Factors Impacting the Acceptance Level of Insurance Policies by Small and Medium Enterprises in Sri Lanka

Aim: The focus of this study is to provide insight into the acceptance level of insurance policies by Small and Medium Enterprises (SMEs) in Sri Lanka.

Study Design: Quantitative research strategy was incorporated into the study.

Place and Duration of Study: Owners, managers, and employees of SMEs were identified as respondents for this study, between June 2020 and July 2021.

Methodology: This study was conducted based on Primary Data gathered by distributing questionnaires. The sample profile is tested through frequency analysis. To evaluate the goodness of data, the reliability and validity of the measurement items are utilized. Here factor analysis, average variance extracted, Cronbach’s alpha values, and discriminant validity are tested. The multiple regression analysis is utilized to determine whether Lack of awareness, High premium cost and paperwork, Experience and beliefs, Low-Income level, Lack of knowledge, and lack of relationship between SMEs and Insurance companies affect the acceptance level of insurance by SMEs in Sri Lanka.

Results: The overall results of the hypothesis of the study are presented based on multiple regression analysis. Sig. (p) values of Lack of Awareness (p =.010), Experience and Beliefs (p =.002), Low Income Level (p =.000), and Lack of Knowledge (p =.000). The findings revealed that Lack of Awareness, Experience, and beliefs, Low-income level and Lack of knowledge of SMEs have a significant impact on the acceptance level of insurance policies by SMEs.

Conclusion: Lack of Awareness, Experience and beliefs, Low-Income level, and Lack of knowledge has caused to inhibit acceptance level of insurance policies by SMEs. In designing insurance plans for SMEs, these factors should be taken into account by Insurance providers.