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The impact of trust in the developing sector of microinsurance in South Africa

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  • Mathithibane, Mpho Steve

Abstract

The aim of this paper is to investigates the influence of trust on insurance penetration in the developing Microinsurance sector of South Africa. Legacy issues and deeply rooted structural and institutional frailties have resulted in substandard levels of financial inclusion for low-income earners in the country. This segment of consumers is highly vulnerable to social, economic and as the covid-19 pandemic has proved, health shocks. Microinsurance has often been touted as a solution to improve resilience and turn the tide of significant adverse economic outcomes for the low-income segment. This paper explores the role of trust as a key construct for business success in the microinsurance sector. The study findings indicate that creation of trust and reassurance that claims will be honored when liability occurs are the main elements valued by prospective and existing microinsurance consumers. These findings contribute to advancing knowledge within the microinsurance segment, in particular, key traits needed in constructing a successful insurance programme as well as the messaging and serving element that needs to be placed at the forefront of product design and marketing in order to build trust.

Suggested Citation

  • Mathithibane, Mpho Steve, 2021. "The impact of trust in the developing sector of microinsurance in South Africa," MPRA Paper 110406, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:110406
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    References listed on IDEAS

    as
    1. R. Chumpitaz & N. Paparoidamis, 2007. "Service quality, relationship satisfaction, trust, commitment, and business-to-business loyalty," Post-Print hal-00199063, HAL.
    2. Dong, Hengjin & De Allegri, Manuela & Gnawali, Devendra & Souares, Aurélia & Sauerborn, Rainer, 2009. "Drop-out analysis of community-based health insurance membership at Nouna, Burkina Faso," Health Policy, Elsevier, vol. 92(2-3), pages 174-179, October.
    3. Bibi Z. Chummun, 2017. "Mobile Microinsurance and Financial Inclusion: The Case of Developing African Countries," Africagrowth Agenda, Africagrowth Institute, vol. 14(3), pages 12-16.
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    Keywords

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    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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