Impact of Economic Uncertainty on Policyholders’ Attitude towards Premium Payment Compliance for Third Party Motor Insurance Policy in Jos North Local Government Area of Plateau State

Abstract

One of the success metrics of a successful insurance business is the policyholders’ attitude towards premium payment compliance. Economic uncertainty has been a persistent issue in Nigerian insurance sector influencing policyholders’ attitude in fulfilling premium payment agreement for third party motor insurance policy. During periods of economic uncertainties, policyholders and insurance businesses face financial constraints, leading to policyholders reassessing their third party motor insurance policy benefits and compliance of premiums payment. As disposable incomes shrink, some policyholders may prioritize essential expenses over insurance premiums, resulting in a decline in policy purchases, loss of trust, dissatisfaction, policy cancellations or adjustments in coverage and low policy renewal rates of third party motor insurance policy among policyholders. Amid these challenging experiences policyholders go through during the period of economic uncertainty, this study examines the impact of the economic uncertainty on policyholders’ attitude towards premium payment compliance for third party motor insurance policy in Jos North Local Government Area of Plateau State. A descriptive survey design was employed, using both primary and secondary data sources. Data from 110 respondents were analyzed using descriptive statistics and inferential statistics. Findings from the study revealed that inflation and unstable exchange rate and changes in government economic policies as dimensions of economic uncertainty were found to significantly affect policyholders’ attitude towards premium payment compliance for third party motor insurance policy in Jos North Local Government Area of Plateau State. The study recommends that Government at all levels should implement economic policies that can reduce inflation rate and stabilizes the exchange rate to help third party motor policyholders keep pace with the rising challenges pose by economic uncertainty.