Key Determinants to Drive Motor Insurance Customer Acquisition in Western Province, Sri Lanka: A Focus on the Marketing Mix

Abstract

Purpose: There is a significant need for a comprehensive insurance policy for all vehicle owners, especially considering the growing emphasis on health and safety, and public protection. The substantial preference for 3rd party insurance over comprehensive policy covers has created a hurdle for insurance companies, both in terms of acquiring new customers and retaining existing ones. This prevailing trend has presented a significant challenge to the growth potential of general insurance firms in the market. The main purpose of this study is to investigate how factors such as product, price, promotion, and distribution network influence the customer purchase intention towards motor insurance.

Design/methodology/approach: This was a cross-sectional study using a deductive research approach. Data were gathered from 412 policy holders in Sri Lanka using a self-administered structured questionnaire. Multiple regression analysis was used to determine the most influencing factor among product, price, promotion and distribution network influencing customer purchase intention towards motor insurance.

Findings: Based on the analysis, the insurance service [product], insurance premium [price], promotion and distribution network have a significant relationship with the customer purchase intention towards motor insurance policies in Sri Lanka. Among the factors tested, distribution network and insurance service have the most significant impact on customer purchase intention with reference to motor insurance segment.

Originality: This study provides a unique contribution by highlighting the critical role of the distribution network, particularly the combination of Place and People elements, in driving motor insurance customer acquisition in Sri Lanka. Unlike prior studies that emphasize price and promotional strategies, this research focuses on the integrated influence of accessibility and personalized service. The findings demonstrate that a well-established distribution network outweighs traditional marketing factors in influencing purchase decisions, offering a new perspective on consumer behavior in the Sri Lankan motor insurance industry.

Implications: The findings of this study will pave the way for a paradigm shift where, insurance firms could understand and develop relevant strategies to improve services provided to the existing and potential motor insurance customers. By analyzing what truly matters to Sri Lankan drivers, both insurance service providers as well as regulatory authorities can ally and develop a holistic insurance policy that comprehensively covers all aspects of vehicle ownership, filling the void in the current market. According to the findings, it can be advised that the insurance corporations should focus more on providing a product with more unique features and invest in creating a solid network of branches across the country which are fortified with skilled and service-oriented personnel who could persuade the customers in buying comprehensive insurance covers. Future researchers can also focus on income and educational level as moderators since both of which have an impact on consumer behavior as suggested in prior literature. Also, there is a possibility of widening their scopes by considering other types of insurance products and expand the geographical area as well.