Better Safe than Sorry: The Intention of Indonesian on Purchasing Sharia Financing Insurance-Layoff Risk Product as a Response to the COVID-19 Pandemic

Abstract

This research aims to investigate the factors that significantly affect the intention to purchase Sharia financing-layoff risk product among the Indonesian society as a response to the COVID-19 pandemic. A conceptual framework was developed by the review of existing literature with the help of the extended Theory of Reasoned Action (TRA) model. Data were collected from 272 Indonesian Muslim respondents who have long-term liabilities and then analyzed by the SEM-PLS approach. The result revealed that attitude, subjective norm, saving motives, and financial literacy have a significant positive impact on Sharia insurance purchase. However, religiosity and risk aversion motives were found to have no significant impact. Furthermore, attitude and subjective norms play as a mediator between knowledge of COVID-19 and Sharia insurance purchase intention. This research also found that saving motives plays as a mediator between risk aversion motives and Sharia insurance purchase intention. This research provides insights to the Sharia insurance companies, especially to understand the factors that lead the consumers purchase intention during the crisis. Finally, the study conveyed several limitations and offered directions for further research.

Keywords: COVID-19, Financing, Layoff Risk, Protection Tools, Purchase Intention, Sharia Insurance, Structural Equation Modelling, Theory Reasoned Action