Perceptions and factors influencing the willingness to pay for micro cyber-risk insurance: A logistic regression approach

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Abstract

This study aims at (re)focusing research attention on the improvement of welfare, achieving sustainable micro cyber-risk management, and the reduction of persistent insurance exclusion among retail e-payment agents (REAs) or branchless banking agents operating globally and in Lagos slums. With the active collaboration of REAs and micro-insurers, we designed and introduced the first hypothetical POS-related micro cyber-risk insurance (PRMCRI) to sustainably manage identified cyber-risks of REAs. Using a contingent valuation survey and logistic regression, this study also investigates REAs’ perceptions and factors having statistically significant effects on their willingness to pay (WTP) for PRMCRI. Our findings revealed that WTP for PRMCRI is only slightly sensitive to premium price. REAs’ perceptions of inflation, interest rates, deployment/administration of PRMCRI on mobile-technology platforms, and the effectiveness of regulatory consumer protection all positively affected their WTP for PRMCRI. Age, marital status, education, religion, and gender had no statistically significant effect on the WTP for PRMCRI. The practical value and actionable implication of the PRMCRI were further evinced, as 65.93 percent of the 455 surveyed REAs affirmed their WTP for the product. Ultimately, we hope that the introduced PRMCRI and its associated empirical/policy dynamics will champion a novel and seminal path for global micro cyber-insurance markets, future studies, and policies.

Keywords: Micro Cyber-Risk Insurance (MCRI), Demand Determinants, Low-Income Groups, Branchless Banking Agents, Urban Slums, POS Related Cyber-Risks (PRCRs), Neobanks, Participatory Governance

Authors’ individual contribution: Conceptualization — E.A.O.; Methodology — E.A.O.; Resources — E.A.O. and J.D.L.; Writing — Original Draft — E.A.O.; Writing — Review & Editing — E.A.O. and J.D.L.; Supervision — J.D.L.; Funding Acquisition — J.D.L.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G280, G210, G220, O17, L860

Received: 13.09.2023
Accepted: 06.12.2023
Published online: 08.12.2023

How to cite this paper: Osifodunrin, E. A., & Lopes, J. D. (2023). Perceptions and factors influencing the willingness to pay for micro cyber-risk insurance: A logistic regression approach. Risk Governance and Control: Financial Markets & Institutions, 13(4), 40–57. https://doi.org/10.22495/rgcv13i4p4