The impact of Islamic beliefs on consumers’ attitudes and purchase intentions of life insuranceby Nizar Souiden, Yosr Jabeur

Intl Jnl of Bank Marketing

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Year
2015
DOI
10.1108/IJBM-01-2014-0016
Subject
Marketing

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International Journal of Bank Marketing

The impact of Islamic beliefs on consumers’ attitudes and purchase intentions of life insurance

Nizar Souiden Yosr Jabeur

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To cite this document:

Nizar Souiden Yosr Jabeur , (2015),"The impact of Islamic beliefs on consumers’ attitudes and purchase intentions of life insurance", International Journal of Bank Marketing, Vol. 33 Iss 4 pp. Permanent link to this document: http://dx.doi.org/10.1108/IJBM-01-2014-0016

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The Impact of Islamic Beliefs on Consumers’ Attitudes and Purchase Intentions of Life

Insurance

INTRODUCTION

Life insurance is a complex, abstract service, based on possible future benefits and difficult for consumers to evaluate even after they buy it. In industrialized countries, the life insurance market is developed and well established. For example, according to a Swiss Re report (2011), Japanese citizens invest about US $3,472 in life insurance each year, which represents 8.6 percent of their annual income per capita. According to the same report, life insurance represents a 79.1 percent share of the insurance market in Japan, 69 percent in the

UK and in France, and 43 percent in the US. However, in most emerging or developing countries, this sector is still in its embryonic stage. For example, in Turkey, Tunisia, and

Algeria, life insurance represents less than 20 percent of the total insurance market (15.6%, 13.2% and 7.5%, respectively) (Swiss Re report, 2011). Additionally, many studies show that in Muslim countries, the demand for life insurance is lower than in non-Muslim countries because of individuals’ Islamic beliefs and Islamic laws banning such services (e.g., Browne and Kim, 1993; Outreville, 1996; Beck and Webb, 2002; Chui and Kwok, 2008; Khalid et al., 2010). Karich (2004) adds that life insurance is not easily accepted in Muslim countries because it is not well understood, and is associated with misfortune and negative aspects of life.

To answer the insurance needs of Muslims, institutions have developed Islamic life insurance services that conform to Islamic law (sharia). Thus, conventional life insurance and Islamic

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A pr il 20 15 (P

T) 2 life insurance are two different types of insurance. Karich (2004) defines Islamic life insurance (takaful) as an agreement among many participants who pool their financial resources to mutually protect themselves against the consequences of an unforeseeable event.

For Farooq et al. (2010), Islamic insurance is a collateral security between participants against loss and damages that may be inflicted upon one of them. The members of the group jointly guarantee that if one of them suffers from a tragedy or a calamity, he or she will receive the premium in order to deal with the loss and damages incurred.

In many Muslim countries, Islamic law influences daily life, including businesses such as banks, insurance companies, and hotels. But other Muslim countries are more liberal, including the United Arab Emirates (e.g., the emirate of Dubai), Tunisia, and Turkey. In these countries, Islamic law is jointly used with civil law and consequently, the business environment is relatively less influenced by Sharia, if at all. Citizens of less conservative

Muslim countries tend to be more liberal than those of conservative ones. According to

Alserhan (2011), not all Muslims behave according to Sharia law. He adds that some of them consume alcohol, dine at restaurants where halal food is not provided, and deal with conventional rather than Islamic banking. Thus, the Islamic beliefs of many Muslims may vary greatly (i.e., could be stronger for some and weaker for others) and therefore, the impact of religion on their lifestyle could be different too. It is this last context that our present study is concerned with. In particular, we examine, within a less conservative Muslim country, the effect of Islamic beliefs on individuals’ attitudes and intention of purchasing conventional or

Islamic life insurance. Our objectives are:

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T) 3 i. To investigate whether individuals’ attitudes and purchase intentions toward conventional and Islamic life insurance vary according to the strength of their Islamic beliefs. ii. To see whether individuals’ attitude toward conventional (or Islamic) life insurance has a significant impact on their purchase intentions of these services and whether this impact is moderated by their Islamic beliefs.

LITERATURE REVIEW

The Determinants of Life Insurance

Many researchers maintain that the demand for life insurance depends on factors such as culture (e.g., Chui and Kwok, 2008), the price of the insurance (e.g., Browne and Kim, 1993;