Domestic Travelers’ Perceptions and Intention to Purchase Travel Insurance ^†

Abstract

Unfortunate events happening recently in increasing numbers, not least the outbreak of COVID-19, have caused drastic changes in tourist behaviours. Several studies have found that tourists’ consumption patterns for travel products and services are changing due to threats of health hazards and travel risks at tourism destinations. Considering the increasing numbers of potential risks that might occur during traveling, it is crucial for travelers to have travel insurance that functions as a protection mechanism. This study investigates and determine travelers’ awareness and perceptions of and their intentions towards travel insurance purchase in Malaysia. A non-probability sampling method and purposive sampling technique were applied in this study, with a total of 384 Malaysian domestic travelers over 18 years old used as respondents. Data were analysed using descriptive analysis and reliability testing for the pilot study. The study revealed that most of the respondents had positive perceptions regarding the variables and intended to purchase travel insurance for their future holidays.

1. Introduction

Insurance is one of the most complex financial products, and many types of insurance product are offered in the market [1]. The most common type of insurance related to the tourism industry is known as travel insurance. Travel insurance is one of the essential elements that must be involved in travel planning, especially if people intend to visit another country. As described by Lee et al. [2], people travelling abroad have high exposure risks, including injuries and infectious diseases. The main purpose of travel insurance is to cover unforeseen losses that travelers may be exposed to during their holidays. Through travel insurance, travelers can prepare for uncertain risks and unwanted events [3]. Several types of risks are potentially incurred during holidays, including equipment risk, financial risk, physical risk, psychological risk, satisfaction risk, social risk, and time risk [4].

Due to the ongoing COVID-19 outbreak, researchers have observed drastic changes in tourist behaviours. Tourist consumption patterns are changing, in terms of their travel and tourism product preferences, individual lifestyles, and daily behaviours. In the study by Gupta et al. [5], the global pandemic was found to effect travelers’ levels of concern about risks associated with domestic and international traveling activities. Since COVID-19 was declared by the WHO as an infectious disease, peoples’ fears and worries have increased because the virus can easily transmit through infected populations. Therefore, tourist attitudes have shown increasing tendencies towards avoiding risk in everyday life. After the outbreak, tourist preferences for travel products have changed, with more emphasis on health, personal safety, and hygiene elements in travel packages, products, or services that are offered to them [6]. As mentioned by Matiza [7], COVID-19 has influenced tourists’ perceptions of travel risks; health and personal safety are the factors most likely to influence their decision-making processes in these uncertain times. It is believed that travel insurance is valued for its ability to reduce risk exposure during travel [8];considering the increased risk of health hazards during this pandemic it is crucial for travelers to have travel insurance, because most travel insurance provides coverage for medical expenses that occur during traveling [2]. Although travelers may have existing medical insurance, this will only cover medical expenses, while travel insurance covers a wider range of possible risks. As mentioned by Lee et al. [2], travel insurance policies provide coverage that include emergency, outpatient, and inpatient medical costs that occur during holidays, which are not usually covered by other medical insurance policies. Therefore, this study was conducted by the researchers to assess Malaysian domestic travelers’ perceptions of travel insurance and their intention to purchase travel insurance, especially during this global pandemic.

The crisis we face because of this pandemic has clearly brought significant impact. Not only impacting the economic system, coronavirus has also impacted on tourist behaviours and caused drastic changes in consumption patterns of tourism and service products. Therefore, it is important to study and understand tourists’ current behaviours, in order to further improve the quality of products and services. In this study, researchers focused on travel insurance products because tourists nowadays are more sensitive towards health risk and personal safety, as mentioned by Matiza [7]. According to Wen et al. [9], tourist behaviours and preferences in tourism marketing during the pandemic require more analysis in order to shape theories about consumer behaviours, marketing, and management, specifically in the tourism industry. Nevertheless, limited research has been published related to insurance, especially in the tourism and hospitality industries [2,4,8,10]. Moreover, most of the previous studies concentrated on other countries, whereas studies about travel insurance in Malaysia have been very scarce. Therefore, this research gathers new information related travel insurance, focusing on Malaysian travelers. This study aimed to investigate travelers’ perceptions of and intention to purchase travel insurance in Malaysia. The specific objectives were to determine travelers’ awareness of travel insurance, and their perceptions about purchasing travel insurance, and to identify travelers’ intention to purchase travel insurance.

2. Travel Insurance

The most common insurance that related to the tourism industry, especially among travelers, is known as travel insurance. Travel insurance is an insurance policy that provides a safety net for travelers during trips, whether domestic or international [3]. For example, travel insurance policy in Malaysia by Persatuan Am Insurans Malaysia (PIAM) offers cover for accidents and losses that arise during a journey, whether by land, sea, or air. The coverage includes loss of luggage, medical and hospitalization expenses, death, permanent disablement, loss of money, loss of passport, repatriation, curtailment, and hijacking. In 2017, according to Olano [11] most Malaysian travelers were unwilling to purchase travel insurance despite their awareness about travel insurance; around 80% knew about travel insurance, but not more than 35% were willing to buy it. However, due to the Coronavirus outbreak, most insurers foresee rising demand for insurance products because Malaysian people’s awareness of health risks has increased [12]. According to Li [6], COVID-19 pandemic, many countries have reportedly made travel insurance mandatory for travelers to destinations such as Singapore, Thailand, Vietnam, UAE, Portugal, and Turkey. Chin [13] reported that there was a growth and high demand for domestic tourism in Malaysia after the outbreak. Thus, this study focuses on domestic travelers since this group has become crucial in the Malaysian tourism market.

3. Purchasing Behaviours

According to Ramya and Ali [14], consumer purchasing behaviour refers to consumer activity towards the products, goods, or services; that activity includes selection, purchase, and consumption. Meanwhile, studies by Mashao and Sukdeo [15] defined consumer behaviours in purchasing products as practices that are used by individuals and groups, including organizations, to select, use, and dispose of products, services, or experiences, to fulfil their needs. Meanwhile studies by Auf et al. [16] stated that the purchase decisions of consumers are the results of many options, and purchasing patterns differ based on the goods or services involved. It was suggested by Qazzafi [17] that consumer behaviour is a broad area of activity that involves many different stages that have significant impact on purchase decisions for specific products, brands, or services. Based on these insights, this study examines the purchasing behaviours of domestic travelers in Malaysia, specifically towards travel insurance, based on their perceptions and intentions.

There are various factors, determinants, specificities, and characteristics that affect consumer purchase behaviours. The list includes consumer perceptions, which influence their final decisions towards products or services. Perception is a personal trait of an individual, insofar as consumers tend to form and interpret information related to the product or services based on their understanding [15]. Consumers acquire relevant information from their surroundings and form a perception about the products that they consider for purchase [17]. A recent study by Lim et al. [18] focused on peoples’ perceptions towards life insurance purchase, and found that favourable perceptions of life insurance corresponded with a high tendency to purchase. Consequently, in the context of this current study, favourable perceptions of travel insurance are expected to be associated with a high intention to purchase travel insurance.

Lim et al. [18] used five indicators of perceptions to examine the association between peoples’ perception and their intention to purchase life insurance. The five indicators assessed were objective knowledge, risk propensity, family influence, peer influence, and internet influence. These five indicators were confirmed to have significant linkage with peoples’ behavioral intention to purchase life insurance in Malaysia. The research analysis showed more inclination towards life insurance purchase if people perceived the product positively. The indicators that were shown to have significant effect on peoples’ perceptions were family, peer group, and internet influences; the study explained that if positive information about life insurance is available on the internet, potential consumers can self-educate themselves, which subsequently influences their attitudes towards these products and leads to better perceptions. Thus, this can be used as empirical evidence to support the linkages between perception and decision-making processes including intention to purchase certain products.

Therefore, the theoretical framework from Lim et al. [18] has been adapted in this study, because it provides a lens for exploring consumer perceptions’ influences on individual intention to purchase. The indicators used for the current study were knowledge influences, perceived risk influences, social influences, and internet influences. There has been no specific research on domestic travelers’ travel insurance purchases in Malaysia; the published information related to this topic is very limited. This study attempts to fill the literature gap related to this topic and contribute to an understanding of the changing patterns of travelers’ behaviours. Figure 1 shows the research framework model for this study.

4. Materials and Methods

The study population for this research was Malaysian domestic travelers aged 18 years old and above. Based on the number of Malaysian domestic travelers, which is 131,700,000 [19], the number of samples estimated based on Krejcie and Morgan (1970) was 384 respondents. Since the probabilities of respondents being chosen were not related, the researcher used a non-probability sampling approach with purposive sampling for the data collection. The purposive sampling technique was used because the group of respondents had already been specified in advance. The questionnaire was designed using Google Forms and the hyperlink shared with the respondents through online platforms, i.e., Facebook, WhatsApp, and Telegram. The pilot test was conducted in December 2021 with 50 samples, in order to test the reliability of each item that was used in the questionnaire. The Cronbach Alpha values for independent variables were above 0.8 and the dependent variables were 0.6, which indicates that the items used were reliable. For data analysis the Statistical Package for Social Sciences (SPSS) software version 26.0 was used. The analysis carried out in this software included the reliability test which used Cronbach coefficient alpha, descriptive statistical methods, and inferential statistics methods with Pearson coefficient correlation to analyse the relationships between the variables in this study.

5. Results

5.1. Respondents Demograhic Profile

By gender, there were 72.1% female and 27.9% male respondents. The respondents in this study were from different range of ages, most were 22–30 years old (60.6%). The respondents’ marital status was predominantly (82.8%) single, and the remainder were married (17.2%). Most respondents had a college or university level of education.

5.2. Perception and Intention to Purchase Travel Insurance

The descriptive analysis results for independent and dependent variables for each item are given in

Table 1. Variables descriptive analysis (N = 355). The items were measured using five-point Likert scale:1—strongly disagree, 5—strongly agree.

Variables						Means
	1	2	3	4	5
Knowledge Influences (KI)
I acknowledge the benefits and types of travel insurance coverage.	5.9	12.4	21.4	42.0	18.3	2.54
I believe travel insurance will provide me with financial support during the travel period.	2.3	6.8	25.6	45.9	19.4	3.74
I think travel insurance is essential in travel planning.	0.8	4.8	13.2	45.1	36.1	4.11
I plan to purchase travel insurance with basic coverage only.	3.4	9.0	29.0	42.5	16.1	3.59
I plan to purchase travel insurance with comprehensive coverage.	2.0	6.2	21.7	38.9	31.3	3.91
Cronbach Alpha Value 0.803
Perceived Risk Influences (PRI)
Purchase travel insurance makes me feel safe from unforeseen risks during travel.	1.4	5.9	12.7	47.0	33.0	4.04
The outbreak of diseases influences me to purchase travel insurance.	2.3	6.2	20.3	43.9	27.3	3.88
I think medical expenses coverage is an essential feature of travel insurance.	0.8	3.7	13.8	44.5	37.2	4.14
I think personal accident coverage is an essential feature of travel insurance.	1.7	3.9	9.9	46.5	38.0	4.15
Coverage for travel inconveniences such as travel delays, loss, or damage of personal belongings are essential features of travel insurance.	1.1	5.6	13.5	44.8	34.9	4.07
I think trip cancellation coverage is an essential feature of travel insurance.	0.8	4.5	20.0	40.0	34.6	4.03
Cronbach Alpha 0.918
Social Influences (SI)
My family influences me to purchase travel insurance.	7.3	20.6	29.6	28.7	13.8	3.21
My friends influence me to purchase travel insurance.	7.6	18.3	25.9	33.2	14.9	3.30
An insurance agent influences me to purchase travel insurance.	9.3	15.5	27.9	32.7	14.6	3.28
A travel agent influences me to purchase travel insurance.	7.3	11.8	30.1	34.9	15.8	3.40
Social events influence me to purchase travel insurance.	7.0	12.1	28.7	37.2	14.9	3.41
Cronbach Alpha Value 0.819
Internet Influences (II)
I seek information online before purchasing travel insurance.	2.8	7.3	16.1	48.7	25.1	3.86
The insurance company website influences me to purchase travel insurance.	3.7	10.4	29.3	38.0	18.6	3.57
Social media influence me to purchase travel insurance.	3.4	10.1	25.4	43.4	17.1	3.62
Internet advertisements influence me to purchase travel insurance.	4.8	11.3	29.3	37.7	16.9	3.51
I prefer to purchase travel insurance online.	6.5	11.5	27.6	39.4	14.9	3.45
Cronbach Alpha Value 0.888
Intention to Purchase Travel Insurance (INT)
I will purchase travel insurance for my next domestic trip only.	7.6	15.5	33.2	32.1	11.5	3.25
I will purchase travel insurance for my next overseas trip only.	6.8	12.1	24.5	36.3	20.3	3.51
I will purchase travel insurance for my next domestic and overseas trips.	2.8	5.4	18.6	42.8	30.4	3.93
I will not purchase travel insurance for my next trip.	19.7	19.7	26.5	23.7	10.4	2.85
Cronbach Alpha 0.626

, with the percentages of Likert scale responses and mean values.

6. Discussion

The study highlighted that more than half of respondents (52.1%) did not have any insurance coverage or policy. However, most of them were aware of the availability of travel insurance (73.25%). Domestic travelers ha a better understanding about insurance policy when they were consumers of insurance products. This result is aligned with the survey reported by Olano [11], indicating that most Malaysians were aware of travel insurance products, yet only a few of them were willing to purchase travel insurance because of their perception that they were not exposed to any potential risks during their trips. However, as reported by Azman [20], since the outbreak of COVID-19 there has been increasing awareness among Malaysians of the need to have life insurance. It was also stated by Malaysian RE [12] in their survey report that insurers predict is increasing demand for insurance products in Malaysia because of health risk awareness. Meanwhile, 43% of the respondents were aware about travel insurance through travel agents and 32% from social media; as mentioned by Akar and Dalgic [21] online networking is the medium where people can obtain information quickly and efficiently. These results supported the statements by previous studies [1] that insurance providers and marketers should have digitalization strategies for insurance products, to make consumers’ purchasing processes easier.

The study revealed that almost half of the respondents acknowledged and understood the benefits of travel insurance during their journeys. Most respondents planned to purchase travel insurance including basic and comprehensive coverage. This result supports the study results of Tassiello and Tillotson [22], that subjective as well as objective knowledge influences travelers’ decision making. This was additionally demonstrated by Kai et al. [23] in their studies on Chinese seniors, among whom having knowledge and information increased the intention to purchase travel insurance. They believed that travel insurance can make them feel safe, because it is a practical approach to reduce risk and loss occurred during travel [24], allowing them to enjoy their holiday without worrying too much. The respondents also agreed that the pandemic outbreak had the most significant impact on how they perceived risk in travel and tourism activity, and its influence on purchasing travel insurance, as claimed by previous researchers Tan and Caponecchia [25] and Matiza [7].

Many respondents agreed that social events influenced them to purchase travel insurance. However, these findings are contradictory to some previous research; Alt et al. [1] and Sarman et al. [4], indicated that people are more likely to purchase travel insurance based on advice from their friends and family.. The findings for this study showed that the mean scores for friends and family, respectively, were the lowest, indicating that the respondents’ perceptions were not greatly influenced by their friends or family. Travelers tend to seek information related to travel insurance products before purchase, and the internet makes it easy for travelers to access that information at any time, as mentioned by Kian et al. [26]. Respondents also agreed that social media influenced their perceptions, leading them to buy products. Social media can change peoples’ thoughts and opinions about products or services [21]. The analysis of traveler’s intention to purchase travel insurance revealed that most of the respondents had an intention and future plan to purchase travel insurance for their holidays, whether domestic or overseas.

7. Conclusions

This study is one of very few relating to travel insurance that have been conducted in Malaysia. It examined domestic travelers’ perceptions based on four factors that affect travelers’ purchase decisions towards travel insurance. The four main factors found to affect travelers’ perceptions were knowledge influences, perceived risk influences, social influences, and internet influences. Based on the findings, the dependent variables were found to affect the respondents’ perceptions and their intentions towards travel insurance purchase in Malaysia; these findings align with previous studies by Lim et al. [18]. The information gathered from the present study contributes to current knowledge on tourists’ consumption behaviours and the current demand for travel insurance in Malaysia among domestic travelers. Findings from this study can be used as a general outline and the information obtained can help related parties to develop effective strategies for the management and marketing of tourism products, especially after a public health crisis. From the results, perceived risk was found to effect travelers’ perceptions significantly. Generally, travel insurance is very important in individuals’ travel arrangements to ensure coverage for unforeseen risks and loss during holidays, including for illness such as COVID-19. A number of potential factors that influence tourists’ insurance purchase decisions were not included in the present study. These should be researched further, since trends have changed and travel insurance has become a necessity for travel activities.