CHAPTER ONE

INTRODUCTION

1.1   Background to the Study

1.2   Statement of the Problem

Researches linking consumers’ culture with demand for insurance products in developing countries with Nigeria inclusive have shown that insurance services seem not to have been so accepted enthusiastically in developing countries. The abysmal level of consumers’ perception and culture are often held responsible for the low penetration of insurance. The role of culture in Nigeria is all pervasive that demand for insurance is grossly affected to the extent that it defines consumers risk aversion.

Religion is another drawback since it provides an insight into the individual’s behaviour; and understanding religion is an important component of understanding a nation’s unique culture. Religion historically has provided a strong source of cultural opposition to life insurance as many religious people believe that a reliance on life insurance results from a distrust of God’s protecting care. Until the nineteenth century, European nations condemned and banned life insurance on religious grounds. Even until now religious antagonism to life insurance still remains in several Islamic countries.

The significance of the insurance industry to the growth of the Nigerian economy cannot be overstated, but despite the role played by the insurance industry to individuals, businesses and economic development of the nation at large, it is well known that people have poor attitude towards ownership and patronage of insurance policies. When compared with the developed foreign countries, the Nigerian insurance industry has achieved only a little because of cultural cleavages, religious beliefs, perceptual errors and general attitude of the people towards risk.  

It is against this backdrop that this study seeks to examine the impact of culture on insurance penetration in developing countries with a particular reference to Nigeria.

1.3   Objectives of the Study

The study was conducted with the following objectives:

1.      To examine the impact of cultural cleavages on penetration of insurance growth in developing countries.

2.      To assess the impact of religious beliefs on demand for insurance policy.

3.      To investigate the role of consumers’ perception in purchasing insurance products.

1.4   Research Questions

The research study was guided by the following research questions:

1.      What is the impact of cultural cleavages on penetration of insurance growth in developing countries?

2.      What is the effect of religious beliefs on demand for insurance policy?

3.      What is the role of consumers’ perception in purchasing insurance products?

1.5    Research Hypotheses

Hypothesis One:

Ho:     There is no significant relationship between cultural cleavages and penetration of            insurance growth in developing countries.

Hypothesis Two:

Ho:     Religious beliefs do not have any effect on demand for insurance policy.

Hypothesis Three:

Ho:     There is no significant relationship between consumers’ perception and purchasing         of insurance products.

1.6    Significance of the Study