THE INFLUENCE FACTORS OF CONSUMERS’ COMPREHENSIVE CAR INSURANCE DEMAND: EVIDENCE FROM TURKEY

Abstract

Purpose- Car insurance stands out as the most important line in the individual insurance industry. Even though it is a legal obligation for drivers to have car liability insurance in many countries, there is a coverage gap in comprehensive insurance, especially in emerging countries such as Turkey. Although the comprehensive car insurance penetration rate has slightly increased in the last five years in Turkey, it still has limited coverage. The study investigates the effects of perceived insurance benefit and insurance literacy variables, in addition to socio-economic indicators, as the determinants of comprehensive car insurance demand in Turkey Methodology- The survey method was used for data collection. The survey was prepared digitally and distributed to car owners in Turkey via a social media platform using a simple random method. The total number of usable responses obtained was 261. The binary logistic regression was applied to determine the effect of the socio-economic factors, perceived insurance benefit, and insurance literacy on the comprehensive car insurance demand. Findings- The results showed a significant and strong relationship between comprehensive car insurance demand and having a traffic ticket, driving experience, driver’s age, and vehicle age indicators. The other important determinants of comprehensive car insurance demand with a relatively low weight are perceived insurance benefit and insurance literacy. There was no relationship between insurance demand and driving frequency or experiencing a traffic accident. Conclusion- This study has several practical implications for the insurance industry in terms of marketing, product development and the underwriting process. Insurance companies should consider the factors affecting consumers’ insurance demand while designing products and services. Furthermore, they should act together with regulatory authorities to organize awareness campaigns and financial literacy courses to better explain the individual and social benefits of insurance products and services.

Keywords

• Insurance demand
• comprehensive car insurance
• consumer behavior
• insurance literacy
• perceived insurance benefit

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