Determinants of Insurance Purchase Decision Making in Lithuania

This paper deals with the examination of insurance consumer behaviour in Lithuania. The purpose of the work is to determine the factors that explain the insurance service purchase decision of the Lithuanian citizens. To this end, a structured 5-point Likert scale questionnaire-based survey is employed to collect data. A research model composed of two main stages (purchase inclination and decision) is proposed. Factor analysis and multiple regression analysis are used to determine how the factors are formed and what their relative weights are. Five factors are identified: the acceptability of insurance conditions (F1), insurance service provider's competence (F2), consumers' monetary attitude towards insurance (F3), the positivity of consumers' insurance experience (F4), and the possibility to reduce the amount of premiums payable for insurance (F5). Subsequently, path analysis is applied to further refine the research model by eliminating the less significant relationships between the variables (the relationships between F5 and inclination, between F3 and decision, and between F4 and decision were eliminated). The refined model provides the revised impact weights of the variables on the consumers' decision to purchase insurance services: Decision = 0,192 F1 + 0,379 F2 + 0,156 F5 + 0,222 Inclination + e2, where e2 represents the possible impact of other variables. The results show that in Lithuania, insurance consumption decision making is still mostly influenced by monetary considerations such as consumers' evaluation of an insurance service in monetary terms and the search for the possibility to reduce the amount of premiums payable for insurance. The results also indicate that the demographical and socio-economical characteristics of the consumers influence their behaviour. Among the main findings here are the most distinctive ones: men base their insurance decisions mostly on the acceptability of insurance conditions, whereas women do on the insurance service providers' competence; when purchasing insurance services, mature adults only care about the possibility to reduce the amount of premiums payable for insurance, while the youth and young adults mostly rely on the insurance service provider's competence; generally, for the Lithuanians a monthly amount of 800 LTL per person is the income level which enables them not only to form the inclination to purchase insurance services, but also to decide to purchase them actually; the higher degree or education acquired by the individuals, the fewer factors impact their insurance purchase decision: masters and doctors of science evaluate only the insurance service provider's competence, while bachelors, besides the insurer's competence, are also concerned with insurance service conditions and all the monetary issues; Vilnius' citizens evaluate a rather wider range of factors as compared to the individuals living in other places; individuals who are either married or living in a couple are more than singles inclined to purchase insurance services if an opportunity to reduce the amount of premiums payable for insurance exists; individuals who live alone are mostly concerned with the acceptability of insurance conditions, whereas families composed of two and more members highly focus on the insurer's competence; the decision of families with at least one child is determined by the insurer's competence, whereas families without children take a wider range of factors into account when making the insurance service purchase decision.