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ASPECTS INFLUENCING PERSONAL LIFE AND HEALTH INSURANCE
PURCHASE
Steve Matthew Sanjaya
1*
, Tuntun Salamatun Zen
2
School of Business and Management, Bandung Institute of Technology, Indonesia
1,2
steve_matthew@sbm-itb.ac.id
1
, tuntun@sbm-itb.ac.id
2
ABSTRACT
The study aims to identify the factors that influence the purchase decision of life & health insurance in
Indonesia and determine how those factors influence. The method used in this study is qualitative method
with semi-structured interviews. A total of 17 respondents were interviewed from insurance customers,
non-insurance customers, and insurance agents in Bandung City. The result of this study indicates that
demographic factors such as income level, assets, educational background, financial dependency, and
health status directly influence life & health insurance purchase decisions. Insurance product benefits,
price, trust in insurance companies, trust in insurance agents, and perceived value insurance were found
to influence life & health purchase decisions too directly. Additionally, multiple factors were found to
influence insurance trust. These factors include the insurance company brand, selling practices used by
insurance agents, perceived service quality of insurance, and insurance literacy. Furthermore, insurance
perceived value was also influenced by other factors such as insurance literacy, culture, and environment.
Above all aspects, the insurance agents have direct control over the selling practices, service quality, and
insurance literacy that someone experience. This study also proved that insurance agents were
responsible for the insurance industry’s bad reputation in Indonesia. This result will equip insurance
agents to know their customers better and adjust their selling practices to suit potential customers.
Insurance agents are also strictly prohibited from mis-selling insurance products.
Keywords: Insurance; Service Quality; Perceived Value; Trust; Insurance Purchase Decision
INTRODUCTION
One of the most crucial aspects of personal financial planning to take into account is
insurance, particularly health and life insurance. The best and quickest approach to set aside
emergency funds to cover considerable costs in the event of disasters is through personal
insurance. Life insurance can protect against an early demise and help the family left behind to
make up for lost income. Health insurance can assist in paying hospital bills, protecting us from
incurring catastrophic hospital costs. While you cannot work, a disability can safeguard and
replace your income (Billingsley et al., 2017). Several types of personal insurance are life
insurance, total and permanent disability (TPD), income protection (IP), and critical illness
covers, sometimes called trauma cover.
Studies revealed that insurance plays a crucial role in fostering economic progress, aled
that particularly in economically developed nations with high GDP per capita, like the United
States, Great Britain, Japan, Germany, France, and Sc progress. It is further corroborated by the
fact that insurance penetration is low in nations with low GDP per capita (Musurmanovich, 2020).
In addition, insurance is a sector of the economy that boosts savings rates, lowers the amount
saved for unnecessary precautions, and turns idle capital into active capital by reducing the level
of risk that individuals and businesses in various economic sectors are exposed to (Kajwang,
2020).
The insurance market in Indonesia has been expanding quickly; from 2000 to 2007, gross
written premiums climbed by almost 26% year, and from 2007 to 2013, they increased by over
16% annually (Agrawal et al., 2016). Additionally, a KPMG analysis found that Indonesia's
insurance market is one of the most attractive growing markets in the Asia Pacific due to the
country's large population, market size, and low entry barrier. Insurtech, a new approach to using
technology to improve the efficiency of the insurance industry further, has also started gaining
traction. The main forces driving Indonesia's insurance industry's digital transformation include
the nation's high internet penetration (KPMG, 2022).
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However, Indonesia's number is falling behind other countries based on two insurance
indicators: insurance penetration and insurance density. According to OECD, 2022, Indonesia’s
insurance penetration in 2021 is at 1.6%, much lower than the global average of insurance
penetration of 6.8%. Even compared to neighboring countries in ASEAN and APAC like
Singapore, Japan, Malaysia, Philippines, and Vietnam which ratios are 9.3%, 8.3%, 5.3%, 2%,
and 2,3%, respectively (Atlas Magazine, 2022). Indonesia’s insurance penetration number is one
of the lowest among ASEAN countries.
Other indicators like insurance density compare the insurance premium to the total
population. The figures also did not differ much from the insurance penetration. Indonesia’s
number is still the lowest among other countries in Asia. Indonesia's insurance density is the
lowest in emerging insurance markets, with an insurance density of USD 70 in 2022. Other
neighboring countries within ASEAN, like the Philippines and Vietnam, have higher figures with
USD 72 and USD 95, respectively. Malaysia and Thailand have significantly higher insurance
densities at 395 and 601 USD. India also has a higher number, with 91 USD. Indonesia's insurance
density is also far behind developed countries such as Singapore and Korea, which are at 8304
and 3832 USD.
Several studies show that income can influence and impact the purchase decision and
insurance penetration (Bah & Abila, 2022; Bhatia et al., 2013; Sen & Madheswaran, 2013). So we can
compare the GDP per capita, one of the income indicators, to the insurance density to get a ratio.
The result is that Indonesia has the lowest GDP Per Capita to Insurance Density ratio. It means
that people were more reluctant to spend their money to buy Insurance in Indonesia.
The common-sense approach is to promote more insurance selling, however, the overall
insurance industry in Indonesia had a bad reputation, primarily because of the common practice
of mis-spelling in Wulandari et al., (2023)-one of the issues of Health and Life Insurance in
Indonesia regarding unit-linked products. Unit-linked life insurance is “the application of unit
trust principles to the ‘savings element’ of each premium paid and the application of insurance
principles to the remaining ‘insurance element’ only” (Melville, 1970). It is an insurance contract
associated with investments or Produk Asuransi yang Dikaitkan Dengan Investasi (PAYDI) in
Indonesian. On the application of selling unit-linked insurance, the focus often shifted to the
investments part of the contract, and in reality, the interest is not as great as expected; even if the
Insurance Acquisition costs are deducted, it can lead to losses, rather than profits and in the end,
harm the customer if the customer did not aware in Harjo, (2020).
However, this is not the only reason why insurance penetration and density in Indonesia is
low. Research suggests that also lack of financial literacy, insurance awareness, and also
demographic factors can influence the purchase decision of life insurance (Everlin & Dahlan,
2020; Kang’ethe, 2019; Kansra & Gill, 2016; Sen & Madheswaran, 2013; Weedige et al., 2019).
The novelty of this research is finding out the aspects and influencing people to buy personal
health and life insurance in Indonesia, where there are many frauds and scams happening. This
research also looks at how those factors influence the buying decision of insurance.
Understanding these factors can help insurance marketers adjust how they sell so that potential
customers can be more interested and ultimately increase insurance sales.
RESEARCH METHOD
This research will be conducted from the point of view of interpretivism. This point of view
emphasizes how people think and see the world according to its sociocultural background; the
researcher will also actively participate in the study since it is essential to develop a
comprehensive understanding of the participant, as well as their behaviors, thoughts, and meaning
(Phair & Warren, 2021). In addition to that, the inductive approach will fit the topics of this research
regarding insurance, as there is not much research conducted in the field of insurance buying
behaviors and the phenomenon behind the low number of insurance indicators. This research will
then create new theories on why those phenomena happened.
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In answering the research question in this study, the author needs to formulate what
aspects influence the decision-making of buying insurance. The qualitative method is applied to
this study to gain in-depth comprehension to ensure that the real root cause of the issue can be
found. The qualitative method is also appropriate as it generally was associated with an
interpretive philosophy (Denzin and Lincoln, 2011, as cited in Saunders et al., 2016). The strategy
used in this study is action research, as this method will seek insight that will directly benefit the
respondent in the sample (Phair & Warren, 2021). The benefits that this study can offer the
respondent is with the study's insights. Insurance marketers and organizations that sell it can adjust
their way of selling. They ultimately will increase insurance sales and also hugely benefit the
insured if health and life risks happen, in a way giving back to the community.
The type of action research used in this research is Participatory Action Research (PAR).
This type of action research is suitable because the characteristic of this research is in line with
the attributes of PAR, according to (Kindon et al., 2009). This research seeks to alter selling
practices used by insurance marketers, viewing the participant as capable objects as the
informants in this research is the source of data. This research also deals with real-life issues
regarding insurance dissatisfaction. This research also studies the local values and beliefs
regarding insurance and also incorporates the participant in formulating the results based on the
experience the local community has regarding insurance. By doing this, this research can create
new insights regarding insurance selling practice activity. This research was done in a cross-
sectional time horizon because this was done as a requirement to graduate and was done in the
period of April – July 2023, which was not a long time. However, the observation of the insurance
phenomenon started in July 2020, but the author has not gathered any proof of data.
The method of data collection in this research is semi-structured interviews. Semi-
structured interview type is used because it provides guidance for the author on what to ask the
informant, but also, at the same time, the method provides flexibility in using spontaneous
questions to explore more, deepen understanding, and clarify answers to questions (Wilson,
2014). In collecting the data, there are guidelines on the fundamental questions to ask, the themes
of the interviews, and the problems discussed in the conversation to achieve the goals of the
interviews that are already predetermined. This preparation aligns with the planning and
development process of the semi-structured interview by Wilson (2014).
All of the informants in this research were based in Bandung with various demographic
backgrounds. The demographic backgrounds ranged from high school to master graduate working
in various occupations such as bank employee, entrepreneur, lecturer, and insurance agents to
provide holistic data. The interview was done with insurance customers and people who have not
bought insurance to understand why they bought or have not. During the interviews, the author
recorded all the conversations and transcribed them word by word.
To analyze the data, inductive analysis is used to reduce the extensive data into a brief,
summary format and then construct a model from it. Inductive analysis is the method where
concepts, themes, or a model are derived from comprehensive raw data readings by an evaluator
or researcher, who then interprets the data (Thomas, 2006). To help process the data, inductive
coding will be used by reading all of the interview’s transcript and then segments it into the upper
and lower level categories, then continuously revising it until the data produces new points of
view.
To validate the data, triangulation is used to achieve validity and reliability. Triangulation
is defined as a validation procedure in which the researcher establishes themes or categories by
searching for convergence among multiple and different sources of information (Creswell &
Miller, 200 as cited in Golashani, 2003). In this research, the data triangulation will be done by
combining the results from multiple informants and validating some of the information from an
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informant with other informants and, lastly, validating the data again with an expert insurance
agent with more than seven years of experience and previous literature discussing the same topics.
RESULT AND DISCUSSION
From interviews with 17 informants from various backgrounds, the author formulates
multiple aspects influencing insurance purchase decisions. The author found four aspects directly
influencing insurance purchase decisions: trust, perceived value, demographic aspects, the
insurance product itself, and other reasons, such as existing insurance policies.
Trust
The first aspect influencing insurance purchase decisions is trust. Trust plays a significant
role when deciding whether to buy health and life insurance. Conversely, many customers did not
want insurance because they had trust issues with the company or the agent's representation. This
hindered them from doing so, or they even decided to lapse their insurance. This is because people
who believe in the credibility of agents and insurance companies to deliver on their promises will
be more likely to buy insurance-the author also three parts of trust that influence purchase
decisions. The three components of this trust factor are trust in the insurance firm, the insurance
agent, and the regulatory framework.
Because it has to do with a person's confidence that their insurance claim will be paid, a
person's trust in an insurance business has a direct impact. Therefore, an insurance company's
capacity to settle disputes for its clients establishes trust. Trust in insurance agents is equally
important, if not more so. Since an agency is the most frequent way to sell insurance in Indonesia,
the majority of customers who purchase life and health insurance do so from an agent or marketer.
According to AAJI, reported in (Fatmah, 2017), bancassurance accounted for 35% of insurance
sales in 2015, followed by insurance distribution through agencies or insurance brokers at roughly
44%. Even those who purchase insurance through a bank (bancassurance) will have a dedicated
PIC who manages their needs for insurance within the bank. Because insurance products and
policy contracts are complicated, customers frequently need the assistance of agents who
understand them better to ensure that their claims can be paid. This highlights the importance of
customer trust in agents and marketers. If the claim is initially refused, the agent may typically
assist in planning for the claim to be paid. To try to get the claim settled, the agent looks for gaps
in the law. In this manner, the client feels confident that their insurance will cover the expense of
their medical care. In this way, confidence in the insurance agent is one of the significant factors
that might influence a person's decision to buy insurance. A person is more likely to choose not
to get insurance if they feel uneasy that their insurance needs will be met once they do so if the
agent they were approached by cannot be trusted.
The last aspect of trust aspects is the regulatory environment. The one in charge of
regulating the insurance industry in Indonesia is Otoritas Jasa Keuangan (OJK). This aspect of
trust can influence insurance purchase decisions as the regulatory environment is a last resort for
customers to rely on if there is a problem with their insurance. Someone who has faith in their
ability to obtain the advantages offered by the insurance policy will feel secure buying insurance
since they have trusted OJK to safeguard their interests. They can be sure they are not being duped
if OJK monitors the insurance firm.
Factors Influencing Trust
In addition to the trust factor, there are also other factors that influence trust. The author
identified four factors influencing trust in insurance: Selling Practice, Service Quality, insurance
literacy, and the insurance company itself.
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The first is regarding selling practice, which refers to the technique used in promoting
insurance. A prospective client's perception of an agent may be impacted by overly direct and
abrupt approaches, particularly if the prospective client has not encountered the agent in a while.
Customers can also preemptively close their minds to hearing what the agent says. This behavior
will prevent them from trusting insurance and lead them not to purchase it. The said agent will
lose the trust of potential customers if they suddenly become clingy and close before beginning
to sell insurance. Marketers cannot be viewed as someone whose duty it is to compel and harass
consumers into making purchases. The buyer may experience trauma as a result, which will affect
their trust in insurance marketing, especially when approached by insurance salesmen. This type
of behavior might cause a person to close himself off because he feels uncomfortable being
pressured to buy a product repeatedly. Pushy selling practices that constantly referred to the
customer to sign and buy the insurance as fast as possible also impacted negatively as they will
create a ‘wall’ first to self-defense. It is always safer to say no than say yes and take risks. This
selling practice can cancel out all the interest and the customer’s enthusiast that the agent has
built.
The second aspect that influences trust is service quality. Service Quality refers to the
amount of satisfaction and competence experienced by customers as a result of the service offered
by a firm (Ramya et al., 2019). In the case of insurance, it is the previous service quality
experience in owning insurance. There was a case with one of the informants where the
investment value in his insurance policy did not meet his expectations. This specific case led to
trauma that made him did not trust insurance anymore.
The next aspect affecting trust is regarding insurance literacy. Insurance literacy refers to
knowing the fundamental concept of insurance and well understood the insurance products one is
considering, what the insurance policy covers, and the ability to apply said knowledge and
understanding to make insurance decisions that are in line with the anticipated risk (Lin et al.,
2019). Someone with good insurance literacy will know why there is an issue in someone’s
insurance policy or the reason insurance didn’t pay someone’s claim and therefore didn’t affect
the trust to insurance.
The last aspect influencing trust is the insurance company itself. An insurance company
with bigger brands originating from outside Indonesia was found to be more trustworthy. They
believe that big brands, specifically the ones that are multinational, are more reliable. The
informant will also feel safer if the company has been around for a long time; he will be more
confident that the company will exist longer in the future. They believe that big brands,
specifically the ones that are multinational, are more reliable. The informant will also feel safer if
the company has been around for a long time. He will be more confident that the company will
exist longer in the future.
Perceived Value
The concept of insurance perceived value pertains to the subjective evaluation made by
customers regarding the benefits and usefulness of an insurance product or service. If an
individual comprehends the significance of insurance, which is to establish a contingency fund
for an unforeseeable event in terms of timing and cost, as well as the potential consequences of
lacking insurance coverage, it will have a favorable influence on their decision-making process
regarding the acquisition of insurance. Given that perceived value is subjective, it will vary among
individuals. Consequently, the author also evaluates the aspects contributing to an individual's
perceived insurance value. The elements that have been identified include insurance literacy,
cultural influences, and environmental factors.
From the result of the interview, insurance literacy has an influence on someone’s
perceived value. For instance, an individual's perception of insurance may involve the dual
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purposes of providing protection and serving as a means of savings. This perspective is erroneous
and may lead to the perception that the primary purpose of insurance is to facilitate financial
growth. The perception of insurance as a means of generating profit is misguided and contradicts
the fundamental principle of indemnity. According to this principle, insurance is designed to
prevent the insured from gaining financially from a loss event. Instead, it aims to provide the
insured with the necessary resources or motivation to recover and resume their work (Lin et al.,
2019).
Cultural values regarding family tradition, religious beliefs, and the feeling of taboo
discussing the risk of illness and death were also found to contribute to someone’s perceived
value. There are certain family traditions like Chinese people that were harder to trust their money
to someone, especially the more conservative family. Some religious beliefs also prohibit the use
of insurance. However, other people who do not have that belief can also have the same value
where they just want to rely upon God instead of insurance. Someone who was still feeling taboo
when discussing death and illness also will fail to get the value of insurance as their perspective
of discussing those things is bad for them.
The next aspect that influences insurance’s perceived value of someone is its
environment. If insurance customers surround the person, the person will be more interested in
buying insurance. This can also have the opposite effect; if a person's environment does not
believe in insurance, that person is also unlikely to want to buy insurance. Another aspect of the
environment that influences is if an individual has an insurance agent residing in their local
community or within their social network, mainly if a close personal relationship exists with the
insurance agent. Undoubtedly, the individual will receive an insurance offer from their
acquaintance. The individual's confidence in purchasing insurance will likely increase when the
provider is a familiar acquaintance whose personal history is known to them. Conversely, in the
absence of familiar agents within one's area, the decision to purchase insurance may be influenced
as there may be a lack of insurance agents available to cater to one's needs. However, despite the
existence of informants who solely seek to purchase insurance from a familiar agent, he remains
skeptical and unwilling to place his trust in the aforementioned individual. A solid familiarity with
the insurance agent instills a greater sense of assurance that the agent will effectively address all
insurance requirements during the coverage duration. The final aspect to consider about the
influence of the environment on the perceived value of insurance is to its ability to mitigate the
financial burden associated with emergency medical and death-related costs. Individuals who lack
familial or close social support networks to assist with the financial burden of medical
emergencies are more likely to place a higher value on insurance coverage than those with access
to such assistance.
Trust is found to influence someone’s perceived value too. For someone who does not
trust insurance and its credibility, the insurance agents would not have a chance to educate said
person on the importance and value of insurance. Even though they heard the agent, the person
would not acknowledge what the agent said. Losing trustful belief in the insurance company and
its product can also affect the same outcome.
Demographic
The demographic factors found to have influence are a person's level of income, how many
assets he has, educational background, the number of people that depend financially on him, and
also whether the person is healthy or not were found to be influencing insurance purchase decision
directly.
The major aspect found to have a big influence is regarding income level. Someone with
more income has more buying power to buy insurance; they also do not have to think about how
they would fulfill basic necessities anymore; therefore, they would consider insurance. Someone
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with more income was also exposed to more risk if they got sick and lost the ability to generate
income. To maintain the same lifestyle, they will need to sell their assets. Another way that a
higher level of income can positively influence is because higher income people were targeted
more by insurance agents; therefore, they were offered insurance by many agents, increasing the
probability of them buying insurance.
The next aspect is assets. Someone with more aspects will consider insurance more as they
will buy insurance for other motives, which is to protect their asset from being liquidated because
of health and life risks. However, on the other hand, people with more assets can also fail to see
the value of insurance since they already have many assets that can back them up when the risk
happens. Therefore, their assets become their own insurance.
Education backgrounds was also found to be influential. According to the accounts
provided by informants who work as agents, it is observed that a significant majority of clients
they engage with tend to comprehend the importance of insurance, particularly if they have
undergone education overseas. Several foreign countries are implementing a policy that requires
all individuals within their borders, including international students, to possess health insurance.
On the other hand, the level of education, on the other hand, does not necessarily determine one's
belief in or recognition of the need for insurance. This is seen in the fact that some individuals
hold a Ph.D. degree but do not subscribe to the value of insurance. The field of study pursued by
an individual, such as financial planning or actuarial science, can impact their decision-making
process regarding purchasing insurance.
The term "financial dependents" refers to the number of people who, in the trustee's
judgment, are either entirely or partially dependent financially (Harwood, 1999) were also found
to be influential. In the event of a health danger or death, financial dependents' presence can
significantly impact their well-being. The possession of health and life insurance policies can
mitigate the financial burden associated with medical expenses while offering a form of income
protection in the event that the primary earner can no longer provide due to disability, serious
illness, or untimely death. Consequently, the financial well-being of the dependents will remain
unaffected as insurance coverage encompasses all relevant expenses and provides compensation
to address daily living costs. However, it is plausible that individuals not in a committed
relationship may opt to purchase health and life insurance policies to mitigate potential financial
burdens resulting from unforeseen health complications or mortality.
The last part of the demographic that was found influential is health status. The first factor
to consider is if an individual has relatives, such as parents, grandparents, or even extended family
members, like aunts, uncles, or nephews, who have a documented history of disease. Additionally,
if the individual has a personal history of illness, this may also influence their decision-making
process when purchasing insurance. Individuals with a family history of illness or a prior medical
problem are more inclined to consider purchasing insurance since they perceive an increased
likelihood of falling ill.
In addition, there will be more steps in applying for insurance for someone who has a
medical record. An individual may be granted insurance acceptance without any further
stipulations or be admitted contingent upon excluding any pre-existing medical issues.
Alternatively, there is the possibility of an increase in insurance premiums; in the worst-case
scenario, the individual may be denied acceptance altogether. The offer may also lead to a
confluence of elevated insurance premiums and the exclusion of pre-existing conditions. The
existence of many potential offers can influence an individual's decision-making process when
considering the purchase of insurance, as specific individuals may exhibit hesitancy in acquiring
coverage under these novel conditions.
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Insurance Product
People have different preferences in Insurance benefits, contracts, and payment
requirements. Certain individuals may lack inclination towards purchasing insurance if required
to make lifelong payments, leading them to opt out of acquiring insurance or allowing their
current policy to lapse. However, an alternative product exists, typically in the form of a life
insurance policy, which provides payment options limited to 5, 10, or 15 years. Certain individuals
may exhibit a heightened level of interest in this particular product due to the assurance provided
in the contractual agreement that they are only obligated to pay a predetermined insurance
premium. This contrasts with other insurance products requiring monthly payments without a
fixed duration.
The lack of diverse product knowledge among insurance agents or marketers, and the
absence of diverse products offered by the insurance companies they represent, can impact the
insurance purchasing decisions of potential customers. The potential consumer may perceive that
none of the available insurance product options adequately address their demands.
Other Reasons
The are other reasons that were found to influence insurance purchase decisions. One of
which is if the buyer already has insurance. The insurance can be in the form of employee benefits,
from family, or from government insurance (BPJS). They were more reluctant to buy additional
insurance policies because the office’s insurance already covered them. The same happened with
people with insurance that their parents or family paid.
Another condition that can impact insurance buying decisions n is timing. When insurance
agents do offer insurance, not at the correct time, the buyer will be more reluctant to buy. For
example, from the informants, one of the buyers is still in the process of financing his house, any
decision-making the buyer is in the process of applying to study abroad. These types of
circumstances can also affect someone’s insurance decision-making.
Gaps Model of Service Quality
A model was also found to represent the phenomena in the Insurance industry. The Gaps
model of Service Quality can measure service quality in Insurance as the author found that
insurance dissatisfaction resulted from unfulfilled customers’ expected service. The common gaps
happened in the insurance industry is communication and customer gap.
This model can also explain the influence between selling practices and service quality.
Incorrect spelling practice that is common in insurance is mis-selling practice. The mis-selling in
the insurance industry can occur when insurance agents engage in unfair selling practices, such
Figure 1 Gaps Model of Service Quality
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as providing misleading information or not disclosing essential policy details. This mis-selling
practice creates a communication gap shown in the Gaps Model of Service Quality. The
communication gap shows how the provision of services and the provider's external
communications differ (Zeithaml et al., 2018). This happened when the insurance agents did not
disclose necessary information in the policy or overpromised the benefits of the policy. The
crucial essential details commonly not disclosed or overpromised are investment value, policy
payment contract, and benefits.
Insurance literacies were also found to impact the service quality that someone perceives.
The customer gap in the gaps model of service quality can explain this. Customer gap refers to
the gap between the standards that the customer has in mind and the subjective assessment of the
service experienced (Zeithaml et al., 2018). Customers’ criteria are based on their current level of
insurance knowledge. If an individual perceives insurance in a manner that deviates from its
intended purpose, their understanding of insurance literacy is incorrect. This incorrect insurance
literacy will make customer expectations higher than what the product is supposed to deliver,
making the customer disappointed when they know the benefits they are getting.
CONCLUSION
This study concludes that four aspects directly influence insurance purchase decisions.
The first direct factors are demographic factors, including income level, amount of assets,
educational background, number of financial dependants, and the health condition of the potential
insured. Another direct aspect identified is whether the insurance product suits the prospective
insured; this aspect was related to the benefits, price, and payment contract. The next major direct
aspect is trust. The trust aspects can be categorized into trust in the insurance company, insurance
agents, and regulatory environment, which in this case is Otoritas Jasa Keuangan (OJK). The
last aspect identified concerns the subjective perceived value of the insurance contract to the
potential customer.
From the data analysis, this study also identified that four aspects influence a person’s
trust in insurance. Those aspects are selling practice which refers to the ways or techniques
employed by salespeople to promote and sell products or services; service quality which refers
to the subjective amount of satisfaction and competence experienced by customers from the
service offered; insurance literacy which refers to the knowledge about insurance fundamental
concepts, and the insurance company’s brand reputation and company profile.
The perceived value aspect also has other factors that influence it. Insurance literacy is
also found to influence perceived value, in which wrong literacy can lead to the wrong perceived
value of insurance. Culture also has a role in shaping someone’s insurance literacy. These cultural
factors include family traditions and spiritual beliefs. The last aspect that influences perceived
value is the environment surrounding the potential customer, where an environment filled with
insurance agents and satisfied insurance customers can increase the probability of an insurance
purchase.
Most importantly, the subject that was responsible for conducting selling practices,
maintaining service quality, and shaping the right insurance literacy was insurance agents and
marketers. Therefore, customers must choose the right insurance agents that were trusted and
equipped with adequate insurance knowledge. Insurance agents must also take their job more
professionally and continuously build their credibility and capability to serve customers.
Insurance companies and OJK as regulators should establish stricter regulations in screening new
insurance agents. Insurance agents can use the results of this study to equip insurance agents to
understand potential insurance customers better and therefore increase the chance of selling
insurance and, in the process, also fix problematic assurance policies.
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