Effect of Bancassurance attributes on customers’ intention to purchase insurance products in Nairobi, Kenya

Abstract

At only a 2.14% level of penetration, the uptake of insurance products in Kenya is negligible. The effects of low insurance uptake can be significant – individuals are more exposed to financial shocks from unexpected events, which, depending on the number of uninsured individuals, can lead to greater economic instability since people are less able to recover from financial setbacks, reducing overall economic resilience. Bancassurance has been presented as a solution to enhance financial uptake. However, being an emerging construct, there is limited empirical evidence on its adoption and effect on customers. Therefore, the objective of this study was to examine bancassurance and its effect on customers’ purchase intention for insurance products. Specifically, the study examined the effect of the attributes of bancassurance intermediaries, including brand image, responsiveness, and reliability, on purchase intentions. The selected theories that informed this research were the Theory of Planned Behaviour and the theory of financial intermediation. The guiding philosophy adopted for the research was positivism. The research made use of the descriptive cross-sectional research design. The population consisted of customers who held insurance policies through the bancassurance channels in Nairobi, Kenya. A sample of 297 respondents from 24 bancassurance channels participated in the study. The data collection instrument that was used in the study was the structured questionnaire, and descriptive and inferential statistics were adopted for data analysis. The results of the study suggest that the perceptions of brand image of bancassurance intermediaries are generally positive; however, inferential analysis indicates that brand image does not significantly drive purchase intention. Instead, the responsiveness of bancassurance agents emerges as the most crucial factor, exhibiting a strong positive and significant influence on customers' inclination to buy insurance products. Reliability also plays a significant positive role, but to a lesser extent than responsiveness. Therefore, this research highlights the need for sectoral policies and organizational strategies aimed at enhancing the responsiveness and reliability of bancassurance providers to effectively convert positive perceptions into actual insurance sales, subsequently driving insurance penetration. However, while this study makes remarkable contributions by highlighting the interactions between bancassurance attributes and purchase intention in the context of a developing nation, further research is needed, especially on other attributes not covered in this research.