Investigating factors that influence property insurance purchase decisions of non-urban homeowners in South Africa

Abstract

The uptake of property insurance among homeowners in South Africa remains low despite the increasing risks associated with property damage and loss. This study examines key factors influencing the decision to purchase property insurance in non-urban areas, focusing on affordability, trust in insurance providers, awareness, knowledge, service culture, religious beliefs, and the availability of suitable insurance products. Additionally, the study aimed to establish whether rural homeowners are willing to purchase property insurance in South Africa. A close-ended questionnaire including yes/no, Likert scales, category questions, ranking questions, and multiple-choice formats was distributed to participants. Participants were selected through convenience sampling, a non-probabilistic method based on accessibility, location, and willingness to participate. The findings reveal that lack of trust in insurance companies, high insurance policy costs, and limited knowledge about property insurance are the top barriers to adoption. Additionally, poor service culture and few suitable products were identified as contributing factors. Interestingly, religious beliefs had minimal impact, and most participants disagreed that religion influenced their decision. Most of the participants indicated that they are willing to purchase property insurance if their pain points are addressed. Majority of the participants are only willing to pay between low amount of money, indicating that affordability is a significant concern for a substantial portion of respondents. These findings underscore the need for insurance companies to rebuild trust, develop affordable and tailored products, improve service delivery in non-urban areas, and enhance public awareness about the value and mechanisms of property insurance.