Willingness to pay for property insurance for people living in the rural areas of South Africa

Abstract

Developing suitable insurance products emanates from understanding the target market and using one’s capabilities efficiently enough for the products to be understandable, affordable and usable; while being profitable for the insurer. This study was motivated by the apparent slow pace in the development of property insurance products suitable for the rural areas of South Africa. The researcher sought to understand what enabled and inhibited the adoption of property insurance in the rural areas of South Africa. The study tests whether factors such as household demographics, social capital, risk awareness and risk aversion have any impact on the willingness to pay (WTP) for property insurance products. A quantitative research methodology was adopted in conducting the study using a self-administered survey type questionnaire. The results of the research show that there is a positive correlation between risk awareness and risk aversion and that risk aversion drives the willingness to pay (WTP) for property insurance products in the rural areas of South Africa.