The Effect of Consumer Buying Behavior of Insurance Product and Services
According to Howard and shift (1969) the attitude of consumers towards the commodity will depend on individual differences. They went further by three different possibilities when considering buyers attitude towards risk namely: A buyer who dislike the existence of a risk is known as risk averters. A buyer is different as to whether risk exists or not is called RISK NEUTRAL the third category is known as RISK AVERTER, since he would actually seek out risk situation Berkam and Gilson (1981) in their analysis started that market items comprise of physical or durable goods and services.
They further classified consumer’s attitude on the basic of environmental factors that is controllable and uncontrollable. They said each consumer is a unique individual who adopt a persona like style and buy the product services which argue that style. Arthur media (1984) stated that individual policy holder remains can used by the small priont contained in items into everyday language, some of these agents mislead clients” he emphasized on the attitude of buyer to misleading act of insurance agents and that though, this may sale within a shared time on the long run it will not guarantee property because the exist will realize they have been cheated and mislead and eventually on one will trust them, then demand will fall. Judging from the above questions, it will be pertinent to say that other life religion beliefs. I would like to say that education and wealth does not at time stop a person from being ignorant about purchasing insurance policy. A potential consumer may believe that insurance does not increase its productivity but he forgets that insurance could protest his business against insurable risk.
To prove consumers patronage towards insurance policy, insurance experts have offered services of suggestions. For instance Kiladefo (1987) considered the services of insurance policies are very important work in an insurance company. Insurance itself is defined as “service industry” companies must encourage patronage by the buying “public”.
Media (1984) regard individual policy holders as confused buyers considering the small print contained in policy document and the relevance of buyers insurance representative to translate then in every language. Emphasized on the attitude of the “consumer “of insurance policy to the misleading act insurance agent and that time eventually on the long run it will not enhance increase in demand because the existing client will realize that they have been cheated and mislead and consequently, the demand for insurance policy will fall.
- THE INSURANCE MARKET
The market was initially regarded as a physical place where buyers and sellers came together to exchange goods and services, whereas economic see market as all buyers and seller individual in actual or potential transaction over goods and services. A market on the hand sees a market as the sets of all individual and organization who are equal or potential buyers of a product.
SELLERS OF INSURANCE
They are the insurance companies and reinsurance companies in Nigeria
INSURANCE COMPANY
There are often limited liability companies but can be by creation of the act of parliament of decree such as the national (NICON) and national insurance corporation of Nigeria (NAIC).
LLOYDS UNDERWRITERS
Unique among insurer, Lloyds underwriters are individual transaction, but is merely provides factices for its member to transact business and is not no way responsible for liabilities incurred by the underwriters.
A Member of the public who want to take up a policy at Lloyds must go through a Lloyds as they cannot approach the Lloyd directly. When insurance has been accepted it is the appropriately distributed among the insurance (a particular group know a syndicates) made distributed proportionately among the member.
THE GOVERNEMNT
The government is another seller of insurance, for example in the United Kingdom; the government runs the national insurance scheme, legalized by the national insurance act. In Nigeria the government through the Nigeria agricultural insurance company (NAIC) provides cover for the agricultural goods such as maize, rice including livestock item like poultry against loss or damage suffered by farmers.
THE INSURANCE BUYERS/ CONSUMERS
The insurance buyers/ consumers consist of the general public club or societies, cooperate bodies and government agencies. Any person who needs insurance coverage can buy, it from a registered insurer. The buyer’s representatives can go to any insurance company to affect the insurance on property such as houses, vehicles; they can also affect life incurrence such as personal accident, pension annuity, permanent health insurance to their liabilities they may be expose to for example personal, public professional and product liabilities. However, some buyers prefer to buy the through intermediaries like insurance agents, brokers and consultant.
THE INSURANCE INTERMEDIARIES
An intermediary is an agent that is one who is authorized by a party called the principal to enter into a continual relationship with another (third party) if an agent does not have prior authority to act and the principal later rat dies and confirms the agents’ action. Then a contractive relationship will exist therefore, people who bring buyers and sellers of insurance product into business relationship are known as intermediaries or middle men e.g. agent brokers and consultant.
- CLASSIFICATION OF RISK
Risk can be classified into three main category pure and speculative risk, status and dynamic risk and fundamental and particular risk. A pure risk exist when there is a chance of loss, but no chance for example, the owner of a building faces the risk associated with potential fire loss, if a fire incident occurs, the owner will suffer a financial loss if there is no fire the owner does not gain in other words the owners position in unchanged.
A speculative risk exists when there is chance of gains, as well as chance or loss for example a manufacturer who buys raw material before the finished products is offered in the market. If a beneficiary or adverse out come could stem from a specific event then there is speculative risk for instance, the rise in process could be beneficial to business with large stock of goods. Other examples are the buying of stock and shares in a stock exchange, those value can rise or fall at the end of the year, the launching can rise or fall at the end of the year, the launching of a new product, exporting and importing of goods the above activities are associated with speculative risk, which hold out the prospect of loss, break even or gain such risk are uninsurable.
Static risk has been defined as those connected with losses caused by irregular action or forces of nature on the mistake and misleads of a person, static whilst directly affecting a few individuals usually result indirectly in a loose to society. They are almost always fire risk. Dynamic risks are associated with changes, especially change in human wants and improvement in technology and the manner in which things are organized.
Dynamic risk includes pure and speculative risk. Unlike a static loss, dynamic looses have more wide spread effect.
Fundamental risk is group risk impersonal in origin and at least for individual, unpreventable, whereas particular risk are personal in origin and effect and readily controlled are: those associated with uncertainties, inaccuracy and disharmonies in economic system.
Risk associated with extraordinary natural disturbance such as drought. Examples of particular risk are the risk of death or disability from non occupational causes e.g. the risk of person drawing in his bath or swimming pod.
Risk of property losses by such peril as fire explosion theft, vandalization or malicious damage etc.
RISK IS RELATED TO UNCERTAINLY
In so far as business enterprise is concerned this uncertainty will relate to assets owned by it, its future earnings and profits as well as cash flow that is putting in jeopardizing the overall of the business and its profitability or the achievement of what ever other objectives that might have been set for it.
FREQUENCY AND SEVERITY OF RISK
When we say that an event or an operation is very risky, two interpretations could probably be given to that statement it many mean the frequency at which loss events would occur. The prospect of the fire damage to factory is very risky. The statement may not a only mean that there is a high probability of fire occurring rather the fire even whenever it occurs might involve substantive loss of money.
- CAUSES OF CONSUMERS BUYING BEHAVIOUR IN AN INSURANCE CONTRACT
As earlier discussed in the literature review, there are many problem facing insurance consumers in Nigeria as result of sophistication and complexity of insurance business the main causes consumers problem in Nigeria are as follow:
LOW INCOME
This is responsible for the patronage of the services rendered by the insurers. Risk is inseparable from out life and may result from an uncertain event or as the variation in actual income from expected outcome through this fact that the way to go about tier problem is to effect insurance but for the inadequate most of the insurance of insurance product fall into low income bracket and disposable income it becomes difficult to buy insurance policies hence they are prone to adversity of risk venture.
LEVEL OF AWARENESS
The level of awareness of buyers of the various forms of policies available for purchase will go a long way to determine their attitude towards buying insurance. They are not aware of the policies; they would not know the benefits, which would be gained from effecting insurance.
MODE OF INSURANCE
The buyers of insurance have seen the mode of insurance as the difficult way of practice which in essence is the actual cause of the buyer’s problem.
FUTURE SECURITY
Insurance is unique in nature in the sense that a person sees no immediate benefit from purchasing the service. He sees immediate evidence that he has a contract in force for examples, cover note certificate of policy document but unless he has a claim at once he does see any tangible benefit this greatly affect the demand of customers.
UNDERSTANDING DOCUMENT
This is that evidence the contract of insurance policies and concluded in legal terms, which many find difficult to understand the insured is expected to read this policy and under its terms and conditions of course same policies certain wordings such as “please examine the policy and if it does not meet with your requirement kindly return it to once” but the question is how the consumer will know whether it meet this requirement or not, when he can’t understand the policy for example “this policy does not cover the destruction or damage to properties which at the time of happening of such destruction or damages insured by or would, but for the existence of this insured by any excess beyond the amount which would have been p0ayable under the marine policy or policies and the insurance not being affected as commodity fund in reinsurance policy” the legal phrase is used because their meaning has after been toasted by the courts and little ambiguity exist.
INFORMATION PROVIDED BEFORE PURCHASE
A proposes has duty upon him to disclose voluntarily fully and accurately all information relatively to the subset matter of insurance under the doctrine of utmost good faith, the insurer also has moral duty to disclose fully information relatively to the proposed policy and legal duty of utmost good faith not to mislead the insured or lead him, into a contract to his own advantage.
In order to make the best decision , the potential insured should be to compare covers, claims, services surrender values and so no without having to go through a great deal of efforts on his own. The lack of adequate pre purchase information on the both parts to the contract made than be a further possible cause of the buyer’s problems.
UNDERINSURANCE
Underinsurance is one of the factors in fixity a premium, the rating structure assurers that it is equal to the value as risk and if it is lower than this value, the insurer will raceme too low premium. Before looking at the remedies (average) often to an insurer to counter under insurance, it is appropriate to consider what a sum insured is the problems encountered in owing at the correct under insurance only limits these abilities at the time of claim that could conflict between the insurer and the insured.
