An investigation of factors influencing customer's adoption of bancassurance channel of insurance distribution in Nairobi Central Business district
Wachira, Bilha Njeri
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Insurance is the transfer of risks to a firm or an individual to retain him to his initial financial status in the event of a loss. The insurance marketplace is undergoing a transformation that may eventually lead to significant changes in how consumers purchase insurance products. A variety of distribution channels are currently used in this market place and some insurers utilize a combination of distribution channels. The general objective of this study is to determine the factors influencing customer's adoption of bancassurance channel of insurance distribution in Nairobi central business district. The factors investigated included product characteristic, market characteristics, context change and marketing communication. In this study, descriptive research design in form of a survey was used. The population of interest of this study was 504 customers using bancassurance channels in banking sector which included Equity Bank, Chase Bank, NIC bank, Diamond trust, cooperative bank Citi and Equatorial bank that were operating in Nairobi central business district. The study targeted a population of 46 banks in the central business district. The study interviewed 151 bancassurance customers in Nairobi CBD whom were selected by stratified sampling and seven bancassurance officials from the banks adding up to a sample size of 158 respondents. Questionnaire was designed to identify the factors influencing customer's adoption of bancassurance channel. The questionnaires had both open and closeended questions. Secondary data sources were employed with previous documents or materials to supplement the data received from questionnaires and information from interviews. A factor analysis and descriptive analysis was employed in data analysis. Descriptive statistics was used to summarize the data. This included percentages and frequencies. Tables and other graphical presentations as appropriate were used to present the data collected for ease of understanding and analysis. The study found that the product is more affordable and influenced customers' decision to purchase insurance to a very great extent. In addition, the respondents strongly agreed that new busy lifestyles influence customers to demand a more convenient way of buying insurance and the social groups they belong to influence most members to buy insurance due to peer pressure. Moreover, existence of a multiple channels for insurance distribution therefore increasing convenience and availability of insurance services that can be purchased through membership in Chamas contributed to insurance transactions through the bank to a great extent. The study found that the bank applied to a very great extent mobile Short Messaging Service, sponsorship of community development programs such as tree planting, golfing and E-marketing through E-mails to sell insurance. The study concludes that Positioning can be done by using product characteristics or the customer benefits associated with the product. Trusted brands will be ever more critical in attracting and retaining an expanding mass-market investor base. The share of insurance services purchases made through affinity groups has increased. The economic reasons for banks selling multiple products include efficiently using fixed capacity resources, customer demand for several products from a single channel, and product combination strategy. Insurance marketing emphasizes the importance of the customer preferences and priorities. The study recommends companies to pay special attention to ensuring consistency in quality, feature, packaging, and so on. The need to provide insurance services any place, anytime, anywhere. They need to ensure that they consider customers preference. Technology need to be used effectively while marketing products. The study recommends banks to use mobile short message service, sponsorship of community development programs such as. tree planting and golfing and E-marketing through E-mails to sell insurance.