploratory in nature. Instruments were designed, andsubjected to peer review by experts in psychometrics to enhance the construct validityof the instrument before being used to collect the primary data. The field work tookplace on Friday, December 24, 2010, a public holiday in Nigeria, when respondentswere at home and could be reached to provide the necessary information connectedwith insurance patronage.

Study location: The study population was Onike/Iwaya, a suburban community inMainland Local Government, Lagos State. Lagos State is an administrative division ofNigeria, located in the southwestern part of the country. It is the smallest in area ofNigeria�s states. Lagos State has a total land mass of 3,474km2 and has coordinates of6o35�N 3o45�E. Lagos State, with its capital in Ikeja was created on May 27, 1967 byvirtue of state Decree No. 14 of 1967. Prior to this, Lagos municipality had beenadministered by the Federal Ministry of Lagos Affairs as a regional authority, while theLagos City Council (LCC) governed the City of Lagos. Onike/Iwaya, a subset ofLagos State, was chosen for the study because of its proximity to our university andthe fact that we could elicit necessary data from the location. It is a mainly residentialarea consisting mainly of lower-class people, and a handful of middle-class people.

Study population: The population of interest comprised of adult males and femalesresiding at the communities at the time of study. The respondents are mainly pettytraders, white-collar civil servants and artisans.

Sample size and sampling technique: The proposed sample size was 180. Asthere was no sampling frame that could provide comprehensive details of the districtsor final units of analysis, and due to the exploratory nature of the work, a convenientsampling technique was employed.

Recruitment of research assistants: Ten research assistants were recruitedfrom the faculties of Business Administration and Social Sciences in the Universityof Lagos, (five from each faculty) drawn from students in their penultimate/finalyears of their study and trained with the instruments for a day; ambiguous questionswere cleared with them. Exercise notes, pencil, pens and other field materials weregiven to them and they were conveyed to the field work sites. The three researchersserved as the field supervisors to the research assistants. The research assistantsafter the trainings were financially motivated, with the transport fare and honorariagiven to them at the end of the exercise.

Research instrument: The research instrument used for the study was structuredquestionnaire which was developed by the researchers to elicit information from180 respondents. It was a 21-item instrument containing both open- and close--ended questions. The open-ended questions were provided with mutually exclusivecoding frames before data entry and analysis. There are three sections in theinstruments: the respondents� socio-demographic background, the respondents�experience of insurance companies and policies, and a final section containing questions

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12 Fatai Adesina Badru, Tajudeen Olalekan Yusuf, Wakeel Isola

related to how socio-cultural factors such as religion, ethnicity, language, genderand education affect their patronage of insurance companies.

Data screening: Data screening is the process of ensuring that the data are cleanand are ready for statistical analysis. During the process of the screening, it wasrealized that 28 instruments were not properly administered; some key questionswere not answered and some contradictory responses were given which could reducethe reliability and validity of the study. Hence, these 28 instruments were disqualified,thereby reducing the total number used to 152.

Ethical issues: The consent of participants was sought before the researchcommenced, and they were not in any way forced.

Data entry/analysis: At the end of the field exercise, the instruments were retrievedfrom the research assistants, coded and cleaned before data entry on SPSS. Variableswere created for both univariate and bivariate data. The results are presented below.

Presentation of Data and Analysis

Table 1. Socio-Demographic Characteristics of Respondents

Age

Under 25 years

26�35 years

36�45 years

46�55 years

55�65 years

66 and above

No response

Marital Status

Single

Married

Divorced

Separated

Academic Background

Primary school

Secondary school

OND/HND

Bachelor�s degree

Master�s degree

No response

Frequency

19

65

28

25

6

4

5

58

91

1

2

6

28

37

60

15

6

Percentage

12.5%

42.8%

18.4%

16.5%

3.9%

2.6%

3.3%

38.1%

59.9%

0.7%

1.3%

3.9%

18.4%

24.2%

39.5%

9.9%

3.9%

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Socio-Cultural Factors Affecting Insurance Patronage in Lagos State 13

Table 1 shows that 65 respondents (about 43 percent) of the population were withinthe ages of 26�35 years; about 13 percent fell below the age bracket of 25 years, andabout 18 percent were within the age bracket of 36�45 years; 25 (about 16 percent)were within the age range of 46�55 years; 6 (3.9%) of the respondents were withinthe ages of 56�65 years, 4 (2.6%) of the respondents were above 66 years, while5 (3.3%) of the respondents did not respond to the question. The table indicates that alarge percentage (about 60 percent) of the respondents were married, followed byabout 38 percent that claimed to be single; while 0.7 and 1.3 percent of the respondentswere divorced and separated respectively. From the above table, 22 (14.5%) of therespondents were Muslims, 123 (80.9%) of the respondents were Christians,1 respondent (0.7% of the total) was a free-thinker and 6 (3.9%) of the respondentsdid not respond to the question. The age structure is typical of the Nigerian population,where the majority of the people are youths, defined by the Nigerian National YouthPolicy as individuals between the ages of 18�35 years, who are more likely to beindependent and take a decision on insurance patronage, whether life or non-life.

Religion

Islam

Christianity

Free-thinker

No response

Total

22

123

1

6

152

14.5%

80.9%

0.7%

3.9%

100%

N=152. Source: Field survey, 2010.

Table 2. Distribution of Respondents According to Insurance Patronage

Item

Have you owned any insurance policy before?

Yes

No

Do you own any policy presently?

Yes

No

No response

Do you pay your premium promptly?

Yes

No

No response

Frequency

84

68

72

79

1

76

61

15

Percentage

55.3%

44.7%

47.4%

52.0%

0.7%

50.0%

40.1%

9.9%

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14 Fatai Adesina Badru, Tajudeen Olalekan Yusuf, Wakeel Isola

From table 2 above, we see that 84 (55%) of the respondents claimed that theyhad patronized an insurance policy previously, while 68 (about 45%) of therespondents had never had an insurance policy. From the respondents who claimedto have had insurance, 72 (about 47%) of them still have an insurance policy, while79 (52%) of them claimed not to have a current insurance policy. This is a lacunafor the insurance practitioners to explore, to find out why people who have had theservices before are not continuing to access the services. One respondent did notrespond to the question. These results have a marketing implication. Could this betraced to socio-cultural factors?

From the table, it is interesting to note that 50 percent of the respondents paidtheir premium promptly, 40.1 percent of them did not pay their premium promptly,while 9.9 percent of the respondents were indifferent to the question. Are theresocio-cultural factors that make about 40 percent of people not pay their premiums?Could this be due to job loss, under-employment, pressing domestic demands, poverty,or other reasons? The table also reveals that 49 (32%) of the respondents think thatinsurance companies are reliable and trustworthy, 42 (about 28%) of the respondentsbelieved that the insurance companies ought to be reliable and trustworthy, 8 (5%)of respondents think that the insurance companies must be reliable and trustworthy,17 (11%) of the respondents feel that the insurance companies may not be reliableand trustworthy, while 3 respondents did not answer the question.

Table 3 shows the socio-cultural factors affecting the possession of an insurancepolicy. From the table, 49 (32%) respondents never felt any socio-cultural factoragainst owning an insurance policy, whereas 33 (about 22%) of the respondentssometimes have socio-cultural reason(s) against owning an insurance policy. Thetable also reveals that 107 (70%) have never had a religious reason not to takeinsurance and about 18% asserted that accidents could be averted spiritually. However,

Are you satisfied with the service from the insurer?

Yes

No

No response

Do you think insurance companies are reliable andtrustworthy?

They ought to be

They are

They must be

They are not

They may not be

No response

62

60

30

42

49

8

33

17

3

40.8%

39.5%

19.7%

27.6%

32.2%

5.3%

21.7%

11.2%

2.0%

N=152. Source: Field survey, 2010.

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Socio-Cultural Factors Affecting Insurance Patronage in Lagos State 15

about 38% of the respondents had the notion that accidents could be averted throughspiritual means. This definitely has implications for insurance service and patronage.Such individuals may resort to a fatalistic attitude rather than patronizing insuranceservices. The implication of this is that cultural concepts and religious adherencecould negatively or positively affect insurance policy and insurance patronage. Thirteenrespondents affirmed that they sometimes have cultural and religious reasons againstinsurance policy, while 7.9 and 6.6 percent of the respondents claimed that they�somewhat� have cultural and religious reasons against taking out an insurance policy.

The table shows that 57 (37.5%) of the respondents agreed that sometimesaccidents could be averted spiritually, and 27 (17.8%) of the respondents believedthat accidents could not be averted spiritually. This implies that people might notreally see the need to have motor insurance since they believe that God can protectthem from having accidents. Such thinking has been explained in Comte�s law ofthree stages, affirming the dominance of the theological stage where mystical andsupernatural power dominate people�s minds and dictate their activities. Thus,regardless of the fact that the respondents had claimed that they had no religiousreasons against insurance, this analysis contradicts such claims.

From table 4, sex, religion, and marital status do not have any significant relationshipwith owning an insurance policy; this is because the X2 cal > the X2 table at the 5%significant level. The study is a confirmation of earlier studies (Yusuf et al.), whereage and academic background were found to have a significant relationship withowning insurance policy, as the Pearson Chi values of 5.886 and 39.583 are greaterthan the table values of 21.026 and 22.209 respectively. Thus, we infer that age andacademic attainment are statistically significant in explaining ownership and patronageof insurance policy. This can be attributed to the fact that relatively more matureindividuals would be independent and free from the financial encumbrances of theirparents; in work; and if sufficiently educated would understand and appreciateinsurance service and patronize the services � both life and non-service forms.Educated persons tend to have higher socio-economic status, own cars and pay for

Item

Reasons againstinsurance

Cultural reasonagainst insurance

Religious reasonagainst insurance

Believing accident canbe averted Spiritually

Noresponse

22 (14.5%)

0 (0.0%)

1 (0.7%)

2 (13%)

Never

49 (32.2%)

95 (62.5%)

107 (70.4%)

27 (17.8%)

Sometimes

23 (21.7%)

13 (8.6%)

10 (6.6%)

57 (37.5%)

Indifference

26 (17.1%)

32 (21.1%)

24 (15.8%)

14 (9.2%)

Somewhat

22 (14.5%)

12 (7.9%)

10 (6.6%)

52 (34.2%)

Table 3. Socio-Cultural Factors and Insurance Patronage

Source: Field survey, 2010.

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16 Fatai Adesina Badru, Tajudeen Olalekan Yusuf, Wakeel Isola

Table 4: Crosstab of Demographic Characteristics and Owning an Insurance Policy

AlphaLevel

5

5

5

1

5

x2tab

9.488

21.026

11.070

23.209

11.070

x2cal

5.006

35.886

5.464

39.583*

3.924

NR

1

0

0

0

0

0

0

1

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

No

40

37

2

16

34

12

11

1

2

3

36

41

1

1

3

23

19

28

4

2

10

63

1

5

Yes

47

22

3

3

31

16

14

4

2

2

22

49

0

1

3

5

18

32

11

3

12

59

0

1

Responses

Item

Male

Female

No response

Less than 25

26�35

36�45

46�55

56�65

Above 66

No response

Single

Married

Divorced

Separated

Pry School

Sec School

OND/HND

B.Sc.

Masters

No response

Islam

Christianity

Free thinker

No response

Sex

Age

Marital status

Academic

background

df

4

12

6

10

6Religion

Source: Field survey, 2010.

car insurance, either �third-party� and/or �comprehensive insurance policy�. Inaddition, these findings tend to reinforce the notion that insurance, as a complexproduct, requires maturity and high academic attainment to appreciate its values. Inthis regard, insurance marketers face the onerous task of appealing to the young, theold, the educated and the less-educated to garner more patronage.

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Socio-Cultural Factors Affecting Insurance Patronage in Lagos State 17

Summary, conclusion and recommendations

The analysis presented has shown some of the socio-demographic characteristicsas most of the respondents were males of the age group of 26�35 years. The analysisshows that most of the respondents have a bachelor�s degree certification and aremostly Christians. In terms of their ownership of insurance policies, most respondentshad an insurance policy and they were paying promptly. However, there seems to besome difference in their level of satisfaction with the services the insurance companiesprovide. Also, most of the respondents still have an ideal perspective of the role thatinsurance companies should play and adhere to. The principles of reliability and trustare values that people believe that insurance companies must hold, in order to convincethem into seeing insurance as worth engaging in.

In terms of influence on signing an insurance policy, the findings have shown thatthe Nigerian socio-political environment is not an encouraging factor. This stemsfrom the finding that some of the respondents were influenced by their awareness,education, the governmental regulation, friends and colleagues. This also shows thatthe Nigerian society largely lacks an insurance culture. In terms of their reasons notto patronize insurance, the study shows that people have fewer reasons againstinsurance even from their spiritual and cultural underpinnings. Thus, this shows thatthere is still an opportunity for people to be impressed by insurance companies. Thisview is supported by the last section of our analysis, which reveals that mostrespondents believe that signing insurance policies is not a waste of money, neitheris it a sign of evil or an anticipation of a disaster or a catastrophe.

From the above assertion, it is necessary to state that insurance policies do nothave a negative connotation among Nigerians. Thus, there is a chance to motivateNigerians to partake in insurance services. The benefits of insurance undercovercannot be over-emphasized, as there is no gainsaying that signing insurance policiescan provide a cover for risks and damage to come which are a part of everyday life.On this basis, several recommendations can be made:� A well-planned awareness program should be carried out, in order to enlighten

people on the basis and uses of insurance.� The government has an important role to play in motivating people to sign

insurance policies.� Various institutional orders should provide encouragement for signing

insurance policies, e.g. the health sector, religious systems, the educationalsector et al.

� As for the insurance companies, they should ensure that their services arereliable and trustworthy, in that the services should not require too muchbureaucratic process of their customers in taking an insurance policy orreceiving their claims.

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18 Fatai Adesina Badru, Tajudeen Olalekan Yusuf, Wakeel Isola