A Structural Equations Model of Qualitative Elements Influencing Automobile Insurance Uptake

Abstract

Around the world, automobile insurance (Comprehensive Coverage
Policy) offers a greater coverage to vehicles and contributes significantly to
insurance company’s revenue as one of the popular policy choices of vehicle
owners. However, the case is somewhat different in Bangladesh as such policy, on
an average, adds comparatively less to the overall revenue of any typical insurance
company. Besides financial terms, behavioral attributes and other qualitative
aspects have wide-ranging influence on insurance decisions. This study explores
potential antecedents of insurance uptake, including driving attributes, perception
of accident risk, vehicle specifications, and neighborhood effects. The mediation
effects of road safety awareness and insurance literacy on insurance uptake were
also examined. Self-reported questionnaire was used to collect data through survey
responses from 332 vehicle owners. The study findings suggest that road safety
awareness and insurance literacy mediate some effects on automobile insurance
uptake.