EFFECT OF SOCIAL MEDIA ON INSURANCE PENETRATION

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ABSTRACT

This study was carried out to examine the effect of social media on insurance penetration with a particular reference to selected Insurance companies in Lagos State, Nigeria. To achieve this objective, four research questions and two research hypotheses were formulated to guide this study. The data was collected from primary sources. The primary data were collected with the help of a well-structured questionnaire of two sections administered to the staff of selected Insurance companies in Lagos State, Nigeria. The collected data were analyzed with tables and simple percentages to analyze the research questions while Chi-square statistical tool was used to test research hypotheses. The study revealed that there is a significant difference between social media on insurance penetration in Lagos State and social media enhance insurance penetration in Lagos State. The study concluded with some recommendations that insurance companies should shift the way they approach social media currently from a simple marketing tool to incorporate it into the business strategy with the marketing department taking the lead in social media strategy.

CHAPTER ONE

INTRODUCTION

1.1   Background of the Study

        The activities of social media have increased overtime with the advancement in the level of technology in Nigeria and its effect is in the life of insurance industry. It is evident that the development of social media on the Internet has considerably transformed the way people communicate with one another. According to a recent Nielsen report on the state of social media, nearly 80% of active Internet users visit social networks and blogs (“State of the Media,” 2011).

        According to (Blackshaw & Nazzaro, 2004) stated that social media can be described as “a variety of new sources of online information that are created, initiated, circulated and used by consumers intent on educating each other about products, brands, services, personalities, and issues”. Social media is an umbrella term that includes social networking sites, creativity work sharing sites, blogs, and forums. This new media form is becoming increasingly influential on consumer behavioir in the marketplace, specifically in awareness, obtaining information, developing opinions, and purchasing behaviour. Consumers are substituting traditional media and means of advertising, such as television, radio, magazines and newspapers, for new media that give them instant access to information at their own convenience. Due to its consumer-generated nature, social media is perceived as a more trustworthy source of information than traditional advertising and communication (Cayari, 2011).

        Insurance sales involve the selling of insurance products by insurance companies to other businesses or individual consumers. Insurance cover allows policy holders to transfer the financial impact of possible losses incurred in the future onto the insurer in exchange for payment in the form of premium. For businesses, this protection covers the business itself and its stakeholders against losses and will provide stability to operations when the occurrence of loss does take place (Ashby and Diacon, 2014). Such losses may be in the form of fire, theft, bankruptcy, death, illness and so on, all which have a negative impact on normal operations for individuals and companies.

        Insurance companies provide unique financial services to the growth and development of every economy. Such specialized financial services range from the underwriting of risks inherent in economic entities and the mobilization of large amount of funds through premiums for long-term investments (Pearson & Robinson, 2017). Insurance companies’ ability to continue to cover risk in the economy hinges on their capacity to create profit or value for their shareholders. Indeed, a well-developed and evolved insurance industry is a boon for economic development as it provides long-term funds for infrastructure development of every economy (Charumathi, 2012).