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

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International Journal of Bank MarketingThe impact of Islamic beliefs on consumers’ attitudes and purchase intentions of

life insuranceNizar Souiden Yosr Jabeur

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To cite this document:Nizar Souiden Yosr Jabeur , (2015),"The impact of Islamic beliefs on consumers’ attitudes andpurchase intentions of life insurance", International Journal of Bank Marketing, Vol. 33 Iss 4 pp. 423 -441Permanent 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’

attitudesand purchase intentionsof life insurance

Nizar Souiden Faculty of Business Administration, Laval University, Quebec, Canada, and

Yosr Jabeur Institut des Hautes Études Commerciales (IHEC), Carthage University,

Tunis, Tunisia

Abstract

Purpose – The purpose of this paper is to investigate the role of Islamic beliefs in moderatingconsumers’ attitudes and purchase intentions of conventional and Islamic life insurance. Second, itinvestigates the role of Islamic beliefs in moderating the relationship between the attitude towardconventional/Islamic life insurance and purchase intentions of these types of services.Design/methodology/approach – A questionnaire was administered online in a Muslim liberalcountry where both types of insurance are offered. Based on a total sample of 207 responses, ANOVAtests and a structural Equation Modeling were used to test the research hypotheses.Findings – Results show that: the higher (lower) the Islamic beliefs of individuals, the less (more)favorable their attitude will be toward conventional life insurance and the more (less) favorable theirattitude will be toward Islamic life insurance; the higher (lower) the Islamic beliefs of individuals, theweaker (stronger) their purchase intentions for conventional life insurance will be and the stronger(weaker) their purchase intentions for Islamic life insurance will be; and Islamic beliefs moderate therelationships between attitudes and purchase intentions of life insurance.Practical implications – Because they play a significant role in moderating consumers ’ attitudesand purchase intentions of conventional and Islamic life insurance, Islamic beliefs can be used as ameaningful criterion to segment the life insurance markets in (less conservative) Muslim countries.This would help insurance companies to better target their services. In a case where two segmentscoexist (i.e. individuals scoring low on Islamic beliefs vs individuals scoring high on Islamic beliefs),insurers should weigh different strategic options by targeting one of the two segments or both of them.Perhaps the main issue occurs when an insurer attempts to target both segments. In this case,managers should be aware of the confusion that they might create in the mind of their clients (orpotential clients). Concurrently offering two types of life insurance (conventional and Islamic) may putthe insurers’ credibility at stake.Originality/value – Earlier studies report that in Muslim countries, the demand for life insurance isweak or negatively correlated with religion. The majority of these studies consider religion as a macroindicator (i.e. at the country level) when explaining the demand for such services. The present study furtherclarifies the nature of the relationship between religion and the demand for life insurance by: examining therole of Islamic beliefs (as one of the main dimensions of Muslims’ religiosity) at the micro level (i.e. at theconsumer level); and investigating the moderating role of Islamic beliefs in explaining attitudes andpurchase intentions of conventional and Islamic life insurance in a less conservative Muslim country.

Keywords Religion, Insurance, Consumer behaviour, Purchase intention, Attitude, Islamic beliefs,Religious beliefs, Islamic life insurance

Paper type Research paper International Journal of BankMarketing

Vol. 33 No. 4, 2015pp. 423-441

© EmeraldGroupPublishing Limited0265-2323

DOI 10.1108/IJBM-01-2014-0016

Received 26 January 2014Revised 5 June 2014

Accepted 23 June 2014

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/ 0265-2323.htm

The authors thank the editor and two anonymous reviewers for their constructive comments.

423

Impact of Islamic beliefs



IntroductionLife insurance is a complex, abstract service, based on possible future benefits anddifficult 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 aSwiss Re (2011) report, Japanese citizens invest about US$3,472 in life insurance eachyear, which represents 8.6 percent of their annual income per capita. According to thesame 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 USA. However, in mostemerging or developing countries, this sector is still in its embryonic stage. Forexample, in Turkey, Tunisia, and Algeria, life insurance represents less than 20 percentof the total insurance market (15.6, 13.2, and 7.5 percent, respectively) (Swiss Re, 2011).Additionally, many studies show that in Muslim countries, the demand for lifeinsurance is lower than in non-Muslim countries because of individuals’ Islamic beliefsand 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 thatlife insurance is not easily accepted in Muslim countries because it is not wellunderstood, and is associated with misfortune and negative aspects of life.

To answer the insurance needs of Muslims, institutions have developed Islamic lifeinsurance services that conform to Islamic law ( sharia ). Thus, conventional lifeinsurance and Islamic life insurance are two different types of insurance. Karich (2004)defines Islamic life insurance ( takaful ) as an agreement among many participants whopool their financial resources to mutually protect themselves against the consequencesof an unforeseeable event. For Farooq et al. (2010), Islamic insurance is a collateralsecurity between participants against loss and damages that may be inflicted upon oneof them. The members of the group jointly guarantee that if one of them suffers from atragedy 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 moreliberal, including the United Arab Emirates (e.g. the emirate of Dubai), Tunisia, andTurkey. 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 lessconservative 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 addsthat some of them consume alcohol, dine at restaurants where halal food is notprovided, and deal with conventional rather than Islamic banking. Thus, the Islamicbeliefs 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 beliefson individuals’ attitudes and intention of purchasing conventional or Islamic lifeinsurance. Our objectives are:

(1) to investigate whether individuals’ attitudes and purchase intentions towardconventional and Islamic life insurance vary according to the strength of theirIslamic beliefs; and

(2) to see whether individuals’ attitude toward conventional (or Islamic) life insurancehas a significant impact on their purchase intentions of these services and whether

this impact is moderated by their Islamic beliefs.

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IJBM 33,4



Literature reviewThe determinants of life insuranceMany 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; Outreville, 1996; Beck and Webb, 2002; Chui and Kwok, 2008), religion(e.g. Browne and Kim, 1993; Outreville, 1996; Beck and Webb, 2002; Chui and Kwok,2008; Khalid et al., 2010), the ethical behavior of life insurance sellers (e.g. Yi et al., 2012),the involvement of consumers with the service and the ease of information searches(e.g. McColl-Kennedy and Fetter, 2001), family income (e.g. Browne and Kim, 1993; Beckand Webb, 2002; Khalid et al., 2010), social security coverage (e.g. Browne and Kim,1993; Outreville, 1996; Khalid et al., 2010), inflation (e.g. Browne and Kim, 1993;Outreville, 1996; Beck and Webb, 2002; Khalid et al., 2010), and the sophistication of national financial markets (e.g. Beck and Webb, 2002; Khalid et al., 2010).

Using a regression analysis in 1980 and 1987, Browne and Kim (1993) investigatethe factors that lead to variations in the demand for life insurance across countries.They conclude that revenues and social security spending are the main determinants of the demand for life insurance, but inflation has a negative effect. They also report anegative correlation between the demand for life insurance and Muslim countries.Based on a study of 45 developing countries, Outreville (1996) finds that personalincome, inflation, and the development of the country’s financial sector have the mostimportant impact on the demand for life insurance. In line with Browne and Kim’s(1993) study, the author reports that in Muslim countries, the demand for life insuranceand Muslim religion are negatively correlated.

Beck and Webb (2002) find that in countries where per capita income is high,banking services are developed, and inflation is low, the demand for life insurance islikely to be high. They report that buying life insurance is influenced by the

private savings rate and the interest rate. However, education level, dependency ratio,life expectancy, and social security expenses had no influence on the demand for lifeinsurance. The authors add that civil rights and political stability lead to an increaseddemand for life insurance, but the demand for life insurance in Muslim countries is lowor negative due to religious considerations.

Using data gathered between 1966 and 2004 in 30 countries, Chui and Kwok (2009)report that national income, inflation rate, and the development of the banking sectorhave a strong influence on the demand for life insurance. As in Beck and Webb’s (2002)study, the investor protection index, the dependency ratio, and life expectancy have noinfluence on the demand for life insurance, but Chui and Kwok (2009) confirm thatMuslim beliefs have a negative influence on the demand for life insurance. Catholic and

Protestant beliefs, in contrast, had no influence on the demand for life insurance.When focussing on Muslim countries, Rahmane (2009) and Yazid et al. (2012) find

that the determinants of Islamic life insurance are similar to those of conventional lifeinsurance on all points except religion. They maintain that the demand for Islamic lifeinsurance in Muslim countries is important because this type of insurance (namedtakaful ) is consistent with Muslim religion.

Past studies on the role of religion in explaining the demand for life insurance present,however, several drawbacks. First, most of them consider religion/religiosity as anaggregate concept (e.g. a one-dimensional concept). Conversely, more recent studies arguethat religiosity is a multidimensional construct encompassing different aspects such asreligious beliefs and religious practices (Souiden and Marzouki, 2015). Thus, when

considering religion/religiosity, researchers should specify which dimension is under

425




investigation. In the present study, a particular interest is attributed to the dimensionof “religious beliefs” since it is considered as one of the main indicators of religiosity(e.g. Dusuki and Abdullah, 2007; Al-Ajmi et al., 2009; Souiden and Marzouki, 2015).

Second, past studies often treat culture and country as synonymous; therefore,nationality and country are used as surrogate variables for culture. Similarly,nationality and country are often used as surrogate variables for religion (since religionis one of the components of culture). Craig and Douglas (2006) have criticized thisapproach and posit that using a geographical setting (e.g. nationality) or ethnicbackground as proxy for culture is no longer relevant because cultures are increasinglyinterpenetrated. They add that geographically localized cultural units are rapidlydisappearing. Confirming this view, Tung (2008) urges scholars to balance cross-national and intra-national diversity to improve cross-cultural studies. According toAgarwal et al. (2010), and Tung (2008), scholars and practitioners should address thehomogeneity and the heterogeneity of consumer behaviors within and across countries.When examining past studies (within or across countries) on life insurance, most of them, in order to explain the demand for such services, refer to religion as a country’ssocio-demographic indicator (in a combination with other macro environmentalindicators such as national income and inflation rate). For instance, in Browne andKim’s (1993) study, demand for life insurance is correlated with a dummy variable forIslamic countries (e.g. Muslim¼ 1; non-Muslim¼ 0). Also, in Beck and Webb’s (2002)study, demand for life insurance is correlated with the Muslim share of the population(the religion variable in this study is defined as the ratio of adherents of one religionover the entire population). Consequently, the results of these studies might be relevantonly at the macro level (e.g. citizens of Muslim countries purchase less life insurancethan citizens in non-Muslim countries).

In the present study, we do not consider religion as a socio-demographic

characteristic at the country level, but at the personal/individual level (i.e. at theconsumer level). For example, we do not assume that all citizens from a Muslim countryform a single homogeneous group in terms of their religiosity. On the contrary, webelieve that Muslims might have different interests in Islam (as a faith/religion) orattribute a different importance to it in their lives. Thus, we may expect that Muslimsvary in terms of their Islamic beliefs, and that their behaviors and attitudes will dependaccordingly. To the best of our knowledge, there is no study that has looked at therelationship between religion (i.e. Islamic beliefs) and the demand for life insurancefrom the same angle as the present study.

Religion and life insurance

The influence of religious beliefs on consumption behavior Past studies do not agree whether religion or religiosity is one-dimensional, bi-dimensional, or multidimensional (e.g. Allport and Ross, 1967; Hoge, 1972; Batson andVentis, 1982; Sandage, 1999). Despite this disagreement, the literature concurs that“religious beliefs” is one of the most significant dimensions reflecting individuals ’

religiosity, and affecting their attitudes and behaviors, particularly in Muslimcountries. (e.g. Erol and El-Bdour, 1989; Haron et al., 1994; Hegazy, 1995; Metawa andAlmossawi, 1998; Naser et al., 1999; Dusuki and Abdullah, 2007; Al-Ajmi et al., 2009;Souiden and Marzouki, 2015). Certainly, there is a strong relationship betweenreligiosity and religious beliefs, but the focus of the present study is on the latter.

Noland (2007) argues that, whatever a person’s religion, his religious beliefs tend to

affect his behavior. According to Mokhlis (2006), the effects of religious beliefs on

426

IJBM 33,4



consumer behavior come from two main sources: the obligations that people whobelong to certain religions must respect (e.g. food restrictions) and, in contemporarysociety, the behaviors of individuals as forged around a culture, norms, attitudes, and

values, which are themselves influenced by religion.Assadi (2003) investigates the impact of religion on consumer behavior, paying closeattention to monotheistic religions (i.e. Christianity, Judaism, and Islam). These threereligions require, to different degrees, that their believers follow principles (laws)that touch many aspects of their lives, such as dress code, diet, business relations,etc. Khraim (2010) maintains that religious values and beliefs affect human behavior inritualistic and symbolic ways, holding an essential role in a person’s lifestyle. Religioninfluences traditions (e.g. marriages and funeral rites), instills values (e.g. morals, ideasof good and evil), influences public opinion on social questions (e.g. premarital sex,organ donation), orients individuals toward what is permitted (e.g. halal products) andwhat is forbidden (e.g. alcoholic beverage, etc.), and generally touches many aspects of daily life.

Because of their laws and restrictions, religious beliefs influence attitudes andconsumption behavior (Kim et al., 2004; Bonne et al., 2007; Mokhlis, 2006; Shaari andAfitrin, 2010). But some researchers report that though religion has a considerableeffect on consumption behaviors, its impact may vary on individuals (Delener, 1994;Choi et al., 2010). Confirming this opinion, Khraim (2010) finds that the lifestyle a personadopts largely depends on his religiosity and faith. Also, Delener (1994) categorizesbelievers into two sub-groups: the more religious and the less religious, termingmore religious individuals as more conservative, more traditional, more dependent,less tolerant, less flexible, and more rigid in their purchase decisions. Compared to lessreligious individuals, more religious people are dogmatic.

The influence of religious beliefs on attitudes and purchase intentions of life insuranceNumerous studies on the service sector confirm that the intent to purchase a servicedepends on attitude, measured by factors such as the quality of the offered service,trust, image, and satisfaction (e.g. Eisingerich and Bell, 2007; Kassim and Souiden,2007; Ladhari et al., 2011). In the present study, we focus on the general attitude towardthe service itself to see if religious beliefs contribute to form favorable or unfavorableattitudes toward conventional or Islamic life insurance. Our approach is in line withCampbell’s (1963, p. 581) definition of attitude: “an acquired disposition toward abehavior” and with Filser’s (1994, p. 297) definition, where the goal of attitude is to“describe the formation of global favorable or unfavorable orientations toward anobject or an action.”

Browne and Kim (1993) affirm that religion is one of the most influential factors onthe demand for life insurance, especially in Muslim countries. Their results indicatethat citizens of Muslim countries purchase less life insurance than citizens innon-Muslim countries. Zelizer (1979) reports that, until the nineteenth century, lifeinsurance was condemned and banned in Europe for religious motives. He adds thatreligion has always constituted a source of strong cultural opposition to life insurancefor Muslims. Religious individuals tend to believe that buying life insurance isequivalent to doubting God’s protection. Zelizer (1979) argues that religious antipathytoward life insurance still exists in many Muslim countries.

Karich (2004) and Farooq et al. (2010) explain the negative attitudes of Muslimstoward conventional life insurance by noting that this service is contrary to the

principles of the Muslim religion since conventional insurance is based on interest and

427




speculation. The Sharia forbids interest (i.e. riba ), games of chance or speculation(i.e. maysir ). According to these authors, a (true) believer will have an unfavorableattitude toward conventional life insurance. Thus, when a life insurance

policy contradicts the principles of Islam, the attitude of Muslims toward this servicewould be negative. This also applies to the purchase intentions of such services.Confirming this view, Chui and Kwok (2008, 2009) maintain that the more religiousa person is, the lower his intent to purchase life insurance since this wouldmean questioning one’s trust in God. This implies that when a life insurance policyconforms to the principles of the Islamic religion, Muslim consumers may develop apositive attitude and show an interest in purchasing it. Therefore, we postulate thefollowing hypotheses:

H1a. Individuals scoring high (low) on Islamic beliefs would have less (more)favorable attitudes toward conventional life insurance than those scoring low(high) on Islamic beliefs.

H1b. Individuals scoring high (low) on Islamic beliefs would have more (less)favorable attitudes toward Islamic life insurance than those scoring low (high)on Islamic beliefs.

H2a. Individuals scoring high (low) on Islamic beliefs would have less (a greater)intention of purchasing conventional life insurance than those scoring low(high) on Islamic beliefs.

H2b. Individuals scoring high (low) on Islamic beliefs would have a greater (less)intention of purchasing Islamic life insurance than those scoring low (high) onIslamic beliefs.

According to Shah Alam et al. (2011), religion is an important cultural factor because itis one of the social institutions that have a considerable influence on people’s attitudes,values, and behaviors at the individual and social levels. Thus, religion, which is part of culture, is likely to shape individuals’ behavior, and influence their actions anddecisions. Confirming this view, Salman and Muhammad Shaukat (2013) find thatMuslim consumers’ behavior varies with their level of involvement and their degree of religiosity, reporting that highly religious people are less recreational, fashionconscious, and impulsive in their shopping orientations. In the case of low involvementproducts, however, religiosity negatively influences consumer brand consciousness.Abdur Razzaque and Chaudhry (2013) find that Muslims’ religious commitmentinfluences their involvement in the brand decision, but not in the product decision.Based on the previous discussion, we can postulate that Islamic beliefs moderate the

relationship between Muslim attitudes toward and purchase intentions of lifeinsurance. Therefore, the following hypotheses are proposed:

H3. For individuals with low Islamic beliefs, their attitude toward conventional lifeinsurance has a significant and (a) positive impact on their purchase intentionsof this type of insurance and (b) negative impact on their purchase intentions of Islamic life insurance.

H4. For individuals with high Islamic beliefs, their attitude toward Islamic lifeinsurance has a significant and (a) positive impact on their purchase intentionsof this type of insurance and (b) negative impact on their purchase intentions of

conventional life insurance.

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IJBM 33,4



These different relations between attitude and purchase intention of life insurance, and themoderating role of Islamic beliefs are shown in the following conceptual model (Figure 1).

MethodologyContext of the studyThe context of the present study is Tunisia, a Muslim country considered liberal whencompared to other Muslim countries such as Saudi Arabia and Iran. To date, most lifeinsurance services offered in the country have been conventional. In 2011, the firstIslamic life insurance institution (Zitouna Takaful) was established in Tunisia andbegan operations at the end of 2012. The Tunisian General Council of Insurance isexpecting a substantial growth of this insurance segment. Thus, the present study canilluminate decision making relating to the launch of this new type of service in a marketwhere the demand for life insurance in general is still not well developed.

In 2011, life insurance in Tunisia represented 14.5 percent of the insurance market.

Tunisians spend on average 14 dinars (US$10) each year on life insurance, whichrepresents 0.23 percent of their average income (US$4300). Compared to citizens of other emerging countries, Tunisians spend only about half of what Turks spend on lifeinsurance (US$18.9), even though in Turkey and Tunisia, life insurance has about thesame market share. According to the 2011 annual report of the Tunisian GeneralCouncil of Insurance, the insurance market in the country grew 48 percent from 2005 to2010. Life insurance became the third most important insurance that Tunisians buy.Since it is mandatory, automobile insurance has the largest share in Tunisia, followedby property and casualty insurance.

Islamic Beliefs

Attitude toward

Islamic life

insurance

Attitude toward

conventional life

insurance

Purchase intention

of Islamic life

insurance

Purchase intention

of conventional life

insurance

H2a

H3a

H1b

H4b

H3b

H2b

H4a

H1a

Figure 1.Impact of Islamic

beliefs on attitudesand purchaseintentions of

conventional andIslamic life insurance

429




Measurement scaleTo measure Islamic beliefs, we searched in the literature for a valid measurement scale,following a rigorous selection process. A scale containing four items was derived from

King and Crowther (2004), Jana-Masri and Priester (2007), and Khraim (2010). Theliterature stipulates that scales on religion must be adapted to the context to reflectthe social and psychological aspects of the respondent. Examples of items used inthe present study are: “I believe women must wear the headscarf ( hijab )” and “I believeMuslims should not receive financial interest.” The four items selected were those wethought best reflected the distinctions between Muslims with high Islamic beliefs andthose with low Islamic beliefs. We also believe that these four items can measure theextent to which religion is important in the social life of individuals and the degree of sacrifice they are willing to endure in order to respect the principles of their religion.The Cronbach’s α of Islamic beliefs scale is 0.912.

For the two attitude variables, the same measurement scale was used forconventional and Islamic life insurance with adaptations. To measure each variable of attitude, we selected seven of the most used items by Schlosser et al. (1999), Korgaonkarand Wolin (2002), An and Kim (2007), Sun and Wang (2010), Nepomuceno and Porto(2010), and Amin et al. (2011). Examples of items used to measure attitude are: “Overall,I consider conventional life insurance a good thing” and “Globally, I prefer conventionallife insurance.” Cronbach’s α is 0.953 for attitude toward conventional life insurance,and 0.970 for attitude toward Islamic life insurance.

For the purchase intention variable, referring to past studies by Lada et al. (2009),and Nepomuceno and Porto (2010), four items were selected to measure the purchaseintention of conventional life insurance, and the same four items (after adaptation) wereused to measure the purchase intention of Islamic life insurance. Examples of itemsused to measure intention are: “I will purchase conventional life insurance” and “I will

choose conventional life insurance in the future.” Cronbach’s α ’s were 0.971 and 0.981,for purchase intention of conventional life insurance and purchase intention of Islamiclife insurance, respectively. Other information concerning convergent validity (AVE)and additional reliability tests of each construct ( ρ ) are reported in Table I.

For all the variables in this study, a five-point Likert-type scale was used to measureresponses (1¼ strongly disagree to 5¼ strongly agree). The survey was originallywritten in English, and then translated into French since the latter is widely-spoken inTunisia (particularly among educated individuals). To ensure that the meaning of thescales was identical in the two languages, a back translation was conducted bybilingual experts, suggesting only minor modifications. The questionnaire was laterconverted into an online version.

The sampleA convenience sampling method is used in this study. Two Tunisian MBA studentshelped in sending the link of the online questionnaire to a list of contacts. Using asnowball technique, these contacts were also requested to forward the link to their friendsand family. Data collection lasted five days, during which 207 responses were collected.Apart from the wide usage of internet in Tunisia (41 percent of the population), the choiceof an online questionnaire is justified by the fact that many questions are consideredpersonal, especially those related to Islamic beliefs. Indeed, according to Sabri et al. (2010),there exists a taboo concerning certain subjects related to religion (application of Sharialaws, polygamy, etc.). Consequently, it was preferable to administer the questionnaire

anonymously to encourage respondents to participate in this study.

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IJBM 33,4



V a r i a b l e s

H I B

L I B

A N O V A

C o r r e l a t i o n s

V I F

R e l i a b i l i t y a n d c o n v e r g e n t v a l i d i t y

M e a n

S D

M e a n

S D

F

S i g .

A T T I L I

P I C L I

P I I L I

A V E

ρ

A T T C L I

3 . 0

0 3

1 . 0

9 3

3 . 6 5

8

0 . 9

2 6

2 1 . 7

3 6

0 . 0

0 0

−

0 . 0

3 2

0 . 9

0 8 * *

− 0 . 1

0 2

5 . 8

6 8

0 . 7

5 5

0 . 9

5 6

A T T I L I

3 . 3

3 6

1 . 1

1 0

2 . 1 9

4

0 . 8

9 4

6 6 . 9

7 3

0 . 0

0 0

− 0 . 0

9 5

0 . 9

2 7 * *

7 . 3

2 4

0 . 8

2 1

0 . 9

7

P I C L I

3 . 0

0 8

1 . 2

2 8

3 . 7 6

6

1 . 0

7 7

2 2 . 4

2 8

0 . 0

0 0

− 0 . 1

5 1 *

5 . 8

6 1

0 . 8

6 9

0 . 9

6 4

P I I L I

3 . 3

0 1

1 . 1

6 9

1 . 9 5

8

0 . 9

8 4

8 0 . 2

5 2

0 . 0

0 0

7 . 3

5 4

0 . 8

8 4

0 . 9

6 8

N o t e s : L I B ,

l o w

I s l a m i c b e l i e f s ; H I B ,

h i g h I s l a m i c b e l i e f s ; A T T

C L I , a

t t i t u d e t o w a r d s c o n v e n t i o n a l l i f e i n

s u r a n c e ; A T T

I L , a t t i t u d e t o w a r d s

I s l a m i c l i f e

i n s u r a n c e ; P I C L I , p u r c h a s e i n t e n t i o n

o f c o n v e n t i o n a l l i f e i n s u r a n c e ; P I I L

I , p u r c h a s e i n t e n t i o n o f I s l a m i c l i f e i n s u r a n c e .

* , *

* S i g n i f i c a n t a t 0 . 0

5 a n d 0 . 0

1 l e v e l ,

r e s p e c t i v e l y

Table I.Descriptive statistics,

ANOVA andcorrelation results:

high Islamic beliefsvs low Islamic

beliefs andconventional life

insurance vs Islamiclife insurance

431




In our sample, 59 percent of respondents were female and 41 percent male. Of therespondents, 60 percent were single, 35 percent were married, and 5 percent weredivorced or widowed. More than half (57 percent) of the respondents were between 20

and 30 years old, 33 percent between 31 and 50 years old, 7 percent more than 51 yearsold, and 3 percent less than 20. The majority of our sample (93 percent) have a highschool education or more, 51 percent have an annual income of less than 5,000 TD, 21percent between 5,001 TD and 20,000 TD, 21 percent between 20,001 TD and 50,000TD, and 7 percent more than 50,000 TD.

ResultsIn order to test our hypotheses, two methods of analyses were necessary: an ANOVAanalysis to test whether Islamic beliefs moderate individuals’ attitudes and purchaseintentions toward conventional and Islamic life insurance (i.e. H1 and H2 ), and across-group analysis using structural equations modeling analysis to test whether

Islamic beliefs moderate the relationship between individuals’ attitudes and purchaseintentions toward conventional and Islamic life insurance (i.e. H3 and H4 ). Both tests/

analyses were undertaken separately.

ANOVA analysisIn order to compare between groups, we had to split the sample into two subgroups onthe basis of respondents’ Islamic beliefs. When using the mean (mean¼ 2.35),respondents who score low on Islamic beliefs (LIB) represent 56 percent of the sample(i.e. 116 respondents) and those who score high (HIB) 44 percent (i.e. 91 respondents).When using the median (median¼ 2.00), respondents with LIB represent 52 percent of the sample (i.e. 108 respondents) and those with HIB 48 percent (i.e. 99 respondents).

Overall, there is no big difference if we use the median or the mean; however, sincemedians are resistant to extreme scores and are considered robust measures of centraltendency, we judged that dichotomizing on the basis of a median score allows us todraw a better comparison between the two categories (e.g. Escalas et al., 2004; Iyengaret al., 2006): LIB and HIB.

The ANOVA was used to compare the means of the two groups of participants withrespect to their attitudes and intent of purchasing the two types of life insurance.

As Table I and Figures 2 and 3 show, individuals with low Islamic beliefs have amore favorable attitude toward conventional life insurance than those with highIslamic beliefs (mean LIB¼ 3,658Wmean HIB¼ 3,003; F ¼ 21.736). Individualsdisplaying high Islamic beliefs have a more favorable attitude toward Islamic lifeinsurance than those displaying low Islamic beliefs (mean HIB¼ 3,336Wmean

1.5

2

2.5

3

3.5

4

HR LR

ATT CLI

ATT ILI

Figure 2.Attitudes towardconventional andIslamic lifeinsurance:HIB vs LIB

432

IJBM 33,4



LIB¼ 2,194; F ¼ 66.973). We conclude that the higher the Islamic beliefs of individuals,the less favorable their attitude toward conventional life insurance and the morefavorable their attitude toward Islamic life insurance. Similarly, the lower the Islamic

beliefs of individuals, the more favorable their attitude toward conventional lifeinsurance and the less favorable their attitude toward Islamic life insurance.Consequently, we accept hypotheses H1a and H1b.

With regard to purchase intentions, individuals with high Islamic beliefs tend topurchase conventional life insurance less than those with low Islamic beliefs (meanHIB¼ 3,008omean LIB¼ 3,766; F ¼ 22.428). The purchase intention of Islamic lifeinsurance is, however, stronger for individuals with high Islamic beliefs than thosewith low Islamic beliefs (mean HIB¼ 3,301Wmean LIB¼ 1,958; F ¼ 80.252).We conclude that individuals who have high Islamic beliefs have lower purchaseintentions of conventional life insurance than those with low Islamic beliefs.Similarly, individuals with high Islamic beliefs manifest a stronger purchaseintention of Islamic life insurance than those with low Islamic beliefs. Thus, we accepthypotheses H2a and H2b.

SEM analysisTo test the role of Islamic beliefs in moderating the impact of attitude on the purchaseintention of life insurance, we conducted a multi-group analysis by using StructuralEquations Modeling (AMOS 20). Thus, the model should first be tested for itsconfigural, metric, and structural invariance before proceeding to compare the twogroups. The conceptual model was tested for each sub-group, HIB and LIB (models 1and 2), then for the whole sample (model 3). The results in Table II indicate that

1.5

2

2.5

3

3.5

4

HR LR

PI CLI

PI ILI

Figure 3.Purchase intentionsof conventional and

Islamic lifeinsurance:

HIB vs LIB

Models CMIN df p CMIN/df RMR IFI TLI CFI RMSEA χ 2test (%)

Model 1: HR group 480.029 204 0.000 2.353 0.077 0.914 0.902 0.914 0.118Model 2: LR group 414.749 204 0.000 2.033 0.056 0.933 0.923 0.932 0.098Model 3: configuralinvariance 894.823 408 0.000 2.193 0.067 0.923 0.912 0.923 0.076Model 4: full metricinvariance 904.545 426 0.000 2.123 0.071 0.924 0.918 0.924 0.074 94.06Model 5: full structuralinvariance 905.789 431 0.000 2.102 0.082 0.925 0.919 0.925 0.073 94.06

Table II.Cross-group models’testing: high Islamic

beliefs vs lowIslamic beliefs

433




configural invariance (model 3) is established, as well as metric (model 4) and structuralinvariance (model 5). Indeed, the indexes of these constrained models are satisfactorybecause the CFI, TLI, and IFI are superior to 0.9, and the RMR and the RMSEA are

inferior to 0.08. Also, as shown in Table II, the χ

2

test between models 3 and 4 is verified( χ 2 test¼ 94.06 percent). Thus, total metric invariance is established between these twosubgroups (Bollen, 1989; Steenkamp and Baumgartner, 1998). The χ 2 test betweenmodels 4 and 5 is also verified ( χ 2 test¼ 94.06 percent), which indicates that the fullstructural invariance is also established. Consequently, we can retain model 5 forsubsequent analysis to test the remaining research hypotheses (Bollen, 1989;Steenkamp and Baumgartner, 1998).

Table III shows that hypotheses H3a, H3b, H4a, and H4b are verified. Theresults not only confirm that attitude is a determinant of purchase intention (Howardand Sheth, 1969; Engel et al., 1978), but also support Delener’s (1994) opinion thatreligion does not influence individuals in the same ways. Individuals with highIslamic beliefs exhibit favorable (unfavorable) attitudes toward Islamic (conventional)life insurance, which in turn influence positively (negatively) their purchase intentionsof this type of insurance. Conversely, individuals with low Islamic beliefs exhibitfavorable (unfavorable) attitudes toward conventional (Islamic) life insurance, whichin turn have a positive (negative) effect on their purchase intention of this typeof insurance.

The correlation results (Table I) also support the relationships between attitudesand purchase intentions of conventional and Islamic life insurance. We observed nomulticollinearity between the variables since the VIF (the variance inflation factor)values were all inferior to 10 (Neter et al., 1990; Hair et al., 2006). Additionally, at theconceptual level, the constructs are different.

Theoretical and managerial implicationsThere are a few theoretical implications that can be derived from the overall results.First, earlier studies report that in Muslim countries, the demand for life insurance isweak or negatively correlated with religion (Browne and Kim, 1993; Outreville, 1996;Beck and Webb, 2002; Chui and Kwok, 2009). The majority of these studies referto the country’s national religion (i.e. refer to religion as one of the country’ssocio-demographic characteristics) when investigating the demand for life insurance.The present study further clarifies the nature of the relationship between religion andthe demand for life insurance by: investigating religion as at the personal/individuallevel, and distinguishing between the attitudes and behaviors of individuals with highIslamic beliefs and those with low Islamic beliefs.

Second, since religion is one of the components of culture, the present studyconfirms the opinion of Chui and Kwok (2008, 2009) stipulating that culture determines

HIB LIBHypotheses St. β St. β t p Conclusion

H3a: ATTCO→PICO 0.974 0.913 17.813 *** Accepted H3b: ATTCO→PIIS −0.062 −0.062 −2.028 0.043 Accepted H4a: ATTIS→PIIS 0.961 0.961 20.444 *** Accepted H4b: ATTIS→PICO −0.064 −0.057 −2.015 0.044 Accepted

Table III.Tests of H3 and H4

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IJBM 33,4



in large part the demand for life insurance. More specifically, the results concur withNoland’s (2007) and Khraim’s (2010) opinions stating that a person’s religious beliefstend to affect his behavior, and orient him toward what is permitted and what is

forbidden. Also, the present study comes into support of Mokhlis’s (2006) view statingthat the effects of religious beliefs on consumers’ behavior may partially be explained

by their respect of the obligations of their religions.Last but not least, the results of the present study further elucidate previous

research findings on the impact of religiosity on consumer behavior and purchaseintentions (e.g. Assadi, 2003; Mokhlis, 2006; Sabri et al., 2010; Shaari and Afirin, 2010).More specifically, we found that depending on the strength of their Islamic beliefs,individuals’ attitudes toward and purchase intentions of (conventional or Islamic) lifeinsurance vary greatly. Muslims with low Islamic beliefs have strong purchaseintentions of conventional life insurance, while those with high Islamic beliefs tendto consider Islamic life insurance. Additionally, the degree of Islamic beliefs is found tomoderate the relationship between individuals’ attitudes toward life insurance andtheir purchase intentions of this service. Thus, this is in line with Salman andMuhammad Shaukat’s (2013) view stating that Muslim consumers’ behavior varieswith their level of involvement (with the service or the product) and their degree of religiosity. On the other hand, the present study’s results partially contradict AbdurRazzaque and Chaudhry’s (2013) findings that Muslims’ religious commitment does notinfluence their product (service) decision.

Concerning managerial implications, the present study suggests that in a Muslimcountry, it is important to segment the life insurance market by using individuals ’

Islamic beliefs as a criterion to allow companies to target actual and potential clientswith the appropriate messages. This is in line with Rusnah Muhamad and Melewar ’s(2012) findings which suggest that institutions offering Islamic financial services could

make a better decision if market segmentation is applied. Some possible marketsegmentation bases they recommend are consumers’ religious values and benefitsought from product and product attributes (e.g. sharia compliant products). They addthat market segmentation of Islamic financial services contributes in fine-tuning thecommunication, and product and brand positioning strategies. The present studysuggests that in less conservative Muslim countries, both types of life insurance(conventional and Islamic) can be offered, but each should target a specific segment:individuals with low Islamic beliefs would probably buy conventional life insurance,while those with high Islamic beliefs would be more interested in Islamic insurance.The size of each segment would be partly indicated by the role of Islam in people’s life.The more religion plays a key role in a society, the larger the segment seeking Islamic

life insurance.Insurers should therefore weigh different strategic options by targeting one of the

two segments or both of them. To appeal to both segments, the main question is toknow how to concurrently market both types of life insurance (conventional andIslamic), presumed to be contradictory. Presently, conventional life insurancecompanies generally target one segment, the less religious. To appeal to the morereligious segment, marketers must answer certain questions: Should life insurancecompanies offer both types of insurance, which are contradictory from a religiousstandpoint? Should they offer both services under the same banner at their existingbranches or offer each insurance service under different banners at different branches?How will consumers perceive the integrity of companies that offer both types of

insurance, one perceived as “

halal ”

(permissible) the other perceived as “

haram”

435




(forbidden)? Should the difference between the two types of insurance necessarily andexclusively be based on the religious aspect of the offer or could the positioning of bothtypes of insurance be based on other criteria (e.g. premiums, etc.)?

Another point that emerges from this study is that companies which offer or intendto offer Islamic life insurance in less conservative countries can emphasize the halal character of their services (i.e. educating consumers about the conformity of theirservices with the Sharia ). Also, insurance companies can create informative advertisingcampaigns about their services in order to increase the notoriety of these services(insurance on life and insurance on death). Finally, insurance companies need to traintheir employees and sales staff on how to detect the nuances in (or the degree of)religiosity of their clients in order to offer adequate services.

Conclusion, limits, and further research directionsFrom a theoretical standpoint, this study allows us to outline how religious beliefs (inthis case Islamic beliefs) moderate consumer attitudes and purchase intentionstoward conventional and Islamic life insurance. The results can be extended to otherfinancial services, and to products and services involving religion (e.g. halal foodproducts, loans).

The reliability of the Islamic beliefs scale used in this study is considered excellent.It would be interesting to use this same scale in other Muslim countries. Since theinsurance market has considerable potential in Muslim countries, researchers couldfurther explore the attitudes and purchase intentions toward life insurance in otherMuslim countries, and include additional factors, such as values (e.g. Schwartz, 1999)and optimism (e.g. Scheier et al., 1994). Indeed, since values are related to culture(e.g. Schwartz, 1999), they may contribute to explain consumers’ attitudes and purchaseintentions of life insurance. Also, because in many Muslims and non-Muslim societies,

death is considered a taboo and people avoid talking about it (e.g. McDonald andRoberts, 1990; da Costa et al., 2002), and because a correlation might exist betweenoptimism and death (e.g. Scheier and Carver, 1985; Kurdek and Siesky, 1990), futurestudies are encouraged to explore the impact of optimism on consumers’ attitudes andpurchase intentions of life insurance.

This study has several limits, such as the use of a convenience sample. Cautionshould therefore be exercised in generalizing the results to the entire populationof Tunisia or to other Muslim countries. Although finding a representative samplein many Muslim countries is a challenge in itself, we suggest using a larger sample(if financial, time, and human resources are available) that better reflectsthe characteristics of the examined population. Using the internet to administer the

questionnaire is also a limitation since it is impossible to have true control overthe identity of respondents. In spite of its advantages (e.g. speed, anonymity), onlineadministration (when compared to face-to-face administration) can create bias if respondents do not fully understand the questions. Other methods of data collection suchas mail surveys or a combination of qualitative (in-depth interviews, focus groups, etc.)and quantitative methods can be considered. Finally, because “religious beliefs” is one of the dimensions of religiosity, it will be interesting to investigate the role of otherdimensions, such as religious practices, on the demand for life insurance in Muslimcountries. There are many Muslims who have strong beliefs in Islamic principles,but they occasionally, if not at all, practice their faith. Finding which dimension(s)of religiosity better explain consumers’ attitude and behaviors would add to our

understanding of this topic.

436

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Further reading

Fishbein, M. (1967), “Attitude and the prediction of behavior”, in Fishbein, M. (Ed.), Readings in Attitude Theory and Measurement , Wiley, New York, NY, pp. 477-492.

Hofstede, G. (1980), Cultures’ Consequences: International Differences in Work-Related Values,Sage, Newbury Park, CA.

Hofstede, G. (1997), Cultures and Organizations: Software of the Mind , McGraw-Hill,New York, NY.

Singelis, T.M., Triandis, H.B., Bhawuk, D.P.S. and Gelfand, M.J. (1995), “Horizontal and verticaldimensions of individualism and collectivism: a theoretical and measurement refinement”,Cross-Cultural Research, Vol. 29 No. 3, pp. 240-275.

Triandis, H.C. (1995), Individualism and Collectivism, Westview Press, Boulder, CO.

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About the authorsDr Nizar Souiden is a Professor of Marketing at the Laval University, Canada. He received hisPhD from the Kyoto University, Japan. He has lived and worked in various parts of the world,including Canada, United Arab Emirates, Japan, France, and Tunisia, which has equipped himwith a rich experience of international and cross-cultural marketing. His research interestsinclude global marketing strategies of multinational firms, international market segmentation,cross-cultural consumer behavior, brand image, corporate branding, country branding, andservices marketing. He has established connections with researchers in Japan, South Korea,China, Thailand, Australia, France, Canada, Middle East countries, and Tunisia. His articleshave appeared in well-known international journals such as Psychology & Marketing ,

International Marketing Review, European Journal of Marketing , Journal of Retailing and Consumer Services, Journal of Consumer Marketing , Journal of Product and Brand

Management , Journal of Brand Management , Journal of International Consumer Marketing , Journal of Financial Services Marketing , and Journal of International Marketing and Marketing Research. Dr Nizar Souiden is the corresponding author and can be contacted at: [email protected]

Yosr Jaber is a Postgraduate student at the IHEC, Carthage University, Tunis.

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