Insurance adoption amongst micro, small

and medium-sized enterprises in the context

of a developing country:
Are improvements in insurance communication a
solution to address the vulnerability of the entrepreneur
sector in Peru?

Hilario Chong Shing Cong (486794)

Rotterdam School of Management

MSc Marketing Management Thesis

Coach: Dr. Jordana M. Liberali

Erasmus School of Economics
Co-reader: Dr. Xi Chen
Rotterdam School of Management

16th June 2018

Author’s declaration

The author declares that the text and work presented in this Master thesis is original and that no
sources other than those mentioned in the text and its references have been used in writing the
Master thesis. The copyright of the Master thesis rests with the author. The author is responsible
for its contents. RSM Erasmus University is only responsible for the educational coaching and
beyond that cannot be held responsible for the content.

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Executive summary

Micro, small and medium-sized enterprises as influencers for economic growth, are
tremendously relevant for both developed and developing countries. However, entrepreneurs
face constraints that make it harder to succeed no matter where they are. 90% of enterprises in
Peru do not survive the first year of operations due to an excess of empiricism, a lack of
understanding of the market and the different consumer profiles and a short-term mentality that
does not consider long-term scenarios and potential risks that could affect the company in the
future.

In that context, the primary goal of this research was to provide empirical evidence to determine
whether there is a more effective way to communicate business insurance services to micro,
small and medium-sized enterprises (considering different marketing treatments such as source
of endorsement, spokes-character type and message format of risk exposure) that could increase
their likelihood of insurance adoption, thus, improving their decisions regarding risk
management. Additionally, another primary goal of this research was to determine whether the
effectiveness of message formats of risk communication changes depending on the business
size, the education level of the businesses´ owners, their perceived risk towards specific hazards
affecting their companies (robberies) or their preconceived attitudes towards insurance.

To achieve this, the author performed a full factorial 2 x 2 x 3 between-subjects experiment

using a sample of 226 owners and managers of micro, small and medium-sized enterprises in
Peru. To test the cause and effect relationship between three marketing treatments and insurance
purchase intention, a three-way ANOVA analysis was conducted. The experiment randomly
assigned respondents into twelve different experimental conditions with diverse combinations
of source of endorsement (MSME´s owner vs. insurance executive), spokes-character type
(animated character vs. real character) and message format (verbal expressions only vs. verbal
plus numerical expressions vs. verbal expressions plus graphical displays). In addition, to
establish how do risk perception towards robberies, attitudes towards insurance, characteristics
of the business (business size) and characteristics of the business´ owners (education level)
influence the effectiveness of message formats of risk communication in terms of insurance
purchase intention, a moderation test was performed using PROCESS macro for moderation
analysis in SPSS.

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The results suggested that messages using graphical displays or numerical expressions in
addition to verbal expressions are especially effective at fostering insurance adoption amongst
MSMEs as compared to messages using verbal expressions only. Although the outcome of the
analysis did not show significant main effects of source of endorsement or spokes-character
type on insurance purchase intention, fictional Ads that used animated MSMEs owners or
human insurance executives as main characters were more effective at fostering insurance
adoption amongst MSMEs. Both results remained even if the effects of characteristics of the
business and characteristics of the business owners were controlled. Besides, results provided
substantial evidence for a moderating effect of preconceived attitudes towards insurance and
education level on the effectiveness of message formats of risk exposure. Risk communication
including numerical expressions or graphical displays in addition to verbal expressions was
more effective in terms of purchase intention amongst business´ owners with a high education
level (technical or university studies) and amongst business´ owners with negative or neutral
attitudes towards insurance than risk communication using only verbal expressions.

Nonetheless, although both the main effect of message format and the interaction effect between
source of endorsement and spokes-character type on insurance purchase intention were
significant, it is important to acknowledge that both had a trivial effect size, which could imply
that results may have low practical significance. Thus, further research addressing some issues
of this study regarding representativeness and sample limitations is needed to determine
whether the low effect size of results remains.

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Table of contents
1. Introduction .....................................................................................................................5
1.1 Introduction ................................................................................................................. 5
1.2 Research Objective ................................................................................................................... 7
1.3 Relevance .................................................................................................................................. 9
1.4 Research Questions ................................................................................................................ 14
1.5 Conceptual framework .......................................................................................................... 16
2. Literature review ...........................................................................................................17
2.1 Marketing Treatments ............................................................................................... 17
2.2 Potential moderators .............................................................................................................. 21
2.3 Dependent variable: Insurance Purchase Intention ............................................................ 26
3. Methodology ..................................................................................................................28
3.1 Research Design ..................................................................................................................... 28
3.2 Data collection ........................................................................................................................ 29
3.3 Stimuli ..................................................................................................................................... 29
3.4 Measurements ......................................................................................................................... 31
3.5 Research method .................................................................................................................... 35
4. Results ............................................................................................................................38
4.1 Survey pretest ......................................................................................................................... 38
4.2 Preparing the dataset ............................................................................................................. 39
4.3 Descriptive statistics .............................................................................................................. 40
4.4 Randomization Check ............................................................................................... 40
4.5 Effects of Marketing treatments (H1.1, H1.2 and H1.3) ................................................ 42
4.6 Moderation Testing (H2.1, H2.2, H2.3, H2.4) ............................................................................ 46
5. Discussion ........................................................................................................... 51
5.1 Marketing treatments ............................................................................................................. 51
5.2 Risk perception towards robberies as moderator ............................................................... 53
5.3 Attitudes towards insurance as moderator .......................................................................... 53
5.4 Business size as moderator ................................................................................................... 53
5.5 Owner´s education level as a moderator ............................................................................. 54
5.6 Limitations .............................................................................................................................. 54
5.7 Further research ...................................................................................................................... 56
6. Conclusions ....................................................................................................................58
References ..........................................................................................................................59
Appendix ............................................................................................................................65

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1. Introduction
1.1 Introduction

“Take the first step in faith. You don't have to see the whole staircase, just take the first step.”
(Martin Luther King Jr.), this seems to be the mantra of most entrepreneurs in the world, a
necessary mindset considering the amount of optimism needed to decide to start your own
business. Numerous empirical evidence has shown the positive effects of entrepreneurship on
economic growth, for instance, Carree and Thurik (1998, 1999) showed that the share of small
manufacturing firms in European countries in 1990 had a positive effect on the output growth
in their industry. Robbins et al. (2000) analyzed data from 48 U.S. states between 1986 and
1995 and reported that states with a high proportion of micro-sized businesses experienced
higher levels of Gross State Product growth.

Micro, small and medium-sized enterprises, also known as MSMEs (a convention that the
author will follow) as generators of innovation, employment and supply for bigger companies
are tremendously relevant for both developed and developing countries, representing more than
95% of enterprises around the world and accounting for about 60% of private sector´s employed
labor force (Ayyagari et al., 2011). However, the context does not always favor the
entrepreneurial endeavors, entrepreneurs face constraints no matter where they are, and
entrepreneurs in developing countries have to deal with a unique set of constraints that make it
even harder to succeed (Benzing et al., 2005; Chu et al., 2007).

This thesis will focus on the entrepreneur sector (MSMEs) in Peru, which according to the
country´s law regulations includes three subgroups of enterprises1. Businesses are categorized
on each subgroup based on their “Total annual sales” as follows:

Table 1: Business categories in Peru

Total Annual Sales (UITs2)
Micro Enterprises 150 UITs
Small Enterprises From 150 UITs to 1,700 UITs
Medium Enterprises From 1,701 UITs to 2,300 UITs

1 Categorization according to Article N° 3 of Legislative Decree N°1086 and Law Nº 30056.

2 UIT: Peruvian Tax unit equivalent to 1,223 US$ considering an approximate exchange rate in the year of study (2018).

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Peru is a developing country with plenty of experience in economic crises, natural disasters,
delinquency, terrorism, corruption, and unemployment, so you have to be very brave if you
want to be an entrepreneur there. Despite this context, according to the General
Entrepreneurship Monitor (2016), Peru is one of the most entrepreneurial countries in the world.
Micro, small and medium-sized enterprises represent 99.5% of businesses in the country
(Peruvian society of SMEs, 2017) and are responsible for almost 50% of Peru´s GDP
(Development Finance Corporation - COFIDE, 2014). However, this entrepreneurial culture is
unfortunately overshadowed by another fact, 90% of enterprises in Peru do not survive the first
year of operations (Peruvian society of SMEs, 2017).

There are several reasons that explain this considerable mortality rate: First, a lack of strategic
vision due mostly to a profound culture of making decisions based entirely on intuition. There
is also an excess of empiricism within the Peruvian business atmosphere in which
understanding the market and the different consumer profiles and needs are overlooked. In
addition, there is a short-term mentality that creates businesses “designed to survive," not
considering long-term scenarios and potential risks that could affect the company in the future.

Optimism is good, but a blind optimism that completely ignores risks and their possible impacts
can lead to severe financial damages if the risk materializes. According to a study of Pacifico
Insurance (2016), if a business is not covered by a proper insurance, the average cost of
reparations that could include damages to the building, losses of merchandise or destruction of
machinery; as well as those damages caused to third parties and nearby homes can reach up to
US $ 5,000, an amount that can destabilize or even mean the end for most enterprises in the
country. “These (MSMEs) are companies that do not have any financial support, (…) they do
not have the capacity to withstand hazards of this nature. It is part of the nature of companies
to go bankrupt, but they should go bankrupt for the right reasons and not for the wrong ones”
- Eduardo Moron, Peruvian Association of Insurance Companies (Appendix 23 – Interview 3).

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1.2 Research Objective
1.2.1 Problem definition

It would be logical to expect a high rate of insurance usage amongst MSMEs in a country prone
to earthquakes, exposed to the occurrence of natural disasters and owner of the highest crime
rate in Latin America (Americas´ Barometer, 2015). Just to exemplify the above, the economic
cost of the floods caused by "El Niño Costero" in 2017 exceeded 3 billion dollars
(Macroconsult, 2017), registered fires in the country increased by 22% in the last 5 years
(General Volunteer Fire Department, 2016), 42% of the population declares been victim of
robberies, and 80% perceives that the level of crime in the country increased in the last year
(National Institute of Statistics and Informatics – INEI, 2016). However, despite all these facts,
less than 5% of micro, small and medium-sized enterprises in the country have insurance
(Peruvian association of insurance companies – APESEG, 2016), a worrisome situation that
exhibits the vulnerability of the MSME sector.

According to a report from the Peruvian Superintendence of Banking and Insurance (SBS) part
of the preceding phenomenon responds to the lack of knowledge and understanding of
insurance products and especially their benefits. Results from one of their studies (2012)
showed that only 43% of Peruvians could associate the concept of “Insurance” with other
concepts such as “Protection against losses," “Payment to accident victims” or “Damage
Prevention." In addition, according to an interview with Martin Giha, Head of MSMEs products
at Pacifico Insurance, another essential barrier towards insurance adoption is the
underestimation of risks MSMEs are exposed to. “People are very reactive, not preventive.
People do not care to buy insurance until something happens… they continue to see insurance
as an expense and not as an investment, and that is our great challenge” (see Appendix 21 –
Interview 1). Thus, if both MSME´s attitudes towards the benefits of insurance services and the
accuracy of MSME´s risk assessment are part of the problem, can improvements in insurance
communication and the way risk exposure is communicated to MSMEs become part of the
solution to address the vulnerability of the entrepreneur sector in Peru?

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Current advertising strategies of insurance companies with an active role of promotion in the
MSMEs´ market have not had substantial results as reflected by insurance adoption rates in
Peru. This advertising strategies rely on different communication resources and formats,
varying aspects such as the “Source of endorsement” (the source transmitting the information
to the audience: e.g. a peer MSME´s owner or an insurance executive), the “Spokes-character
type” (e.g. animated characters or real characters) and the “Message format of risk exposure”
(presentation formats of probability information about risks). The Message format most
frequently used by insurance companies includes verbal expressions only (e.g., "Risk event X
is very common”) leaving aside the use of numerical expressions (e.g., frequencies or
percentages) and graphical displays (icon arrays or bars graphs) or limiting their use to the
context of press releases when a major catastrophic event has occurred. To the best of the
author´s knowledge, there is no previous research focused on identifying which of these
different approaches regarding Source of endorsement, Spokes-character type and Message
format of risk exposure is more effective at fostering likelihood of business insurance adoption.

Moreover, there is no empirical evidence neither to test whether the effectiveness of this
different marketing treatments used in the industry is affected by the “Perceived Risk” towards
specific hazards affecting MSMEs or MSME´s “Attitudes towards insurance” nor to formulate
a conceptual model that illustrates their role (e.g. a complex relation as moderators or mediators
or a simple relation as independent predictors) on the relationship between the aforementioned
marketing treatments and insurance purchase intention.

Furthermore, insurance companies and policymakers also remain oblivious of whether the
nature of the relationship between the marketing treatments (Source of endorsement, Spokes-
character type and Message format of risk exposure) and insurance purchase intention changes
depending on characteristics of the businesses like their size (as a representation of their
economic capacity and resilience) or characteristics of the businesses´ owners like their
education level. Finding such differences would imply that some groups require different
approaches in order to be influenced by insurance communication and therefore make better
financial decisions.

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1.3 Relevance
1.3.1 Relevance for private firms

Notwithstanding some isolated efforts, most of the big players in the insurance industry have
taken a passive position regarding the commercialization of insurance services for MSMEs,
giving information of available insurance services when required by a client and relying on
their websites as a source of information. These sites show a complete description of available
insurance services in text form. The description includes aspects such as: what can be insured,
types of accidents and criminal acts businesses are exposed to, aspects not covered by the
insurance, and an explanation of how to use the insurance if a sinister occurs. As a result,
MSMEs looking for information are exposed to relevant but maybe excessive data that might
not be entirely integrated into their decision-making process because of information overload
(O’Reilly, 1980).

On the other hand, as neither the public nor the private sector has developed any relevant
research initiative aimed to understand which communication resources and message formats
are more effective at fostering likelihood of insurance adoption amongst MSMEs, players with
a more active communication role have emphasized very diverse aspects on their advertising
strategies. Some of these aspects are the following:

▪ Emotional resources: insurance companies use humor appeals as a mechanism to attract

people’s attention (Venkatesh, 2015) or lay on the importance of the business for the owner
(e.g. “Your business is like your son, take care of it”, “Your effort is worth a lot, that's why
we help you to keep your business growing with business insurance”). Although insurance
companies are aware of the potential rebound of other relevant facts such as statistics
showing the frequency of accidents and criminal acts affecting businesses, most of the time
they limit the use those facts to the context of press releases whenever an important sinister
or catastrophe occurs.
▪ Different Sources of Information: these sources vary from company´s executives describing
insurance services3, to other business owners endorsing insurance products4. The use of
different information sources could lead to different perceptions regarding information
quality, trustfulness and persuasion within the audience.

3 Pacifico Insurance campaigns (2016, 2017) "Insurance for MSMEs." Retrieved from:
https://www.youtube.com/watch?v=LPtnsPcZIXs
4 Pacifico Insurance campaigns (2016) “Why insurance for MSMEs?”. Retrieved from:

https://www.youtube.com/watch?v=HP80BI9j0IY&app=desktop

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 Some insurance companies rely on the strength of the relation that executives usually
generate with their clients whereas some experts believe that MSME´s owners may be more
receptive if a message comes from a peer. The question remains about which of the
mentioned sources of information is more effective in this market.

Figure 1: Examples of sources of information

▪ Creative appeals: insurance companies also use animated spokes-characters5 (cartoons) in

their communication. The adoption of animated spokes-characters in advertising has
increased over the time (Garretson et al., 2004) as they are more adaptable and more
moldable in comparison to human characters (Bhutada, 2016) and also due to several
technological improvements and production costs reductions that make animation more
accessible (Callcott et al., 1995). Nevertheless, the question remains whether animated
spokes-characters are more effective at fostering the adoption of insurance services than real
spokes-characters for this market.

Figure 2: Examples of spokes-characters

From a commercial point of view, it is relevant for insurance companies to know which of the
communication formats currently used in the industry are more likely to generate a commercial
response amongst MSMEs. In addition, it is also relevant for them to identify whether MSMEs
with different characteristics (regarding the business itself or the business´ owners) require
different communicational approaches to better understand risks of not being insured and
change their attitudes towards insurance adoption.

5Rimac Insurance campaign (2014) "Multi-risk Insurance for MSMEs." Retrieved from:
https://www.youtube.com/watch?v=akLuPa-9Egk

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1.3.2 Relevance for theory

This thesis covers three main gaps in available research, the first regarding the analyzed target
population, the second regarding the analyzed industry (insurance services) and the third
regarding the tested marketing treatments. About the target population, this thesis will focus on
two populations to which previous research has not paid much attention. First, businesses units
instead of individuals. Because of the economic relevance of MSMEs globally, it is vital for the
theory to determine whether previous learnings regarding risk communication oriented to
individual concerns could also be applied in the context of business decisions. Second, an
analysis from a developing country perspective, also relevant since the different context of
developing markets could also affect the way audiences exposed to risk communication
perceive and analyze risks they are exposed to (Teigen et al. 1988).

About the analyzed industry, most of the findings regarding the effectiveness of different
message formats of risk communication have been limited to risks affecting individuals´ health.
For instance, one attempt to integrate different approaches regarding communication of
probability information about risks and their effect on individuals´ comprehension, risk
perception, and behavioral changes performed by Visschers et al. (2008) unified empirical
findings comparing message formats such as verbal expressions (Slovic et al., 1982), numerical
expressions (Lion and Meertens, 2001; Teigen et al. 1999; Gurmankin et al., 2004; Marteau et
al., 2000) and graphical displays of probability information (Schirillo and Stone, 2005). These
findings were entirely focused on medical, technological and accident risks. To the best of the
author´s knowledge, there is still a lack of research regarding the effects of different message
formats (verbal, numerical and graphical) in the insurance field.

Finally, about the tested treatments, as Fischhoff (1995) summarized on his work showing
developmental stages in risk communication, most of the existing research in the field has
focused on the informational content of the message and the way it is delivered. Little attention
has focused on non-informational elements of the content such as spokes-characters adopted as
sources of information to promote insurance services.

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This little attention can be attributed to the high involvement nature of insurance (because of
its complexity, relatively high price, and related risk) as according to the elaboration likelihood
model (Petty and Cacioppo, 1986), informational content in the message will be a more critical
determinant of persuasion for this type of service. However, empirical evidence suggests that
the use of non-informational elements like spokes-characters can gather a positive impact on
attitudes towards advertised brands and products (Garretson, 2004).

Concerning the spokes-characters type, mixed evidence exists about the specific impact and
effectiveness of animated spokes-characters (frequently used in Peru) in comparison to real
spokes-characters in the context of risk communication. For instance, research from Callcott &
Phillips (1996) suggests that animated spokes-characters have the power to build stronger
emotional connections between the audience and the advertised brands in comparison to real
spokes-characters. On the other hand, more recent efforts from Neeley (2004) and Bhutada
(2016) didn't find significative results while trying to link the effects of the exposure to
animated spokes-characters and product choice (the first amongst children and the second
amongst adults). In addition, previous research showed that individuals are more likely to
accept message arguments coming from an expert source (Sternthal et al. 1978) or a trustworthy
source (Yalch and Elmore, 1984). Likewise, a meta-analysis conducted by Wilson and Sherrell
(1993) found that on average, source manipulations (and especially “expertise”) accounted for
nine percent of the effects on message´s persuasion. The constant variation of sources of
endorsement in insurance advertising makes it relevant to understand the effect of using
MSME´s Owners and Insurance Executives as sources in the context of their perceived
expertise and trustiness. To the best of the author´s knowledge, no prior research has been done
exploring the source effects neither in the MSME´s market nor in the insurance industry in Peru.

This thesis aims to fill the gap in knowledge regarding the effectiveness of different
informational (Message format) and non-informational elements (Source of endorsement and
Spokes-Character Type) of risk communication in the context of insurance services.

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1.3.3 Relevance for global economic development

The lack of prevention culture amongst MSMEs in Peru is evident6, but although this analysis
will be limited to this country, it is important to consider (also for further research) that this
same situation repeats itself all over the world. For instance, in a similar Latin American market
like Colombia, just 5% of MSMEs have insurance (JLT Valencia Iragorri, 2017). In Mexico,
only 10% of MSMEs have insurance, and statistics show that after a sinister 80% go to
bankruptcy (Mexican Association of Insurance Agents, 2014).
Furthermore, as a proof that this situation is not restricted to developing countries, recent studies
show that many MSMEs in developed countries such as the UK are not sufficiently protected
against risk. Despite having a more established prevention culture, almost 80% of MSME´s
owners in the UK have not recently changed nor increased their insurance coverage despite
recognizing the existence of new risks that were not present when they started operations (e.g.,
exposure to cyber-attacks). Moreover, 28% of them recognized that an unexpected sinister with
a cost higher than £50,000 would put them out of business (Opinium Research UK, 2016). The
above-mentioned cases are just a few examples that exhibit how global is the extension of this
issue. Hence, as micro, small and medium-sized enterprises play such a vital role in generating
national wealth across all regions of the world (Lukacs, 2015), the present research will have
implications for knowledge dissemination valuable for both policymakers and private firms
(e.g. insurance companies) to address vulnerability of the MSME sector by improving the way
they communicate MSME´s risk exposure, the importance of risk prevention and the benefits
of insurance services.

Empirical evidence suggests that improvements in the quality of risk management can increase
the survival rates of MSMEs (Falkner and Hiebl, 2015) as it reduces or eliminates the financial
impact if risks materialize, therefore making MSMEs more resilient to unexpected shocks
caused by a sinister. Consequently, upgrading the effectiveness of the communication of risk
exposure and risk prevention could be one path to reduce the mortality rate of the entrepreneur
class.

6 Penetration rates of insurance in Peru reach 1.7% of the country´s GDP, compared to 3.9% in developed countries and 2.2%
in the region.

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1.4 Research Questions
The first purpose of this thesis is to identify which marketing treatments in terms of “Source of
endorsement” (a peer MSME owner vs. an insurance executive), “Spokes-Character Type” (an
animated character vs. a real character) and “Message format of risk exposure” (verbal
expressions only vs. verbal plus numerical expressions vs. verbal expressions plus graphical
displays) in the context of business insurance in Peru are more effective at fostering likelihood
of insurance adoption amongst MSMEs. The aforementioned research objective leads to the
following research question:

Question 1: Which marketing treatments (Source of endorsement, Spokes-character type and

Message format of risk exposure) are more effective at fostering the likelihood of acquiring
business insurance amongst MSMEs?

Additionally, the second purpose of this thesis is to establish whether the nature of the
relationship between the tested marketing treatments and insurance purchase intention changes
depending on MSME´s perceived risk towards specific hazards affecting their companies or
MSME´s attitudes towards insurance. The test will focus specifically on risk perception towards
"Robberies" as according to the main insurance companies in the country is the most frequent
sinister, representing 40%7 of all the hazards affecting MSMEs. As one of the most critical
security issues in Peru, there is available statistical data from the National Institute of Statistics
and Informatics about the proportion of both individuals and businesses affected by robberies.
Unfortunately, this same information is limited regarding other less frequent hazards like
damages to third parties, floods, and fires. The aforementioned objective leads to the following
research question:

Question 2: How do “Risk perception towards robberies” and “Attitudes towards insurance”
influence the effectiveness of the tested marketing treatments (Source of endorsement, Spokes-
character type, and Message format) in terms of insurance purchase intention?

7According to a suggestion from Pacifico Insurance, this calculation only considers the four most frequent hazards affecting
MSMEs: Robberies (40%), Damages to third parties (24%), Floods (21%) and Fires (15%).

14
Finally, the third purpose of this thesis is to establish whether the nature of the relationship
between the tested marketing treatments and insurance purchase intention also changes
depending on characteristics of the businesses like their size (as a representation of their
economic capacity and resilience when facing unexpected incidents) or characteristics of the
businesses´ owners like their education level (as it´s perceived as a key determinant of
insurance culture and potential insurance adoption amongst experts in the sector). This final
research objective leads to the following research question:

Question 3: How do characteristics of the business (business size) and characteristics of the
business´ owners (education level) influence the effectiveness of the tested marketing
treatments (Source of endorsement, Spokes-character type, and Message format) in terms of
insurance purchase intention?

As a result, the final goal of this research is to provide empirical evidence to determine whether
there is a more effective way to communicate business insurance services to MSMEs´ managers
and owners that could increase their likelihood of insurance adoption, thus, improving their
decisions regarding risk management in addition to illustrating whether this potential effect
changes depending on some characteristics of the businesses or the businesses´ owners.

15
1.5 Conceptual framework
The conceptual framework of this study is described in Figure 3 below.

Figure 3: Conceptual framework

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2. Literature review

To establish a proper theoretical framework for this research, in the following chapter the author
reviews the available literature on the analyzed marketing treatments (source of endorsement,
spokes-character type and message format of risk exposure), potential moderators (business
size, education level, risk perception towards robberies and attitudes towards insurance) and
dependent variable (insurance purchase intention).

2.1 Marketing Treatments

Source of endorsement
As previously mentioned, sources of information currently used in insurance advertisement
vary, sometimes using company´s executives describing insurance services, which may be
perceived as information of higher quality and a source of valid affirmations due the executive´s
expertise and knowledge about the service (Erdogan, 1999) and sometimes using the
endorsement of other MSMEs exemplifying real cases of accidents, which can be perceived as
a more trustworthy and persuasive source due to similarity effects (Eysenbach, 2013).

According to experts in the insurance sector, the distrust that the majority of MSMEs still show
towards the banking and insurance system in Peru is believed to be one of the reasons explaining
the small penetration of insurance. “There is some distrust in the small letters of insurance
contracts and what they actually cover” - Martin Giha, Pacifico Insurance (see Appendix 21 –
Interview 1). As a result, MSMEs may not be too receptive to a message coming from a
company member (whom from their perspective could have a commercial bias) as compared to
a message coming from a peer MSME´s owner that may be perceived as a source of unbiased
and more objective information (Belch & Belch, 1994). Considering the previously mentioned
aspect, this study hypothesizes the following:
H1.1: Risk communication will be more effective at fostering insurance purchase intention if the
insurance´s endorsement is delivered by other MSMEs (a peer) in comparison to being
delivered by an executive of an insurance company.

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Spokes-Character Type
Preceding studies analyzing the impact of human vs. animated spokes-characters in
communication effectiveness have shown opposite outcomes. For instance, Luo et al. (2006),
found human spoke-characters to be perceived as more likable and trustworthy in comparison
to animated spokes-characters in the context of e‐retailing. Huang et al. (2011) in a research
also focused on the use of animated spokes-characters in advertising found that although
animated characters were effective at fostering positive attitudes towards the tested
advertisements, there was no significative impact on purchase intention towards the products
within the audience, this possibly due to the effects of product and brand appeals, both relevant
purchase drivers not included in the study. On the contrary, Heiser et al. (2008) found that the
use of animated spokes-characters in advertising could foster more positive attitudes towards
brands and even purchase intention amongst the audience as compared to human spokes-
characters.

Notwithstanding the lack of research on the specific impact of animated spokes-characters on

advertising effectiveness and the discordance in the outcomes of previous efforts regarding this
issue, experts in the sector agree that “trust” is one of the first barriers that the insurance
companies need to break to generate a change in MSME´s behavior. Consequently, the author
believes that MSMEs may be more receptive to a message coming from a human spokes-
character instead of an animated one. Considering this aspect, this study hypothesizes the
following:
H1.2: Risk communication featured by a human spokes-character will be more effective at
fostering insurance purchase intention in comparison to risk communication featured by an
animated spokes-character.

Message Format of risk exposure

The current message content of insurance advertising in Peru focuses on communicating three
main aspects: A brief explanation of what insurance is, how important are businesses for the
owners (“The success of your business is the product of your effort”) and the fact that
businesses need insurance because sometimes accidents can happen. All these powerful
statements that are expected to influence MSME´s attitudes towards insurance positively.

18
Nonetheless, as mentioned before, the current message content of insurance advertising does
not include any also relevant information regarding the frequency of accidents and criminal acts
affecting MSMEs or statistics showing the likelihood of occurrence of accidents and criminal
acts in neither numerical expressions nor graphical displays. Despite some empirical evidence
supporting the continuity of the current message format used by insurance companies has
proved that people tend to focus on the qualitative aspects of risks instead of quantitative aspects
as they may better understand a risk that is communicated in verbal expressions (Slovic et al.
1982), more recent research efforts have challenged these findings, stating that respondents
more often prefer to receive risk information in a numerical format when they have to interpret
a hazard (Lion et al., 2001; Teigen, 1999) and that numerical information is better understood
than verbal information (Marteau, 2000). Visschers et al. (2008) summarized previous learnings
of studies comparing both numerical and verbal probability information in risk communication
recommending using both formats together as individuals prefer numerical information for its
accuracy but use verbal expressions to express a risk probability to others. This is also consistent
with the “Communication Mode Preference Paradox" that states that individuals prefer to
receive numerical information to evaluate risk, but convey risk information to others using
verbal expressions.

Previous research has also compared risk communication using both graphical and numerical
message formats and their effects on the level understanding, accuracy perception and risk
aversion of individuals showing that graphs generate more risk aversion than numerical
information. For instance, Schirillo and Stone (2005) exposed individuals to a fictional situation
in which a manufacturer was considering the introduction of a new brand of tires that could
reduce the risk associated with tire blowouts by a given amount. Their results showed that
participants exposed to graphical displays (asterisks) instead of numerical expressions reported
they would be willing to pay more for the safer product. These findings suggest that risk
communicators interested in decreasing risk-taking behavior should present risk information
graphically rather than numerically. According to the attention priority model developed by
Chua et al. (2006), a possible explanation for these results is that graphs attract people's
attention to the contrast between the number of people affected versus the number of people
unaffected by a particular hazard in the display.

19
Other studies have also led to recommendations about the optimal way to present specific types
of graphs. Schapira et al., (2001) conducted a qualitative study consisting of focus groups and
established the following guidance: (1) Respondents prefer consecutive highlighting of
pictograms (i.e., in rows) to random highlighting of pictograms because the frequency
information it is easier to interpret in the first format. (2) Frequency graphics using figures
reflecting the affected population (e.g., humans) are easy to understand due to the contextual
meaning they add to the numeric information. (3) Frequency graphics with lower denominators
are perceived as more simple, direct and easy to interpret than frequency graphics with higher
denominators (e.g., 10 vs. 100 units).

To test the effectiveness of different message formats, this thesis will examine the performance
of verbal expressions of risk probability (most commonly used) in comparison to verbal
expressions that are also complemented with numerical expressions (percentages) or graphical
expressions (icon arrays and pie graphs) reporting MSME´s risk exposure using information
about robberies affecting MSMEs in Peru. This thesis hypothesizes that a message that in
addition to regular content (verbal expressions only) also includes information in the form of
numerical expressions or graphical displays would enable MSMEs´ owners to mentally
materialize their personal vulnerability towards criminal acts, thus positively influencing their
intention to acquire business insurance.

H1.3: Risk communication including numerical expressions or graphical displays in addition to

verbal expressions will be more effective at fostering insurance purchase intention in
comparison to risk communication including verbal expressions only.

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2.2 Potential moderators

Risk Perception towards robberies (Pre-exposure to the treatments)

When asked to evaluate risks, most individuals rely on intuitive risk judgments (risk
perceptions), inferences based on everything they heard or observed in the past about the risks
in question (Slovic et al. 1980). Our experience with hazards usually does not come from
personal experiences, which can cause risks to be misjudged (overestimated or underestimated)
if the source is biased. Still, even if the source of information is objective and presents reliable
statistical data about the risk in question, human judgment is needed to interpret it and determine
their relevance.

Previous measurements of risk perception have focused on individual´s certainty of risk

materialization. For instance, Hull (2011), used individual´s certainty of a negative test result
for HIV applying a five-point scales ranging from 1 (extremely unlikely) to 5 (extremely likely)
as a measure of individuals´ perceived risk. Rothman et al. (1999) assessed individual´
perceived risk for developing a particular illness using a scale ranging from 1 (not at all) to 7
(extremely). Similarly, in the study of Garcia-Retamero & Cokely (2011) participants estimated
the likelihood of contracting HIV using a nine-point scale ranging from 1 (very unlikely) to 9
(very likely) as a measure of risk perception. A more holistic measurement of risk perception
was performed by Savage (1993) while investigating how demographic characteristics of
individuals could influence their perceptions of risk. Savage´s study analyzed three dimensions
of risk perception that were previously proposed by Slovic et al. (1980): “dread” (individual’s
psychological dread towards a hazard), “unknown” (individual’s perceived knowledge about a
hazard and the seriousness of its consequences) and “personal exposure” (individual’s
subjective probability of being affected by a hazard). The author of this thesis will use the same
three dimensions of risk perception used by Savage. Each dimension will be measured for the
most common hazard for MSMEs in Peru according to data retrieved from insurance
companies: Robberies.

About the role of risk perception, previous research from Abhyankar et al. (2008), Latimer et
al. (2007) and Rothman & Salovey (1997) sustained that the effectiveness of marketing
treatments like message frame should depend on the perceived risk individuals associate with
a behavior, thus supporting risk perception role as a moderator.

21
Apanovitch et al. (2003) provided empirical evidence of a moderation effect of perceived risk
on the effectiveness of message framing on HIV testing promotion. Their results showed that
amongst women participants with low perceived risk towards HIV, gain-framed messages were
significantly more persuasive for promoting testing than loss-framed messages. In a similar
context (HIV-testing), Hull (2011) demonstrated that the effects message framing on risk-taking
(intentions to seek an HIV test) were moderated by the perceived risk of a positive test result.
This thesis also expects risk perception towards robberies to work as a moderator between
marketing treatments affecting the informational elements of the content (message format of
risk exposure) and insurance purchase intention. This would imply that MSME´s owners with
different preconceived risk perceptions towards robberies would react differently (in terms of
insurance purchase intention) to different message formats of risk exposure.
H2.1: Risk perception towards robberies will moderate the effect of message format of risk
exposure on insurance purchase intention. Moreover, risk communication including numerical
expressions or graphical displays will be more effective at fostering insurance purchase
intention amongst MSMEs with low perceived risk towards robberies in comparison to risk
communication including verbal expressions only.

Attitudes towards insurance (Post-exposure to the treatments)

Attitudes reflect the affective or evaluative reaction individuals have towards an object. They
show our predisposition to respond or behave to a stimulus (Foxall, 1998). Previous measures
of attitudes towards a recommended behavior of risk management have focused on the
perceived benefits and performance of the behavior. For instance, in the study of Rothman et
al. (1999) the authors measured participant’s attitudes towards dental care through an evaluation
of four aspects: the effectiveness of the behavior, how important it was to perform the behavior,
how beneficial it was to perform the behavior and how favorable they felt towards engaging in
the behavior using a nine-point scale ranging from 1 (not at all) to 9 (extremely). The four
aspects were then combined into a single index (Cronbach's α = .83). A similar approach was
also performed by Garcia-Retamero & Cokely (2013) in the context of condom’s usage. The
authors used the same aspects previously mentioned (except for "importance") using a nine-
point scale ranging from 1 (not at all) to 9 (very much). The three remaining items were also
combined into a single index (Cronbach's α = .82). The author of this thesis will use the same
dimensions of attitudes towards risk used by Rothman et al., nevertheless, as the survey will be
translated into Spanish, because of a semantic similarity between "beneficial" and "favorable",
the author will only use the "beneficial" perception as it is a more colloquial expression.
22
About the role attitudes towards a recommended behavior have in risk communication, previous
studies measuring individuals´ attitudes after been exposed to marketing treatments have
supported attitudes´ role as a mediator. For instance, Garcia-Retamero & Cokely (2011) using
a sexual health information brochure as a risk awareness intervention demonstrated that
attitudes toward condom’s usage mediated the effect of message frame and message format on
behavioral intentions and self-reported condom use, showing that more positive attitudes
toward condom’s usage increased participants' intentions to use condoms and the chance that
participants reported that they used condoms. This mediation effect confirmed previous results
from Rothman et al. (1999), investigating the effects of message framing on interest in and use
of types of health behavior. Nonetheless, as the primary objective of this thesis is to find
potential improvements in insurance communication, the author will focus on examining the
role of preconceived attitudes towards insurance in the effectiveness of the tested treatments.
This thesis expects attitudes towards insurance (before the exposure to the tested treatments) to
work as a moderator between marketing treatments affecting the informational elements of the
content (message format of risk exposure) and insurance purchase intention. Moreover, finding
such role would imply that MSME´s owners with different preconceived attitudes towards
insurance would react differently (in terms of purchase intention) to different message formats
of risk exposure.
H2.2: Preconceived attitudes towards insurance will moderate the effect of message format of
risk exposure on insurance purchase intention. Moreover, risk communication including
numerical expressions or graphical displays will be more effective at fostering insurance
purchase intention amongst MSMEs with negative attitudes towards insurance in comparison
to risk communication including verbal expressions only.

Business Size
According to a study conducted by Savage (1993) analyzing how individual demographic
characteristics influence risk perceptions related to common threats such as aviation accidents,
fires, automobile accidents and stomach cancer, individuals with lower levels of income
experience higher levels of dread to hazards. The author stated as a possible explanation that
groups with a lower income could perceive themselves as being more exposed to hazards.
Likewise, Pilisuk and Acredolo (1988) suggested that people with higher income levels
perceived themselves having enough financial means to isolate from technological hazards
(e.g., contaminated drinking water, nuclear war).

23
Considering that the present thesis will focus on businesses units instead of individuals, the
author will use the “business size category" (based on the company´s annual sales) as a measure
of each business´ financial means. Previous studies found a negative relation between measures
of financial means and the likelihood of adoption of risk management tools. For instance,
Velandia et al. (2009) found empirical evidence showing the importance of off-farm income
levels as a factor to determine farmers’ adoption of risk management tools (e.g., crop
insurance). These researchers hypothesized that higher off-farm incomes as indicators of a
higher capacity to overcome financial damages if the risk materializes could generate a
perception of economic stability that reduces farmers’ incentives of insurance adoption.
Nevertheless, criminality statistics in Peru indicate that large and medium-sized companies are
more frequent victims of criminal acts (40.3%) in comparison to small and micro-sized
enterprises, in which the criminality rates are 28.1%, and 28.0%, respectively. The present
research expects that MSME´s owners exposed to marketing treatments affecting the
informational elements of the content (message format of risk exposure) will have different
reactions in terms of insurance purchase intention depending on their businesses´ size. More
precisely, the author expects owners of medium and small size businesses to be more sensitive
to risk communication including numerical expressions or graphical displays than owners of
micro-sized businesses because despite having more financial means to isolate themselves from
possible hazards, their perceived exposure to criminal acts should also be higher.
H2.3: Business size will moderate the effect of message format of risk exposure on insurance
purchase intention. Moreover, risk communication including numerical expressions or
graphical displays will be more effective at fostering insurance purchase intention amongst
medium and small sized businesses in comparison to risk communication including verbal
expressions only.

Education level
Prior research has demonstrated that insufficient numerical skills can inhibit individuals’
comprehension of numeric risk information (Peters, 2008). In that context, Garcia-Retamero
and Cokely (2013) while investigating the influence of risk literacy skills such as numeracy
(measured by numeracy scale consisting of 12 items developed by Schwartz et al., 1997) and
graph literacy (measured by a scale consisting of 13 items developed by Galesic and Garcia-
Retamero, 2011) on the efficacy of framed messages, found that visual aids included in risk
communication are decision support tools for individuals with low numeracy (yet relatively
high graph literacy) that often struggle to comprehend numerical concepts.
24
Unfortunately, both numeracy and graph literacy are not readily accessible indicators, and
consequently, they are not practical enough measures for neither insurance companies nor
policymakers. On the other hand, a measure that can also express individual´s capability of
understanding complex information is “education level," an indicator monitored in national
censuses and most of the time collected by insurance companies' forms at the beginning of the
relationship with a client. Thus, “education level” has greater operability for both insurance
companies and policymakers as it is more easily accessible information.

It is usually hypothesized that individuals with a higher education level tend to adopt more
sophisticated risk management tools. The work of Sabates and Feinstein (2004) showed that
individuals with lower education levels (none or primary education) used less preventive health
measures than individuals with higher education levels (secondary or higher education), leading
to higher mortality rates in the first group. Furthermore, in more insurance-related research,
while analyzing the factors influencing farmers’ crop insurance decisions, Sherrick et al. (2004)
found that education (measured in “number of years of education”) contributed to more accurate
risk assessments and generated differing attitudes towards risk.

The present research expects that MSME´s owners exposed to marketing treatments affecting
the informational elements of the content (message format of risk exposure) will have different
reactions in terms of insurance purchase intention depending on their education level.
Moreover, the author expects owners with higher education level (technical or university
studies) to be more sensitive to risk communication including numerical expressions or
graphical displays than owners with no higher education.
H2.4: Owners´ education level will moderate the effect of message format of risk exposure on
insurance purchase intention. Moreover, risk communication including numerical expressions
or graphical displays will be more effective at fostering insurance purchase intention amongst
owners with higher education level (technical or university studies) in comparison to risk
communication including verbal expressions only.

Depending on the business size, between 12% and 35% of micro-sized entrepreneurs have
primary education or none education, making entirely relevant to understand whether
educational differences amongst MSMEs owners would affect the way they react to risk
communication and which should be the best approach for each group depending on their
educational background.

25
2.3 Dependent variable: Insurance Purchase Intention

Individuals respond to hazards they perceive, and this response will depend on the way they
process and filter the received information. As tracking real responses is a demanding endeavor
in terms of both time and budget, most academic and commercial research has relied on self-
reported intentions as proxies of behavior. For instance, most companies rely on consumers'
purchase intentions to estimate the potential adoption of new products.

Previous measurements of behavioral intentions in the field of risk perception have focused on
individual’s intentions to perform a recommended behavior. Rothman (1999) used three items
assessing respondent’s intention to perform a test for a viral infection: “How likely would you
be to perform the test sometime soon?”, “If you were faced with the decision of whether to get
the test today, how likely is that you would do so?” And “How tempted would you be to put off
getting the test?”. Rothman used a nine-point scale ranging from 1 (not at all) to 9 (extremely)
and combined the three items in a single index (Cronbach's α = .83). Similarly, Garcia-
Retamero and Cokely (2013) measured individuals intentions to use condoms in future sexual
encounters using a nine-point scale ranging from 1 (I have no intention of doing this) to 9 (I am
certain that I will do this). Their analysis also produced empirical evidence showing that
behavioral intentions affected self-reported behavior, exhibiting an increase in condoms usage
amongst participants who previously expressed stronger intentions to do so. The author of the
present thesis will measure individuals’ likelihood to purchase total or partial business
insurance using a scale similar to the one used in Garcia-Retamero and Cokely´s research.
However, as previous studies have established that the price of insurance is an essential
determinant of the level of insurance demand (Swiss Re, 1993), in an effort to isolate the price
effect in respondents’ decisions, participants will be asked to express their purchase intentions
“considering a fair price according to the size of their business”

26
The research questions and hypotheses that this study will test are summarized in Table 2 below.

Table 2: Overview of research questions and hypotheses

Summary of research questions and hypotheses

H1.1: Risk communication will be more effective at fostering
insurance purchase intention if the insurance´s endorsement
Q1 : Which marketing is delivered by other MSMEs (a peer) in comparison to being
treatments (Source of delivered by an executive of an insurance company.
endorsement, Spokes-
H1.2: Risk communication featured by a human spokes-
character type and Message
character will be more effective at fostering insurance
format of risk exposure) are
purchase intention in comparison to risk communication
more effective at fostering
featured by an animated spokes-character.
the likelihood of acquiring
H1.3: Risk communication including numerical expressions or
business insurance amongst
graphical displays in addition to verbal expressions will be
MSMEs?
more effective at fostering insurance purchase intention in
comparison to risk communication including verbal
expressions only.
H2.1: Risk perception towards robberies will moderate the
effect of message format of risk exposure on insurance
Q2 : How do "Risk purchase intention. Moreover, risk communication including
perception towards numerical expressions or graphical displays will be more
robberies" and "Attitudes effective at fostering insurance purchase intention amongst
towards insurance" influence MSMEs with low perceived risk towards robberies in
the effectiveness of the comparison to risk communication including verbal
tested marketing treatments expressions only.
(Source of endorsement, H2.2: Preconceived attitudes towards insurance will moderate
Spokes-character type, and the effect of message format of risk exposure on insurance
Message format) in terms of purchase intention. Moreover, risk communication including
Insurance Purchase numerical expressions or graphical displays will be more
intention? effective at fostering insurance purchase intention amongst
MSMEs with negative attitudes towards insurance in
comparison to risk communication including verbal
expressions only.
H2.3: Business size will moderate the effect of message format
Q3: How do characteristics of risk exposure on insurance purchase intention. Moreover,
of the business (Size) and risk communication including numerical expressions or
characteristics of the graphical displays will be more effective at fostering
business´ owners (Education insurance purchase intention amongst medium and small
Level) influence the sized businesses in comparison to risk communication
including verbal expressions only.
effectiveness of the tested
H2.4: Owners´ education level will moderate the effect of
marketing treatments message format of risk exposure on insurance purchase
(Source of endorsement, intention. Moreover, risk communication including numerical
Spokes-character type, and expressions or graphical displays will be more effective at
Message format) in terms of fostering insurance purchase intention amongst owners with
Insurance Purchase higher education level (technical or university studies) in
intention? comparison to risk communication including verbal
expressions only.

27
3. Methodology
3.1 Research Design

This thesis used an experimental approach to test the cause and effect relationship between
three different marketing treatments and insurance purchase intention. The experiment was a
full factorial 2 x 2 x 3 between-subjects design (see Figure 4) that included the following
factors: Source of endorsement (MSME´s owner vs. insurance executive), Spokes-Character
Type (animated character vs. real character) and Message format (Verbal expressions only vs.
Verbal plus Numerical expressions vs. Verbal expressions plus Graphical displays).

To measure the effect of the tested treatments regardless of other external factors and control
for the threat of 'selection bias', participants in the study were randomly assigned to the twelve
different experimental conditions, automatically directed to complete a questionnaire and
exposed to twelve different ads reporting information about insurance services for MSMEs and
risk exposure to robberies.

Figure 4: Experimental Conditions

28
3.2 Data collection

A sample of owners and managers of micro, small and medium-sized enterprises in Peru who
currently do not have insurance for their companies (total or partial) was recruited using an
online survey panel, Survey Monkey (www.surveymonkey.com). Respondents were invited to
participate in a study evaluating security issues for MSMEs in Peru. All the data from
respondents collected during the experiment was analyzed using SPSS software.

To calculate the adequate sample size required for the experiment, a Power Analysis was
computed considering twelve treatment conditions. The power analysis was conducted using
the G*Power software (G*Power 3.1.9.2) establishing ANCOVA as the required statistical test
as some characteristics of businesses and businesses´ owners were potential covariates. Based
on prior research this study expected a medium effect size (f = .25) and 80% power (alpha=.2).
Considering the previous input data, results showed that a total sample of 176 individuals was
needed to detect the desired effect.

3.3 Stimuli

Previous research has shown different outcomes when using paper flyers vs. videos as stimuli
to implement marketing treatments. For instance, an analysis of the adoption of a rainfall
insurance product in rural India (Cole S. et al., 2013) showed reversed results for insurance
adoption in two different time periods (2006 and 2007) for positive and negative frames when
treatments were implemented on paper flyers vs. videos. Negative frames decreased insurance
adoption in comparison to positive frames when paper flyers were used, the use of videos
produced the reverse effect. A possible explanation from the authors was that paper flyers are
not entertaining enough to capture the audience attention when communicating adverse
outcomes in comparison to videos.

Taking this learnings into account, the author of this thesis created fictional advertising pieces
with the help of an independent audiovisual production agency (Appendix 1). The stimuli
featured “Carlos," the main character explaining the importance of having insurance for
MSMEs. The same character was used in all the tested conditions including those that required
animated representations in order to isolate influences of the likability of the character amongst
the different treatments.

29
Additionally, to prevent participants from acquiring additional information from other sources
that could contaminate responses such as previous experiences or personal opinions towards
specific insurance companies in Peru, the fictional advertising pieces presented a fictional
company “ABC Insurance” instead of a company that was already in the market. Respondents
were asked to assume that “ABC Insurance” was a well-known company already established in
the Peruvian market. A summary of the experimental conditions produced is described in Figure
5 below.

Figure 5: Experimental conditions

30
3.4 Measurements
3.4.1 Marketing Treatments

Source of endorsement
Participants were exposed to two different sources of endorsement, one group was exposed to
a peer endorsement (endorsement delivered by other MSME´s owner), and the other group was
exposed to a company endorsement (endorsement delivered by an executive of a fictional
insurance company).

Spokes-Character Type
Participants were exposed to two different spokes-character types, one group was exposed to a
message delivered by an animated character, and the other group was exposed to a message
delivered by a real character.

Message Format
Participants were exposed to a message of risk exposure reporting statistical information about
robberies affecting MSMEs in Peru. Information included in the message accurately reflected
current statistics retrieved from public sources such as the National Institute of Statistics and
Informatics (INEI) and press releases from national insurance companies already discussed
above. One-third of the participants received information using verbal expressions only
(regularly used in insurance advertising), another third received a message including the same
verbal expressions plus statistical information in percentages. All other participants received a
message including the same verbal expressions as in the other two conditions plus information
in the form of graphical displays (icon arrays and pie charts). The presented graphical displays
followed already mentioned suggestions from Schapira et al., (2001) in the field of risk
communication about the way to present specific types of graphs (consecutive highlighting of
pictograms, figures reflecting the affected population and frequency graphics with lower
denominators).

31
▪ Verbal expressions only: participants in this condition were exposed to qualitative
aspects of risks via phrases such as “most frequent” and “very common." These phrases
accurately reflect the reality as robberies are in fact the most frequent sinister affecting
MSMEs. As there are no guidelines in Peru linking verbal terms to numerical rates, the
phrase “very common” follows a guideline used by Knapp et al. (2004) which indicated
that frequencies of occurrence above 10% could be denoted by the use the verbal
descriptor ‘‘very common’’. The message format in this condition was the following:
“Did you know that the most frequent sinister affecting MSMEs nationwide, are
robberies? An analysis of criminal acts in Peru showed that it is very common among
companies, regardless of their size, to be victims of robberies".

▪ Verbal plus numerical expressions: participants in this condition were exposed to the
same verbal expressions as in the precedent condition plus numerical probability
information in the form of percentages as follows:
“Did you know that the most frequent sinister affecting MSMEs nationwide, are
robberies? 40% of all the hazards affecting MSMEs are robberies, and other various
hazards make up the remaining 60%. An analysis of criminal acts in Peru showed that it
is very common among companies, regardless of their size, to be victims of robberies. In
fact, 30% of companies in our country claim to have been victims of criminal acts such
as robberies or attempted robberies."

▪ Verbal expressions plus graphical displays: participants in this condition were exposed
to the same verbal expressions as in the precedent condition plus graphical displays.
These graphical displays presented the same numerical information regarding robberies
affecting MSMEs as in the numerical expressions but in the form of pie charts and icon
arrays as follows.

32
3.4.2 Potential moderators
3.4.2.1 Characteristics of businesses and businesses´ owners

Business Size
Participants selected their “businesses size category” choosing from the following options:
Micro-sized enterprises, Small-sized enterprises, and Medium-sized enterprises (see Table 1).

Education level
Participants completed an education level scale choosing amongst the following options: No
education, Primary school or below, Secondary school, Technical studies, and College or
above. This scale is commonly used by Peru´s National Institute of Statistics and Informatics
(INEI), market research firms and financial companies in the country.

3.4.2.2 Risk Perceptions and Attitudes towards insurance

Both risk perceptions towards robberies and attitudes towards insurance will be measured using
Visual Analogue Scales (VASs) as previous studies have shown their superior measurement
qualities in comparison to traditional Likert-type response scales and their usefulness in
assessing constructs with many perceptible gradations. Multiple-item VASs are often shown to
have high internal consistency (Wewers & Lowe, 1990). Likewise, both risk perception towards
robberies and attitudes towards insurance will be measured using 7-point scales as they seem
to be the ideal number of item alternatives according to previous studies. For instance, Miller
(1955) concluded that more than seven response categories could be more difficult for the
human brain to process. Furthermore, seven-point scales seem to optimize the reliability of
constructs in comparison to five-point scales (Ghiselli, 1955). Finally, scales using an odd
number of alternatives allows respondents to choose a neutral response (Cox III, E. P., 1980)
allowing more flexibility.

33
Risk Perception towards robberies
The scale of risk perception towards robberies was measured before the exposure to the tested
treatments and included the following items:
▪ Dread: a measurement of whether respondents could think about robberies calmly or whether
they became nervous about it using a seven-point VAS with "1" being "I remain calm when
thinking about it" and "7" being "I become nervous when thinking about it."
▪ Unknown: a measurement of whether respondents are informed or not informed at all about
robberies and its seriousness using a seven-point VAS with "1" being "I basically do not
know anything about the risk and its seriousness" and "7" being "I am well informed about
the risk and its seriousness."
▪ Personal Exposure: a measurement of each respondent´s perceived threat towards robberies
using a seven-point VAS with "1" being "I feel no personal threat" and "7" being "I feel a
high personal threat."

Attitudes towards insurance

The scale of attitudes towards insurance was measured before and after the exposure to the
tested treatments and included the following items:
▪ Importance: an evaluation of how important is for the business to have insurance using a
seven-point VAS with "1" being "Not at all" and "7" being "Extremely."
▪ Effectiveness: an evaluation of how effective is for the business to have insurance using a
seven-point VAS with "1" being "Not at all" and "7" being "Extremely."
▪ Beneficial: an evaluation of how beneficial is for the business to have insurance using a
seven-point VAS with "1" being "Not at all" and "7" being "Extremely."

Dependent variable: Insurance Purchase Intention

After being exposed to the tested marketing treatments, individual’s intentions to get total or
partial insurance for their business were used as a measure of purchase intention. A seven-point
VAS was used, with "1" being "I have no intention of doing this" and "7" being “I am certain
that I will do this."

34
Additional measurements: Perceived trustworthiness and expertise
Finally, two items were included as measurements of the perceived trustworthiness and
expertise of the main characters in the presented fictional ads. These measurements previously
used by Ohanian (1990) asked respondents to evaluate the main characters in a seven-point
Visual Analogue Scales (VASs) in terms of trustworthiness, with "1" being "Not trustworthy "
and "7" being “Trustworthy", and in terms of expertise with "1" being " Inexperienced in the
subject" and "7" being “Experienced in the subject".

3.5 Research method

3.5.1 Testing the effects of marketing treatments (H1.1, H1.2, and H1.3)

A three-way ANOVA (2x2x3) analysis with a significance level of 5% was conducted to test
for significative differences in Insurance Purchase Intention amongst the tested treatments.
Tests of homogeneity of variances and normality were also performed to check whether the
assumptions for the ANOVA test were violated. Finally, a Bonferroni post-hoc test was
conducted for additional exploration of the significant differences found. In addition, as experts
in the insurance sector expect some characteristics of the business and characteristics of the
businesses owners to influence the relationship between the tested treatments and insurance
purchase intentions, a following three-way ANCOVA was conducted using both characteristics
as covariates8.

3.5.2 Moderation Testing (H2.1, H2.2, H2.3, H2.4)

Scales of risk perception towards robberies and attitudes towards insurance

To prepare both scales of attitudes towards insurance and risk perception towards robberies for
analysis, a factorial examination was performed to check if according to theory each one was
unidimensional (converged into one factor) with an adequate level of internal consistency. The
examination initiated testing the appropriateness of factor analysis (Bartlett’s Test and KMO)
and whether the included items naturally loaded into one factor (Analysis of eigenvalues).
Finally, a test of internal consistency (Cronbach's Alpha) was performed to exam the reliability
of each scale and to determine whether internal consistency could improve if some items were
removed.

8 To perform the Ancova test, Businesses Size (ordinal) was transformed into a dummy variable (Micro vs. Small and Medium-
sized businesses) and Education Level (ordinal) was transformed into a scalar variable (years of education).

35
Moderation Testing
The moderation test for risk perception towards robberies, attitudes towards insurance, business
size and business´ owner’s education level was performed using PROCESS for SPSS developed
by Andrew F. Hayes. Hayes´ PROCESS undertakes model estimation with least squares
regression-based path analysis. Using this package to test interactions has advantages over
standard linear regression (Hayes et al. 2017) when testing several relationships (e.g., more than
one potential moderator) the template used in the analysis was Model 2.

3.5.3 Complementary qualitative research: Interviews with experts

Four interviews with experts were performed with the primary objective of producing
complementary insights favoring a more complete and comprehensive interpretation of the
investigated phenomena. These experts had different roles in the insurance and MSME
industries as policymakers, academics, suppliers (insurance companies) and creatives
(advertising agencies). The interviews also had an exploratory objective as allowed gathering
preliminary information that helped shaping the research approach and defining hypotheses.
Participants were contacted via LinkedIn and invited to participate in the study, all interviews
were performed via Skype. Research objectives for each participant were different depending
on their role, these objectives were the following:

Policy makers and academics

▪ Discuss the adequacy of the current insurance products oriented to MSMEs.
▪ Analyze main barriers to insurance adoption and discuss how important is communication.
▪ Discuss the potential impact of insurance adoption to improve the survival rate of MSMEs
in Peru.
▪ Discuss the role of public institutions in insurance communication oriented to MSMEs.

Creatives (advertising agencies)

▪ Discuss the use of animated characters vs. real characters in advertising. Explore which
factors determine the use of each one in a communication strategy.
▪ Analyze advantages and disadvantages of animated versus real characters in advertising.
▪ Discuss the effectiveness of each format (animated vs. real characters) in terms of recall,
liking and commercial response in the context of MSMEs and insurance services.

36
Suppliers (Insurance Companies)
▪ Discuss the adequacy of the current insurance products oriented to MSMEs.
▪ Analyze main barriers to insurance adoption and discuss how important is communication.
▪ Discuss current communication strategy.
▪ Analyze the evolution of insurance adoption amongst micro, small and medium-sized
enterprises. Explore which are the primary drivers for adoption.
▪ Discuss the potential impact of insurance adoption to improve the survival rate of MSMEs.
Discuss limitations.

The following table shows a summary of participants in the interviews.

Table 3: Overview of interviews with experts

Organization Contact
Peruvian Association of Insurance President
Policymakers
Companies (APESEG) (Eduardo Moron)
University of Piura – Director
Academics
Advisory Center for MSMEs (Brenda Silupu)
Y&R Creative Art Director
Creatives (Creative agency responsible for (Charlie Valderrama)
Ad campaigns of Rimac Insurance)
Pacifico Insurance Head of MSMEs products
Suppliers
(Leading insurance company) (Jorge Giha)

37
4. Results
In the following section, results of the data analyses will be presented to answer the hypotheses
specified in the conceptual framework. First, the author will introduce the results from a pilot
test of the survey that was conducted two weeks prior the field phase of the project. Then, the
author will show the data preparation process performed and a descriptive analysis of the
research sample. Subsequently, the author will test the success of the randomization among
conditions. Finally, the author will present results of the empirical testing of the collected data
through different analysis in SPSS mentioned in the previous chapter.

4.1 Survey pretest

To ensure validity in the collected information, the research instrument, an online survey
(appendix 2), was piloted using a sample of 36 owners and managers of micro, small and
medium-sized enterprises in Peru who did not have total or partial insurance for their companies
at the time of the survey.

The primary objectives of the survey pretest were to test the length of time it would take for the
target population to complete it, select a wording that was familiar to the participants and avoid
potential problems such as lack of clarity in the items. An additional objective was to check for
a potential response bias if respondents were able to identify the primary goal of the research.
All the mentioned issues could threaten the validity and reliability of the study. Although the
majority of the items included in the survey are based on previous research and have not been
modified, the unique characteristics of the population being analyzed on this thesis (MSMEs)
could affect the way they interpret the items, and thus how they respond to them.

After an interview with respondents post survey´s application, no issues regarding

inconsistencies, wording or order of questions were identified. The time needed to complete the
survey was six minutes on average, which is an adequate demand of time forn an online survey.
Finally, respondents’ perception of the survey´s objective was in the majority of the cases “talk
about hazards for businesses" or "discuss businesses issues."

38
4.2 Preparing the dataset
Risk perception towards robberies was assessed by measuring self-reported responses to three
items (Dread, Unknown9 and Personal Exposure) on a seven-point VAS scale. Even though
according to previous research (Rothman et al., 1999; Garcia-Retamero & Cokely, 2013) these
three items converge into one factor with an adequate level of internal consistency, it was
necessary to assess the scale´s reliability considering the different characteristics of target
population of this thesis (business units). The author conducted a Cronbach's Alpha test which
initially generated non-acceptable results (Cronbach's Alpha = 0.042 < 0.7). According to the
table “Cronbach's Alpha if item deleted," there was an opportunity to improve the reliability of
the scale by eliminating the item “Unknown." After the item elimination, Cronbach's Alpha
increased to 0.7, an acceptable value which indicated a high level of internal consistency. In
addition, Bartlett's Test of Sphericity in a confirmatory factor analysis including only the
remaining two items of the scale (Dread and Personal Exposure) showed that both attributes
converged in 1 factor (Sig. = 0.00 < 0.01) explaining 76,79% of the total variance (appendix 3).

Attitudes towards insurance (before and after the exposure to the treatments) were assessed by
measuring the self-reported responses to three items (Importance, Effectiveness and Beneficial)
on a seven-point VAS scale. Similarly, the author conducted a Cronbach's Alpha test with an
initial result of 0.876 and 0.934 respectively, both acceptable values which indicated a high
level of internal consistency. Nonetheless, the table “Cronbach's Alpha if item deleted” showed
that there was an opportunity to improve the reliability of both scales by eliminating the item
"Importance." After this elimination, both Cronbach's Alphas increased to 0.904 and 0.941
respectively. Additionally, Bartlett's Test of Sphericity in a confirmatory factor analysis for
both scales (before and after the exposure to the treatments) showed that the two remaining
items converged into 1 factor (Sig. = 0.00 < 0.01) explaining 91.25% and 94.48% of the total
variance respectively (appendixes 4 and 5).

After both scales were confirmed, factor scores for each one were created using the “Unit
Weighing of Items” method in other to continue further with the analysis.

9The scale labeling of the “Unknown” item was reversed to use it in the analysis. Collected data was transformed by subtracting
“8” from each value.

39
4.3 Descriptive statistics
The data for the field study was collected using an online survey panel, Survey Monkey
(www.surveymonkey.com) from March 28th to April 6th. A total sample of 226 complete
responses from Peruvian MSME´s owners and managers without business insurance (total or
partial) was obtained. Thirteen respondents were discarded because they stated that they were
not the persons in charge of making decisions regarding the business (first filter in the survey),
additionally, four respondents were also discarded because they stated that their business was
currently covered by a business insurance partially or entirely (second filter in the survey).

The final sample of respondents was composed by 81.4% micro enterprises, 15.9% small
enterprises and 2.7% medium enterprises. 65.5% of respondents were mainly located in Lima
(the capital city), and the remaining 34.5% were located in different provinces of the country.
Most of the business owners and managers had university (67.3%) or technical education
(27.9%), the remaining business owners and managers (4.8%) declared secondary school as
their maximum education level achieved. Enterprises in the sample operated in the following
sectors: services (46.5%), commercial (29.6%), industrial / manufacture (10.6%), construction
(8%), agriculture / cattle raising (1.3%) and others (4.0%).

After screening the dataset, no strange values or outliers were identified as all the questions in
the survey were closed or semi-closed. Besides, there were no completeness issues, or missing
values as all the questions in the survey were mandatory.

4.4 Randomization Check

Randomization is especially crucial in experimental designs as it yields the most accurate
analysis of the effect of an intervention regardless of other factors (Malhotra and Birks, 2007).
This enables researchers to draw more valid inferences about the analyzed cause and effect
relation. Besides that, randomization controls for the threat of 'selection bias,' which leads to
higher internal validity. To check if randomization was successful in this study, samples in all
the experimental conditions should have the same proportions in terms of characteristics of the
businesses (size, sector/industry, location) and characteristics of the businesses´ owners
(education level).

40
The randomization test initiated with the creation of a new nominal variable “Treatment”
containing all the possible combinations of source of endorsement (2), spokes-character type
(2) and message format of risk exposure (3). Results showed that respondents’ location did not
differ across the twelve experimental conditions (𝑥2= 5,724, df = 11, p = 0.891> 0.05)
(Appendix 6) and that MSMEs participating in the research were equally distributed according
to their business size (𝑥2= 13.813, df = 11, p = 0.244 > 0.05) (Appendix 7) and their sector (𝑥2=
75.564, df = 66, p = 0.197 > 0.05) (Appendix 8) amongst the experimental conditions. Table 4
below describes the characteristics of the participant businesses on each experimental condition
in terms of location, size and sector.

Table 4: Business location, size, and sector - by experimental condition

Treat Group Location Size Sector

Construct.
ment size

Manufac.
Commer.
Province

Services
Medium
Small &

Indust. /

Others
Micro
Lima

(N)

1 14 35.7% 64.3% 100% 0.0% 14.3% 7.1% 71.4% 7.1% 0.0%

2 19 42.1% 57.9% 89.5% 10.5% 36.8% 5.3% 42.1% 5.3% 10.5%
3 22 36.4% 63.6% 72.7% 27.3% 31.8% 4.5% 40.9% 18.2% 4.5%
4 15 46.7% 53.3% 80.0% 20.0% 40.0% 0.0% 53.3% 0.0% 6.7%
5 14 35.7% 64.3% 78.6% 21.4% 21.4% 7.1% 57.1% 14.3% 0.0%
6 22 31.8% 68.2% 63.6% 36.4% 18.2% 22.7% 40.9% 13.6% 4.5%
7 19 31.6% 68.4% 73.7% 26.3% 31.6% 26.3% 36.8% 0.0% 5.3%
8 21 38.1% 61.9% 76.2% 23.8% 42.9% 9.5% 28.6% 9.5% 9.5%
9 22 40.9% 59.1% 81.8% 18.2% 27.3% 0.0% 50.0% 18.2% 4.5%
10 15 33.3% 66.7% 86.7% 13.3% 40.0% 0.0% 60.0% 0.0% 0.0%
11 20 15.0% 85.0% 90.0% 10.0% 35.0% 0.0% 50.0% 15.0% 0.0%
12 23 30.4% 69.6% 91.3% 8.7% 17.4% 8.7% 43.5% 17.4% 13.0%
Total 226 78 148 184 42 67 18 105 24 12
A 1/Peer & Animated & Verbal, 2/Peer & Animated & Verbal+Numerical, 3/Peer & Animated & Verbal+Graphical,
4/Executive & Animated & Verbal, 5/Executive & Animated & Verbal+Numerical, 6/ Executive & Animated &
Verbal+Graphical, 7/Peer & Real & Verbal, 8/Peer & Real & Verbal+Numerical, 9/Peer & Real & Verbal+Graphical,
10/Executive & Real & Verbal, 11/Executive & Real & Verbal+Numerical, 12/ Executive & Real & Verbal+Graphical

41
Likewise, the education level of business owners participating in the research was also equally
distributed among the twelve experimental conditions (𝑥2= 7.621, df = 11, p = 0.747 > 0.05)
(Appendix 9). Table 5 below describes the distribution of education level of the participant
business owners on each experimental condition.

Table 5: Owners´ education level – by experimental condition

Experimental Education Level

Group
Elementary Secondary Technical University or
condition A size (N)
(or below) School studies above
1 14 0.0% 0.0% 35.7% 64.3%
2 19 0.0% 0.0% 36.8% 63.2%
3 22 0.0% 0.0% 18.2% 81.8%
4 15 0.0% 0.0% 33.3% 66.7%
5 14 0.0% 0.0% 21.4% 78.6%
6 22 0.0% 9.1% 31.8% 59.1%
7 19 5.3% 0.0% 21.1% 73.7%
8 21 0.0% 4.8% 19.0% 76.2%
9 22 0.0% 9.1% 27.3% 63.6%
10 15 0.0% 6.7% 40.0% 53.3%
11 20 0.0% 15.0% 15.0% 70.0%
12 23 0.0% 4.3% 39.1% 56.5%
Total 226 1 10 63 152
A 1/Peer & Animated & Verbal only, 2/Peer & Animated & Verbal + Numerical, 3/Peer & Animated & Verbal + Graphical,
4/Insurance executive & Animated & Verbal only, 5/Insurance executive & Animated & Verbal + Numerical, 6/Insurance
executive & Animated & Verbal + Graphical, 7/Peer & Real & Verbal only, 8/Peer & Real & Verbal + Numerical, 9/Peer &
Real & Verbal + Graphical, 10/Insurance executive & Real & Verbal only, 11/Insurance executive & Real & Verbal +
Numerical, 12/Insurance executive & Real & Verbal + Graphical

4.5 Effects of Marketing treatments (H1.1, H1.2, and H1.3)

The first step to determine which marketing treatments (source of endorsement, spokes-
character type and message format of risk exposure) are more effective at fostering the
likelihood of acquiring business insurance amongst MSMEs was to identify which of the
treatments had a significative effect on the desired outcome (insurance purchase intention). To
accomplish this, a Three-Way ANOVA (2x2x3) was conducted. An initial validation of the
Anova assumptions exhibited that the compared groups on each condition had homogeneous
variances (Appendix 10: Levene's Test of Equality of Error Variances, Sig.= 0.327). Although
the target variable of the experiment (purchase intention) was only normally distributed
amongst four of the twelve tested conditions (Appendix 11: Shapiro-Wilk Tests of Normality),
ANOVA tests are somewhat robust to violations of normality (Schmidt & Finan, 2018),
meaning that this assumption can be violated and still provide valid conclusions.

42
Figure 8 shows the estimated marginal means of insurance purchase intention on each one of
the tested message formats. The figure suggests that messages that used graphical displays or
numerical expressions in addition to verbal expressions were especially effective at fostering
insurance adoption amongst MSMEs as compared to messages using verbal expressions only.
This is consistent with results of the three-way ANOVA test, which showed that message
format has a significant effect on insurance purchase intention (F = 3.887, p=0.022 < 0.05,
η210=0.003) (Appendix 12).

A Bonferroni post-hoc test (Appendix 14) exhibited that the average purchase intention after
watching fictional Ads using verbal expressions in combination with graphical displays (5.31)
as message formats of risk exposure was significantly higher (p=0.024 < 0.05) than the average
purchase intention after watching Ads using verbal expressions only (4.59). In addition, the
same post-hoc test exhibited that the average purchase intention after watching fictional Ads
using verbal expressions in combination with numerical expressions (5.23) was marginally
higher (p=0.071) than the average purchase intention after watching fictional Ads using verbal
expressions only (4.59).

Figure 8: Main effect of message format on insurance purchase intention

10 Given that SPSS reports a “partial eta squared”, all reported Eta squared (η2) were recalculated using the following formula:
Eta2 = SSeffect / SStotal, where: SS = sums of squares

43
Although no significant main effects of source of endorsement (F = 0.111, p=0.740 > 0.05,
η2=0.000) or spokes character type” (F = 0.080, p=0.777 > 0.05, η2=0.000) on insurance
purchase intention were found, Figure 9 showing the estimated marginal means of insurance
purchase intention in different combinations of source of endorsement and spokes character
type suggests that messages that used animated MSMEs owners or human insurance executives
as main characters were more effective at fostering insurance adoption amongst MSMEs.

This is also consistent with results of the three-way ANOVA test, which showed a significant
interaction effect between both treatments (F = 4.623, p=0.033 < 0.05, η2=0.002). The analysis
showed that the average purchase intention after watching fictional Ads with a human insurance
executive (5.28) or an animated MSME owner (5.38) as mains characters was higher than the
insurance purchase intention after watching Ads with any other source of endorsement / spokes
character type combination (Appendix 15).

Figure 9: Interaction effect of spokes character type and source of endorsement on insurance
purchase intention

44
As mentioned previously, experts in the academic, private and public sectors believe that some
characteristics of the businesses and characteristics of the businesses owners could also have
an impact on insurance purchase behavior. Nonetheless, a Three-Way ANCOVA conducted
using the mentioned variables as covariates (Appendix 13) did not show any significant effect
for businesses size (F=0.276, p = 0.60 > 0.05, η2=0.000) or education level (F=0.450, p = 0.503
> 0.05, η2=0.000). Thus, even if the effects of characteristics of the business and characteristics
of the business owners are removed through an ANCOVA analysis, all conclusions remained
unchanged. Both the main effect of message format (F=3.945, p = 0.021 < 0.05, η2=0.003) and
the interaction effect of source of endorsement and spokes character type (F=4.140, p = 0.043
< 0.05, η2=0.002) on insurance purchase intention remained significant.

Perceived trustworthiness and expertise of main characters

A complementary analysis of the perceived characteristics of the main characters in the
presented fictional ads exhibited that MSMEs could have significantly different perceptions
regarding the trustworthiness of main characters (F=3.135, p = 0.078 < 0.1) depending on the
source of endorsement. Figure 10 shows a comparison of the average perceived trustworthiness
between a main character who presented himself as an insurance executive and a main character
who presented himself as an MSME owner. Results suggested that an MSMEs owner is
perceived as a more trustful source of endorsement in comparison to an insurance executive.

Figure 10: Perceived trustiness of main characters – Source of endorsement

7.00

6.00
5.07
5.00 4.74

4.00

3.00

2.00

1.00
Source of Endorsement

Insurance Executive MSME Owner

45
Similarly, MSMEs could also have significantly different perceptions regarding the expertise
of main characters (F=4.428, p = 0.036 < 0.05) depending on the spokes-character type. Figure
11 shows a comparison of the average perceived expertise between a human main character and
an animated main character. Results suggested that an animated main character is perceived as
a more expert source in comparison to a human main character.

Figure 11: Perceived expertise of main characters – Spokes character type

7.00

6.00
5.25
4.90
5.00

4.00

3.00

2.00

1.00
Spokes Character Type

Human Animated

4.6 Moderation Testing (H2.1, H2.2, H2.3, H2.4)

To establish how do risk perception towards robberies, attitudes towards insurance,
characteristics of the business (business size) and characteristics of the business´ owners
(education level) influence the effectiveness of message formats of risk communication in terms
of insurance purchase intention, a moderation test was performed using PROCESS macro for
moderation analysis in SPSS. The treatment variable message format needed to be transformed
into a dummy variable before its inclusion in the model analysis. To do so, the significant (or
marginally significant) levels “Verbal + Numerical expressions” and “Verbal expressions +
Graphical displays” were merged into a single code.

4.6.1 Moderation Testing - Risk perception towards robberies and Attitudes towards
insurance (H2.1, H2.2)
To test whether risk perception towards robberies and attitudes towards insurance (before the
exposure to the tested treatments) moderate the relationship between the message format and
insurance purchase intention, the PROCESS macro for SPSS conducted a hierarchical multiple
regression analysis. In the first step of the procedure, three variables were included: message
format, risk perception towards robberies and attitudes towards insurance.
46
To avoid potentially problematic multicollinearity issues with the interaction terms, the
variables included in the analysis were centered, and interaction terms between message format
and risk perception towards robberies and between message format and attitudes towards
insurance were created (Aiken & West, 1991), then, both interaction terms were added to the
regression model. The interaction effect between message format and attitudes towards
insurance accounted for a significant proportion of the variance in insurance purchase intention
(ΔR2 = .010, F= 4.061, p = .045 < .05), thus providing substantial evidence for a moderating
effect of preconceived attitudes towards insurance on the effectiveness of message formats of
risk exposure. On the other hand, the interaction effect between message format and risk
perception towards robberies was not significant (F= 2.283, p = .132, p > .05) which on the
contrary, provides evidence to reject the moderation role of risk perception (Appendix 16).

As described in Figure 12 below, amongst people with negative or neutral attitudes towards
insurance, risk communication including numerical expressions or graphical displays in
addition to verbal expressions was more effective (3.18 and 4.77) at fostering purchase intention
of insurance than using verbal expressions only (2.66 and 3.80). On the contrary, for those
already convinced of the importance of insurance (more positive preconceived attitudes), both
message formats (risk communication including numerical expressions or graphical displays in
addition to verbal expressions vs. verbal expressions only) had a similar impact (6.36 vs. 6.08).

Figure 12: Moderating effect of Attitudes Towards Insurance

47
Changes in attitudes towards insurance (after the exposure to the treatments)
After the moderating role of preconceived attitudes towards insurance was confirmed, the
author focused on testing whether MSME´s attitudes towards insurance could be affected by
advertising (considering the presented fictional Ads). To do so, a paired samples T-test was
conducted (significance level of 5%, two-sided) to determine whether attitudes towards
insurance were differed before and after the exposure to the Ads. Results showed that
respondents' attitudes towards insurance before watching the Ads (mean=4.90) were
significantly different from respondents' attitudes towards insurance after watching the Ads
(mean=5.61). These results make evident that MSME´s attitudes towards insurance were
significantly affected after watching the Ads (t=-10.804, p = 0.00 < 0.01). A similar analysis
conducted for each one of the tested treatments (Appendix 17) proved that the change on
attitudes towards insurance maintained for each level of all the tested treatments as described
in Figure 13 below.

Figure 13: Change in Attitudes towards insurance Post-treatment exposure

48
4.6.2 Moderation Testing - Business Size and Education Level (H2.3, H2.4)
Likewise, to test whether characteristics such as the business size and owners´ education level
moderated the relationship between the message format and insurance purchase intention, the
PROCESS macro for SPSS conducted a similar hierarchical multiple regression including
message format, business size and education level in the analysis. The interaction effect
between message format and education level accounted for a marginally significant proportion
of the variance in insurance purchase intention (ΔR2 = .014, F= 3.125, p = .079 < 0.1), thus
providing evidence for a moderating effect of owners´ education level on the effectiveness of
message formats of risk exposure. On the contrary, the interaction effect between message
format and business size was not significant (F= 0.060, p = 0.806 > .05), which provided
evidence to reject the moderation role of business size (Appendix 18). Figure 14 shows that risk
communication including numerical expressions or graphical displays in addition to verbal
expressions was more effective in terms of purchase intention amongst business´ owners with
technical or university studies (5.30) in comparison with owners with a lower education level
(4.89). On the other hand, risk communication including verbal expressions only was more
effective in terms of purchase intention amongst business´ owners without technical or
university studies (6.50) in comparison with owners with a higher education level (4.52).

Figure 14: Moderating effect of Education Level

A final model incorporating both attitudes towards insurance and owner´s education level as
moderators of the relationship between message format and insurance purchase intention
(Appendix 19) explained 44.5% of the variance in insurance purchase intention (R² = .445).
Both interactions remained significant, thus reaffirming the initial conclusions.
49
An overview of results of the tested hypotheses is presented in Table 6 below.

Table 6: Overview of results

Summary of research questions and hypotheses

H1.1: Risk communication will be more effective at
fostering insurance purchase intention if the insurance´s Not
endorsement is delivered by other MSMEs (a peer) in supported
comparison to being delivered by an executive of an
Q1: Which marketing insurance company.
treatments are more H1.2: Risk communication featured by a human spokes-
effective at fostering character will be more effective at fostering insurance Not
the likelihood of purchase intention in comparison to risk communication supported
acquiring business featured by an animated spokes-character.
insurance amongst H1.3: Risk communication including numerical expressions
MSMEs? or graphical displays in addition to verbal expressions will Statistically
be more effective at fostering insurance purchase intention supported11
in comparison to risk communication including verbal
expressions only.
H2.1: Risk perception towards robberies will moderate the
effect of message format of risk exposure on insurance
purchase intention. Moreover, risk communication
Q2: How do “Risk including numerical expressions or graphical displays will Not
perception towards be more effective at fostering insurance purchase intention supported
robberies” and amongst MSMEs with low perceived risk towards
“Attitudes towards robberies in comparison to risk communication including
insurance” influence verbal expressions only.
the effectiveness of the H2.2: Preconceived attitudes towards insurance will
tested marketing moderate the effect of message format of risk exposure on
treatments in terms of insurance purchase intention. Moreover, risk Partially
Insurance Purchase communication including numerical expressions or supported
intention? graphical displays will be more effective at fostering Marginally
insurance purchase intention amongst MSMEs with significant
negative attitudes towards insurance in comparison to risk
communication including verbal expressions only.
H2.3: Business size will moderate the effect of message
Q3: How do
format of risk exposure on insurance purchase intention.
characteristics of the Moreover, risk communication including numerical
business (Size) and expressions or graphical displays will be more effective at Not
characteristics of the fostering insurance purchase intention amongst medium supported
business´ owners and small sized businesses in comparison to risk
(Education Level) communication including verbal expressions only.
influence the H2.4: Owners´ education level will moderate the effect of
message format of risk exposure on insurance purchase
effectiveness of the
intention. Moreover, risk communication including
tested marketing numerical expressions or graphical displays will be more Statistically
treatments in terms of effective at fostering insurance purchase intention amongst supported
Insurance Purchase owners with higher education level (technical or university
intention? studies) in comparison to risk communication including
verbal expressions only.

11 Statistically significant for graphical + verbal, but marginally significant for numerical + verbal.

50
5. Discussion

5.1 Marketing treatments

This thesis performed an experimental approach to test the cause and effect relationship
between three different marketing treatments (source of endorsement, spokes-character type
and message format) and insurance purchase intention. In line with the author´s hypotheses,
results showed that risk communication that used graphical displays or numerical expressions
in addition to verbal expressions was especially effective at fostering insurance adoption
amongst MSMEs as compared to risk communication using verbal expressions only. As
expected, graphical displays and numerical expressions were more helpful for respondents to
more accuracy interpret the presented hazard (Lion et al., 2001; Teigen, 1999), probably
influencing their level of understanding of its potential consequences in a positive way.
Oppositely to results from Schirillo and Stone (2005), no differences between respondents
exposed to graphical displays and numerical expressions were found, suggesting that risk
communication initiatives interested in decreasing risk-taking behavior amongst MSMEs
should utilize graphical or numerical message formats in addition to verbal expressions as both
formats are more effective at enabling MSMEs´ owners to mentally materialize their personal
vulnerability towards hazards, thus positively influencing their intention to acquire business
insurance.

On the other hand, contrary to the expected, risk communication was equally effective at
fostering insurance purchase intention when the insurance´s endorsement was delivered by an
MSME´s owner in comparison to being delivered by an executive of an insurance company.
Similarly, risk communication featured by a human spokes-character had the same
effectiveness at fostering insurance purchase intention in comparison to risk communication
featured by an animated spokes-character. Nonetheless, even though both marketing treatments
did not have direct effects on insurance purchase intention, their interaction did have a relevant
influence. Risk communication that used a combination of animated MSMEs owners or human
insurance executives as main characters were more effective at fostering insurance adoption
amongst MSMEs. The author hypothesizes that this interaction could be the result of different
perceptions regarding the characteristics of the main characters in the presented fictional Ads.

51
For instance, MSME´s owners were perceived as a more trustworthy source probably due to
similarity effects (Eysenbach, 2013) in comparison to insurance executives. Experts suggest
that entrepreneurs value the advice coming from other entrepreneurs, this organic and everyday
social interaction could make MSMEs more receptive to a message coming from a peer as it is
a communication context they are more familiar with. “Success depends a lot on who promotes
or who sells insurance… The best source would be another entrepreneur because entrepreneurs
learn from themselves and their experiences”- Brenda Silupu, Advisory Center for MSMEs
(see Appendix 22 – Interview 2). Correspondingly, animated main characters were perceived
as a more expert source in comparison to human main characters. Even though it may sound
counterintuitive to associate the attribute “expertise” with animated characters, some
advertising experts believe that their humanization is explained because our society is already
culturally adapted to them. “We have all grown up with cartoons, we have felt respect and
admiration for mutant beings or not even humans, robots or extraterrestrials and there was
never a problem, that same tendency is accepted when you communicate something in an
animated way” - Charlie Valderrama, Y&R (Appendix 24 – Interview 4). Moreover, the
versatility of animated characters is very suitable to the social context in Peru, which is very
sensitive to racial differences. “In a country as diverse as Peru where there are racism and
classism, you need to make communications that reach them all without stereotypes (…)
animated characters softens all these issues” - Charlie Valderrama, Y&R (Appendix 24 –
Interview 4). The author hypothesizes that both the adaptability and expertise perception of
animated characters complement the probable lack of actual knowledge about insurance
services of an MSME´s owner as the main character, thus, positively influencing the audience.

Although no particular characteristics of main characters measured in this thesis were

significantly more associated neither with human spoke characters nor with insurance
executives, the author hypothesizes that additional characteristics of the main characters not
analyzed in this study could also have a considerable impact on the way the audience processes
messages. For instance, their perceived likability (Callcott et al.,1996) or attractiveness (Baker
and Churchill, 1977) to mention a few examples.

The results mentioned above evidence that effective communication is more than just content.
The effectiveness depends not only on what is in the message and the message format but also
on the positive synergy generated by different spoke characters types and sources of
endorsement delivering the message.

52
5.2 Risk perception towards robberies as a moderator
Contrary to the expected, results from this thesis provided evidence to reject the moderation
role of risk perception. The author hypothesizes that because of the vast number of individuals
who have been already victims of robberies and also because of the high focus TV news and
mass media have regarding delinquency, and criminal acts in Peru, the majority of the
population is already aware of robberies and its consequences. This close relation with
delinquency and robberies, even if not from a personal experience, could be an explanation for
the similar levels of risk perception towards robberies respondents show, even in different
locations of the country (F=1.971, p = 0.162 > 0.05).

5.3 Attitudes towards insurance (After the exposure to the treatments) as a moderator
In line with the author´s hypotheses, results showed that amongst MSME´s owners with
negative or neutral attitudes towards insurance, risk communication including numerical
expressions or graphical displays in addition to verbal expressions was more effective at
fostering purchase intention of insurance than using verbal expressions only. The author´s
hypothesis is that including complementary information such as numerical expressions or
graphical displays in a message may be particularly helpful in the decision of acquiring
insurance amongst people not yet convinced of its importance as these complements may have
the capacity to change the evaluative reaction of MSMEs. On the contrary, amongst MSME´s
owners who currently do not have insurance but who are already convinced of its importance
(more positive attitudes towards insurance before being exposed to the ads), risk
communications with or without the inclusion of numerical expressions or graphical displays
seem to produce similar reactions.

5.4 Business size as a moderator

Contrary to the expected, there was no statistical evidence of a moderation effect of business
size. The author hypothesizes that this could be due to the highly unbalanced nature of the
proportion of business according to their size. This unbalanced proportion provided a
representative sample size for micro enterprises (81.4% of the sample) but a less representative
sample size for small and medium enterprises (15.9% and 2.7% of the sample respectively).

53
5.5 Owner´s education level as a moderator
As expected by the author, results showed that risk communication including numerical
expressions or graphical displays in addition to verbal expressions was more effective in terms
of purchase intention amongst business´ owners with technical or university studies. The author
hypothesizes that both numerical expressions and graphical displays in a message work as
decision support tools for highly educated MSME´s owners to adopt risk management tools,
thus increasing the efficacy of risk communication. On the contrary, risk communication
including verbal expressions only was more effective in terms of purchase intention amongst
business´ owners without technical or university studies in comparison with owners with a
higher education level. The author hypothesizes that their probably limited numeracy and graph
literacy (both variables not measured in this research) as compared with individuals with a
higher education level, could inhibit their comprehension of numeric or graphic risk
information. Thus, amongst MSME´s owners with neither technical nor university studies,
numerical and graphical expressions may be too complex and thus more difficult to interpret in
comparison to verbal expressions.

5.6 Limitations
5.6.1 Representativeness issues
Representativeness analysis was performed to test whether the sample was representative of the
population o Peruvian MSMEs in terms of characteristics of the business and characteristics of
the business owners. Results showed that the proportion of MSMEs with technical or university
studies in the sample was significantly higher than in the population12 and thus, is not
representative (Appendix 20). Consequently, readers should approach the current findings and
conclusions with caution as the interpretation of results should be for now limited to the context
of MSMEs with a higher education level. The author hypothesizes that the mentioned issue is
due to the research approach used in this thesis. As in Peru, the penetration of internet has not
reached the majority of the MSMEs population yet, email-based surveys are more effective
amongst individuals with higher income levels and higher education levels (both variables
highly correlated). Nonetheless, this issue was to some extent addressed using an ANCOVA
and controlling for education level, and conclusions remained unchanged.

12Population Proportion: Primary school or below (6.7%), Secondary school (38.8%), Technical studies (23.1%),
College/University or above (31.4%). Source: INEI - Central Directory of Companies and Establishments.

54
5.6.2 Product Characteristics
This thesis is not considering characteristics of the product that could be relevant determinants
of insurance purchase intention amongst the analyzed population such as the price of the
insurance, the type of contract acquired and the supplier insurance company. Although aspects
such as the pricing and the supplier insurance company are in some extent addressed by asking
people to assume a fair price and an offer made by a well-known company (ABC Insurance),
the efforts to isolate the impact of both variables are without question not sufficient.

5.6.3 Hypothetical choices

This thesis utilizes self-reported purchase intentions as proxies of future behavior to estimate
potential insurance adoption. The analysis relies on the assumption that individuals know how
they would behave in a real choice scenario and that they have no reasons to hide their exact
preferences as the present thesis is an independent research effort. However, although past
studies have demonstrated that the most proximal determinant of a behavior is the intention to
perform it (Fishbein et al., 1975; Garcia-Retamero et al., 2013), the author is aware that the
reliance on hypothetical choices raises questions regarding the generalizability of the results.

5.6.4 Effect size

Communication researchers are increasingly recognizing the importance of reporting effect
sizes judging the magnitude of the differences present between groups to complement or even
replace statistical significance testing results. The main reason for this refocus is that
significance tests are highly dependent on sample size and thus, statistical significance testing
may not always imply meaningfulness (Olejnik & Algina, 2000, p. 241). Reporting effect sizes
allow readers to interpret the results with a more comprehensive view as effects are relatively
independent of sample size and provide a method of comparison of results between studies
(Cohen, 1994; Hays, 1963; Thompson, 2002). Results of this thesis showed that even though
both the main effect of message format and the interaction effect between source of
endorsement and spokes-character type on insurance purchase intention are significant
(Appendix 12), they did not meet a standard of even a small effect size (0.1 < η2 < 0.3),
moreover, according to a general guide developed by Cohen (1988) both effects are trivial (η2
< 0.1). This could imply that the differences and effects found in this research may have low
practical significance. Thus, further research addressing the aforementioned representativeness
issues and sample limitations should retest this experiment in order to determine if the low
effect size of results remains.

55
5.7 Further research
5.7.1 Explore the effects of real risk exposure
Previous studies have proved that people in different geographical locations have different
views about the riskiness of various events. An analysis of criminal acts towards companies in
Peru showed that almost a third (28.9%) of companies claim to have been victims of a criminal
act (National Institute of Statistics and Informatics – INEI, 2015). This same study also showed
visible dissimilarities in crime rates amongst different regions in the country, being the regions
with the highest economic dynamism: Lima (40.1%), Ica (48.4%), Arequipa (45.4%) and Puno
(41.4%) the ones with the highest levels of crime, while the poorest regions: Huancavelica
(20.5%), Pasco (21%) and San Martín (21.1%) showed the lowest crime rates. Future research
needs to address and explore the effects of the real risk exposure according to the geographic
location and environment surrounding each business as compared to the perceived risk exposure
and their role in the effectiveness of risk communication.

5.7.2 Use a face to face research approach

According to the Connected Consumer Study performed by Ipsos and Google (2016), internet
penetration in Peru is only 66.6%, and it is significantly lower in the provinces of the country.
Budget and time limitations made impossible for the author to use a research approach different
than email-based surveys, which were more effective amongst populations with access to
internet (individuals with higher income levels and also higher education levels, both variables
highly correlated). Further research with access to higher resources regarding bugged and time
should address a face to face research approach so to cover all the different profiles of MSMEs
owners including those without access to internet, which still represent an important group.

5.7.3 Include additional purchase drivers

Because of the author´s decision regarding the research design, this thesis did not consider
characteristics of the product that could be relevant determinants of insurance purchase
intention amongst the analyzed population such as the price, the type of contract and the
supplier insurance company. To further understand the effectiveness of risk communication,
future research should include real product characteristics, thus exposing respondents to a more
realistic decision scenario.

56
5.7.4 Explore more flexible risk-management solutions
The growing demand for more flexible risk-management solutions amongst low-income
customers has led to new options in the market such us micro-insurances, which experts believe
are suitable to MSME´s characteristics and financial needs. Future research should allow
participants to select more precisely the percentage of insurance coverage they would be more
likely to purchase (taking into account that more insurance coverage will result in a higher
price). This inclusion would be an initial step at exploring the effect of risk communication in
the context of micro-insurance as an alternative introductory product in the MSMEs market.

5.7.5 Include measures of manifest behavior

As mentioned before, because this thesis utilizes self-reported purchase intentions as proxies of
future insurance adoption, it is subject to limitations regarding the generalizability of the results.
Thus, future research should include measures of manifest behavior (e.g., monitor real
insurance acquisition after the respondents´ exposure to the tested treatments) as the ideal target
variable to more accurately estimate the impact of risk communication on future insurance
purchase.

57
6. Conclusions

Considering that the insurance market is still in an introductory phase in Peru according to
experts in the sector, and taking into account the distrust that the majority of MSMEs still show
towards the banking and insurance system, promotion initiatives from the private or the public
sector aimed to increase the insurance adoption rates in Peru are more likely to succeed if the
risk communication includes numerical expressions or graphical displays as complementary
information in messages. Moreover, using the aforementioned message formats in combination
with a human insurance executive or an animated MSME owner as the main characters in
communications could also increase the likelihood of insurance adoption. Thus, as expected,
there are opportunities for both policymakers and private firms to improve the way business
insurance services are communicated and to allocate their available communication budget
more efficiently by considering the proposed treatments in their communication efforts.

Future risk communication should also consider that MSME´s owners require different
communication approaches depending on their educational background to be positively
influenced by insurance communication and therefore make better financial decisions. MSME´s
owners with technical or university studies should be approached using risk communication
including numerical expressions or graphical displays in addition to verbal expressions,
whereas MSME´s owners without technical or university studies should be approached with
risk communication using verbal expressions only as they may be easier to interpret for them.

Finally, the fact that MSME´s attitudes towards insurance were significantly affected after
business owners and managers were exposed to the tested fictional Ads indicates that their
attitudes towards insurance could be altered if the communication they are exposed to is
persuasive enough. The evidence of a moderating role of MSME´s attitudes towards insurance
in the effectiveness of risk communication should encourage both policymakers and players in
the insurance industry to take a more active role, the first in spreading insurance education and
the second in insurance promotion for MSMEs.

58
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 Appendix

Appendix 1: Stimuli (Fictional Ads)

Treatment
1 Peer & Animated & Verbal only
2 Peer & Animated & Verbal+Numerical
3 Peer & Animated & Verbal+Graphical
4 Executive & Animated & Verbal only
5 Executive & Animated & Verbal+Numerical
6 Executive & Animated & Verbal+Graphical
7 Peer & Real & Verbal only
8 Peer & Real & Verbal+Numerical
9 Peer & Real & Verbal+Graphical
10 Executive & Real & Verbal only
11 Executive & Real & Verbal+Numerical
12 Executive & Real & Verbal+Graphical
URL
https://www.youtube.com/watch?v=KREsuZki5qA
https://www.youtube.com/watch?v=usBZHMxi8Fo
https://www.youtube.com/watch?v=Jm3asgjgLB0
https://www.youtube.com/watch?v=jXluRGrn37o
https://www.youtube.com/watch?v=XqX0L7sB6WQ
https://www.youtube.com/watch?v=PMVz6yivfqU
https://www.youtube.com/watch?v=WuoqcB0d3LY
https://www.youtube.com/watch?v=qUSqu8_12QQ
https://www.youtube.com/watch?v=_53l7jILl8c
https://www.youtube.com/watch?v=F-Gp1ukw9bo
https://www.youtube.com/watch?v=x5a3ON7HQps
https://www.youtube.com/watch?v=-Mhx3AarDuA

Appendix 2: Survey

Intro: Thank for participating in this survey, the main purpose is to know your perception
towards some particular security issues faced by businesses in Peru.

1) This survey is aimed at owners and managers of enterprises. Are you the person in charge of
making decisions regarding your business?
Yes 1 No 2 (FINISH)

2) Is your business currently covered by business insurance (partially or totally)? (Please note
that we are asking specifically about insurance covering your business or elements of your
business such as structures, furniture, and inventory. This does not include any personal
insurance such as life insurance, automobile insurance, etc.)
Yes 1 (FINISH) No 2

3) Based on the current categorization of businesses in Peru, please select the category that more
accurately corresponds to your business:
Total Annual Sales (S/.)
Micro Enterprises S/. 600 000 1
Small Enterprises From S/. 600 000 to S/. 7 000 000 2
Medium Enterprises From S/. 7 000 000 to S/. 9 500 000 3

4) Please select the location of your business headquarters. (If your business headquarters are
physically located in different cities, please select all of them)
1. Amazonas 6. Cajamarca 11. Ica 16. Loreto 21. Puno
2. Áncash 7. Callao 12. Junín 17. Madre de Dios 22. San Martín
3. Apurímac 8. Cuzco 13. La Libertad 18. Moquegua 23. Tacna
4. Arequipa 9. Huancavelica 14. Lambayeque 19. Pasco 24. Tumbes
5. Ayacucho 10. Huánuco 15. Lima/Callao 20. Piura 25. Ucayali

65
5) Please select your business sector/industry:
Professional services /
1 Construction 7
technical services
Communications 2 Textile 8
Services Industrial /
Restaurant 3 Metallurgy 9
Manufacture
Hotel / Hostel 4 Foods/drinks 10
Transport / storage 5 Agriculture / Cattle raising 11
Commerce 6 Other_____________ (specify) 12

6) Please select your highest education level achieved:

No education 1 Technical studies 4
Elementary school or below 2 College/University or above 5
Secondary school 3 Other_____________ (specify) 6

The next group of questions seeks to explore your opinion about a type of risk for companies:
Robberies

7) Please answer how you personally feel when you think of “Robberies” and how they can affect
businesses. Use the following scale with "1" being "I remain calm when thinking about it" and
"7" being "I become nervous when thinking about it". Feel free to select any number on the
scale.
I remain I become
Dread Factor: calm 2 3 4 5 6 nervous
1 7

8) Please answer how informed you are about “Robberies” and its severity for companies. Use the
following scale with "1" being "I basically do not know anything about the risk and its
seriousness" and "7" being "I am well informed about the risk and its seriousness". Feel free to
select any number on the scale.
Do not
Well
Unknown know
2 3 4 5 6 informed
Factor: nothing
7
1

9) Please answer how much real threat you feel against “Robberies” and how they could affect
your company. use the following scale with "1" being "I feel no personal threat" and "7" being
"I feel high personal threat". Feel free to select any number on the scale.
Personal No High
Exposure threat 2 3 4 5 6 threat
Factor: 1 7

The next group of questions seeks to explore your opinion about insurance services for
companies like yours

66
10) How important is it to have insurance to protect the future of your business in case of
“Robberies”? Use the following scale with "1" being "Not at all" and "7" being "Extremely".
Feel free to select any number on the scale.
Not at
Extremely
Important: all 2 3 4 5 6
7
1

11) How effective is it to have insurance to protect the future of your business in case of
“Robberies”? Use the following scale with "1" being "Not at all" and "7" being "Extremely".
Feel free to select any number on the scale.
Not at
Extremely
Effective: all 2 3 4 5 6
7
1

12) How beneficial is it to have insurance to protect the future of your business in case of
“Robberies”? Use the following scale with "1" being "Not at all" and "7" being "Extremely".
Feel free to select any number on the scale.
Not at
Extremely
Beneficial: all 2 3 4 5 6
7
1

Stimuli exposure (fictional advertising): Next you will watch a fictional advertising from a
fictional insurance company “ABC”. Please imagine that “ABC” is an insurance company that
already exist in the Peruvian market and that you already know.
Imagine that you are on internet or TV and watch the following Ad [Insert Video]
Based on the information you watched before, please answer the following questions

13) How important is it to have insurance to protect the future of your business in case of
“Robberies”? Use the following scale with "1" being "Not at all" and "7" being "Extremely".
Feel free to select any number on the scale.
Not at
Extremely
Important: all 2 3 4 5 6
7
1

14) How effective is it to have insurance to protect the future of your business in case of
“Robberies”? Use the following scale with "1" being "Not at all" and "7" being "Extremely".
Feel free to select any number on the scale.
Not at
Extremely
Effective: all 2 3 4 5 6
7
1

67
 Insurance Purchase Intention
15) Based on the information you watched before, how likely is that you will purchase total or
partial insurance for your business? (considering a “fair” price according to the size of your
business)

I have no intention of I am certain that I

doing this will do this
1 2 3 4 5 6 7

16) Based on the information you watched before, please evaluate the main character of the
commercial. Use the following scale with "1" being "Non-expert in the subject" and "7" being
"Reliable". Feel free to select any number on the scale.
Not
Reliable
Trustiness: reliable 2 3 4 5 6
7
1

17) Based on the information you watched before, please evaluate the main character of the
commercial. Use the following scale with "1" being "Non-expert in the subject" and "7" being
"Expert in the subject". Feel free to select any number on the scale.
Non-expert
Expert in
in the
Expertise: 2 3 4 5 6 the subject
subject
7
1

Thank you for participating in the survey!

Appendix 3: Scale of Risk Perception towards robberies

Items Factor 1 Communality
Dread 0.876 0.768
Personal Exposure 0.876 0.768
Factor name Risk Perception towards robberies
Reliability (Cronbach’s α) α = 0.70
Bartlett's Test of Sphericity Sig. = 0.00
% Variance Explained 76.80%
Note: Principal components analysis with Varimax rotation, only factor loadings > .30 are presented

Appendix 4: Scale of Attitudes towards insurance (Pre-Stimuli)

Items Factor 1 Communality

Effectiveness 0.955 0.913
Beneficial 0.955 0.913
Factor name Risk Perception towards robberies
Reliability (Cronbach’s α) α = 0.90
Bartlett's Test of Sphericity Sig. = 0.00
% Variance Explained 91.25%
Note: Principal components analysis with Varimax rotation, only factor loadings > .30 are presented

68
Appendix 5: Scale of Attitudes towards insurance (Post-Stimuli)
Items Factor 1 Communality
Effectiveness 0.972 0.945
Beneficial 0.972 0.945
Factor name Risk Perception towards robberies
Reliability (Cronbach’s α) α = 0.94
Bartlett's Test of Sphericity Sig. = 0.00
% Variance Explained 94.48%
Note: Principal components analysis with Varimax rotation, only factor loadings > .30 are presented

Appendix 6: Randomization Test – Business Location (Lima and Provinces)

Chi-Square (cross-tabs) Test
Value df Asymptotic Significance
(2-sided)
Pearson Chi-Square 5,724 11 0.891A
N of Valid Cases 226
A H0 is not rejected, location proportion does not differ across conditions

Appendix 7: Randomization Test – Business Size (Micro, Small and Medium)

Kruskal Wallis Test A
Business Size
Chi-Square 13.813
df 11
Asymp. Sig. 0.244 B
A Grouping Variable: Treatment
B H0 is not rejected, there is no statistically significant difference in terms of business size distribution amongst
conditions

Appendix 8: Randomization Test – Business Sector / Industry (Services, Commercial,

Industrial / Manufacture, Construction, Agriculture, Cattle raising and others)
Chi-Square (cross-tabs) Test
Value df Asymp. Sig.
(2-sided)
Pearson Chi-Square 75,564 66 0.197 A
N of Valid Cases 226
A H0 is not rejected, distribution of business sector does not differ across conditions

69
Appendix 9: Randomization Test – Owners´ Education Level (Elementary or below,
Secondary School, Technical studies, University or above)
Kruskal Wallis Test A
Business Size
Chi-Square 7.621
df 11
Asymp. Sig. 0.747 B
A Grouping Variable: Treatment
B H0 is not rejected, there is no statistically significant difference in terms of education level distribution amongst
conditions.

Appendix 10: Test of Homogeneity of Variances – Treatments

Levene's Test of Equality of Error Variances
Dependent Variable: Purchase Intention
F df1 df2 Sig.
1.146 11 214 0.327 A
A H0 is not rejected, the error variance of the dependent variable does not differ across conditions

Appendix 11: Tests of Normality – Treatments

Tests of Normality: Insurance Purchase Intention
Treatments A Shapiro-Wilk
Statistic df Sig.
1 0.944 14 0.470 B
2 0.848 19 0.006 C
3 0.791 22 0.000 C
4 0.923 15 0.211 B
5 0.841 14 0.017 C
6 0.860 22 0.005 C
7 0.872 19 0.016 C
8 0.914 21 0.065 B
9 0.904 22 0.036 C
10 0.871 15 0.034 C
11 0.908 20 0.059 B
12 0.884 23 0.012 C
A 1/Peer & Animated & Verbal only, 2/Peer & Animated & Verbal + Numerical, 3/Peer & Animated & Verbal +
Graphical, 4/Insurance executive & Animated & Verbal only, 5/Insurance executive & Animated & Verbal +
Numerical, 6/Insurance executive & Animated & Verbal + Graphical, 7/Peer & Real & Verbal only, 8/Peer & Real &
Verbal + Numerical, 9/Peer & Real & Verbal + Graphical, 10/Insurance executive & Real & Verbal only, 11/Insurance
executive & Real & Verbal + Numerical, 12/Insurance executive & Real & Verbal + Graphical.
B H0 is not rejected, there is evidence that the sample on this treatment is normally distributed.
C H0 is rejected, there is evidence that the sample on this treatment is not normally distributed.

70
Appendix 12: Three-way ANOVA – Effects of Marketing treatments
Tests of Between-Subjects Effects
Dependent Variable: Insurance Purchase Intention
Type df Mean F Sig. Partia Obs.
Source III Sum Sqr. l Eta Powerb
Sqrs. Sqr.
Corrected Model 55,65a 11 5.060 1.868 0.045 0.088 0.871
Intercept 5567.1 1 5567.1 2054.9 0.000 0.906 1.000
Source of Endorsement 0.300 1 0.300 0.111 0.740 0.001 0.063
Spokes Character Type 0.218 1 0.218 0.080 0.777 0.000 0.059
Message Format 21.058 2 10.529 3.887 0.022A 0.035 0.698
Source of E. * Spokes Ch. 12.525 1 12.525 4.623 0.033B 0.021 0.572
Source of E. * Message F. 4.933 2 2.467 0.910 0.404 0.008 0.206
Spokes Ch. T. * Message F. 14.973 2 7.486 2.763 0.065 0.025 0.541
Source of E. * Spokes Ch. * 1.450 2 0.725 0.268 0.765 0.002 0.092
Message F.
Error 579.74 214 2.709
Total 6477.0 226
Corrected Total 635.40 225
a. R Squared = ,088 (Adjusted R Squared = ,041)
b. Computed using alpha = .05
A Message Format has a significant effect on insurance purchase intention at a significance level of 5%.
B Source of Endorsement and Spokes Character Type have a significant interaction effect on insurance purchase at a significance

level of 5%.

71
Appendix 13: Three-way ANCOVA - Effects of Marketing treatments controlling for
characteristics of the businesses and characteristics of the owners.

Tests of Between-Subjects Effects

Dependent Variable: Insurance Purchase Intention
Type III df Mean F Sig. Partial Obs.
Source Sum Sqr. Eta Powerb
Sqrs. Sqr.
Corrected Model 58,32a 14 4.166 1.523 0.105 0.092 0.846
Intercept 58.533 1 58.53 21.402 0.000 0.092 0.996
Location A 0.628 1 0.628 0.230 0.632 D 0.001 0.076
Size B 0.762 1 0.762 0.279 0.598 D 0.001 0.082
C
Education Level 1.043 1 1.043 0.381 0.538 D 0.002 0.094
Source of Endorsement 0.291 1 0.291 0.106 0.745 0.001 0.062
Spokes Character Type 0.293 1 0.293 0.107 0.744 0.001 0.062
Message Format 21.81 2 10.90 3.989 0.020 E 0.036 0.710
Source of E. * Spokes Ch. 11.35 1 11.35 4.152 0.043 F 0.019 0.527
Source of E. * Message F. 4.709 2 2.354 0.861 0.424 0.008 0.197
Spokes Ch. T. * Message F. 15.447 2 7.723 2.824 0.062 0.026 0.550
Source of E. * Spokes Ch. * 1.239 2 0.619 0.226 0.798 0.002 0.085
Message F.
Error 577.0 211 2.735
Total 6477.0 226
Corrected Total 635.4 225
a. R Squared = ,092 (Adjusted R Squared = ,032)
b. Computed using alpha = .05
A Variable transformed to dummy (Lima vs. Provinces)
B
Variable transformed to dummy (Micro vs. Small and Medium)
C Variable transformed to scalar (Number of years of education)
D The covariate does not have a significant effect on insurance purchase intention at a significance level of 5%.
E Message Format has a significant effect on insurance purchase intention at a significance level of 5%.
F Source of Endorsement and Spokes Character Type have a significant interaction effect on insurance purchase at a significance

level of 5%.

Appendix 14: Bonferroni post-hoc test - Three-way ANOVA (Effects of Marketing treatments)
Multiple Comparisons
Dependent Variable: Insurance Purchase Intention
Mean Std. Sig. 95% Confidence
Message Difference Error Interval
Format (I-J) Lower B. Upper B.
Verbal Verbal + Numerical -0.6456 0.2830 0.071 B -1.328 0.037
Verbal + Graphical -,7238 A 0.2704 0.024 C -1.376 -0.071
Verbal + Verbal 0.6456 0.2830 0.071 B -0.037 1.328
Numerical Verbal + Graphical -0.0782 0.2593 1 -0.703 0.547
Verbal + Verbal ,7238 A 0.2704 0.024 C 0.071 1.376
Graphical Verbal + Numerical 0.0782 0.2593 1 -0.547 0.703
The error term is Mean Square(Error) = 2,709.
A The mean difference is significant at the 0,05 level
B The average purchase intention after watching an ad using Verbal Expressions and Numerical Expressions is marginally
higher than the average Purchase intention after watching commercials with Verbal Expressions only.
C The average purchase intention after watching an Ad using Verbal Expressions and Graphical Displays is significantly higher

than the average Purchase intention after watching commercials with Verbal Expressions only.

72
Appendix 15: Descriptive Statistics - Three-way ANOVA (Effects of Marketing treatments)

Dependent Variable: Insurance Purchase Intention

Source of Endorsement Mean Std. Deviation N
Verbal 5.533 1.407 15
Human Verbal + Numerical 5.050 1.504 20
Verbal + Graphical 5.304 1.550 23
Total 5.276 1.484 58
Verbal 4.133 1.846 15
Insurance Animated Verbal + Numerical 5.143 1.610 14
Executive Verbal + Graphical 5.364 1.677 22
Total 4.941 1.760 51
Verbal 4.833 1.763 30
Total Verbal + Numerical 5.088 1.525 34
Verbal + Graphical 5.333 1.595 45
Total 5.119 1.620 109
Verbal 4.368 2.241 19
Human Verbal + Numerical 4.905 1.729 21
Verbal + Graphical 4.955 1.618 22
Total 4.758 1.853 62
Verbal 4.357 1.550 14
MSME Animated Verbal + Numerical 5.889 1.183 18
Owner Verbal + Graphical 5.609 1.588 23
Total 5.382 1.557 55
Verbal 4.364 1.950 33
Total Verbal + Numerical 5.359 1.564 39
Verbal + Graphical 5.289 1.618 45
Total 5.051 1.741 117
Verbal 4.882 1.981 34
Human Verbal + Numerical 4.976 1.604 41
Verbal + Graphical 5.133 1.575 45
Total 5.008 1.698 120
Verbal 4.241 1.683 29
Total Animated Verbal + Numerical 5.563 1.413 32
Verbal + Graphical 5.489 1.618 45
Total 5.170 1.665 106
Verbal 4.587 1.863 63
Total Verbal + Numerical 5.233 1.541 73
Verbal + Graphical 5.311 1.598 90
Total 5.084 1.680 226

73
Appendix 16: Moderation Test - Risk perception towards robberies and Attitudes towards
insurance
OUTCOME VARIABLE: Purchase
Model Summary
R R-sq F df1 df2 p
0.659 0.434 33.731 5 220 0.000
Model coeff t p LLCI ULCI
constant 5.083 59.333 0.000 4.914 5.252
Message Format 0.514 2.670 0.008 0.135 0.894
Attitudes _Pre 0.723 11.669 0.000 0.601 0.845
Int_1: Message F. x Attitudes _Pre -0.273 -2.015 0.045 A -0.541 -0.006
Risk_Pre 0.042 0.665 0.507 -0.082 0.165
Int_2: Message F. x Risk_Pre 0.225 1.511 0.132 B -0.069 0.519
R2-chng F df1 df2 p
Int_1: Message F. x Attitudes _Pre 0.010 4.061 1 220 0.045
Int_2: Message F. x Risk_Pre 0.006 2.283 1 220 0.132
A The interaction effect between message format and attitudes towards insurance is a significant at a significance level of 5%.
B Theinteraction effect between message format and risk perception towards robberies is not significant at a significance level
of 5%.

Appendix 17: Change in Attitudes towards insurance (Post treatment exposure)

Paired Samples Test: Attitudes Pre-Treatments vs. Attitudes Post-Treatments
Paired Differences t df Sig.
Std. Std. Error (2-
Mean Deviation Mean tailed)
Total Sample -0.703 0.978 0.065 -10.804 225 0.00 A
Verbal -0.650 1.014 0.127 -5.091 62 0.00 A
Message Verbal + -0.712 0.996 0.116 -6.109 72 0.00 A
Format Numerical
Verbal + -0.733 0.948 0.1 -7.333 89 0.00 A
Graphical
Insurance -0.724 1.070 0.102 -7.069 108 0.00 A
Source of Executive
Endorsement MSME -0.683 0.889 0.082 -8.314 116 0.00 A
Owner
Spokes Human -0.658 1.051 0.095 -6.861 119 0.00 A
Character Type Animated -0.754 0.892 0.086 -8.707 105 0.00 A
A
H0 is rejected, Attitudes towards insurance before the exposure to the treatments are significantly different from
Attitudes towards insurance after the exposure to the treatments.

74
Appendix 18: Moderation Test – Business size and Education level
OUTCOME VARIABLE: Purchase
Model Summary
R R-sq F df1 df2 p
0.2224 0.0495 2.2902 5 220 0.047
Model coeff t p LLCI ULCI
constant 5.094 46.090 0.000 4.876 5.312
Message Format 0.667 2.698 0.008 0.180 1.155
Business size 0.152 0.533 0.595 -0.409 0.713
Int_1: Message F. x Business size -0.162 -0.246 0.806 B -1.462 1.138
Education level 0.245 0.464 0.643 -0.796 1.286
Int_2: Message F. x Education level -2.338 -1.768 0.079 A -4.945 0.268
R2-chng F df1 df2 p
Int_1: Message F. x Business size 0.000 0.060 1 220 0.806
Int_2: Message F. x Education level 0.014 3.125 1 220 0.079
A The interaction effect between message format and Education level is marginally significant at a significance level of 5%.
B The interaction effect between message format and Business size is not significant at a significance level of 5%.

Appendix 19: Moderation Test – Attitudes towards insurance and Education level
OUTCOME VARIABLE: Purchase
Model Summary
R R-sq F df1 df2 p
0.668 0.446 35.351 5 220 0.000
Model coeff t p LLCI ULCI
constant 5.109 60.421 0.000 4.942 5.275
Message Format 0.455 2.401 0.017 0.082 0.828
Attitudes _Pre 0.742 12.370 0.000 0.623 0.860
Int_1: Message F. x Attitudes _Pre -0.252 -1.907 0.058 A -0.513 0.008
Education level 0.453 1.124 0.262 -0.342 1.248
Int_2: Message F. x Education level -2.756 -2.731 0.007 A -4.745 -0.767
R2-chng F df1 df2 p
Int_1: Verbal_G x Attitudes _Pre 0.009 3.637 1 220 0.058
Int_2: Verbal_G x Education level 0.019 7.459 1 220 0.007
A The interaction effect between message format and Education level is marginally significant at a significance level of 5%.
B The interaction effect between message format and Business size is not significant at a significance level of 5%.

Appendix 20: Representativeness Test - Education Level

Kolmogorov-Smirnov Total Population Observed Absolute
Test % Cumulative % Cumulative Differenc
% % e
No education 0 0 0 0 0
Primary school or below 0.067 0.067 0.004 0.004 0.063
Secondary school 0.388 0.455 0.044 0.048 K=0.407 A
Technical studies 0.231 0.686 0.279 0.327 0.359
College/University or above 0.314 1 0.673 1 0
A Considering that the Critical Value at 5% (1.36 / [226^[1/2]] = 0.0904) is lower than the highest absolute difference in
accumulated proportions, H0 is rejected. The distribution of education level in the sample is significantly different than the
distribution of education level in the population

75
Appendix 21: Interview 1

Name of the Interviewed: Martin Giha

Organization: Pacifico Insurance (Leading insurance company in Peru)
Position: Head of MSME´s products
Date: 13/01/2018

Interviewer: Thank you for your participation, as I told you, what this research aims to
analyze is how different communication formats can influence the owners of MSMEs to
adopt insurance to protect their businesses and thus find the most effective
communication formats.
In that context, do you think that the current offer of insurance for MSMEs in Peru, if we
consider their level of income and cost structure, is designed for the three categories of
MSMEs: micro, small and medium-sized enterprises?

Interviewed: The reality is that insurance in Peru is focused for medium and large companies,
in fact insurance products started in those markets, the problem is that what most insurance
companies do is selling insurance adapted for large companies to small companies.
This was a problem that we detected, we were giving insurance for a large company to a small
company and it did not work, we placed high deductibles when the business was very small,
we also asked for very high guarantees, for example, asking for a 2000 dollars alarm system to
a company that did not have money to pay for it because they have other types of needs.

Interviewer: Then, the market is mostly oriented to large and medium-sized companies?
Or there are insurance options even for micro-sized enterprises?

Interviewed: In the company we have a product focused on micro-entrepreneurs, a micro-

entrepreneur is a company that can make S/500 per day, a non-negligible income from
companies such as a grocery store that could really afford insurance. There are approximately
1.8 million companies according to the INEI, large companies are only four thousand. These
micro-entrepreneurs have never been sold insurance.
But insurance companies do not work by segments or types of clients, there is no clear client
segmentation, most companies work and design commercial strategies based on sales channels.
Products are made with sales channels in mind, not customers. If a sales channel, as the brokers
need some features, insurance products are adapted to them.

76
Interviewer: What do you think are the main barriers to the adoption of business
insurance from a business perspective?

Interviewed: To apply for conventional insurance, a company must have an operating license,
so informality in the country is an important barrier. But for example, there are options of
microinsurance to cover only working capital, and the difference of this product is that it has
no restrictions or guarantees, it does not matter if the business does not have an operating license
and does not have deductibles. Microinsurance is very used in Africa for example. The product
has sold a lot in the recent context of "El niño costero" and many cases of fires. It is the
insurance that sells the most, this is a product of entry, but the penetration is still low because
there is also some distrust in insurance.
The micro-entrepreneur does not rely so much on insurance companies as, they rely much more
on executives with whom they have contact. The profile of the micro-entrepreneur is very
different and that is why I think there is a lack of segmentation strategy among the insurance
companies to differentiate the clients, because we treat them all equally.
Another issue is that people who regularly buy insurance are those who have higher education
or children who study abroad.

Interviewer: Do you think that education is a critical variable in the sale of insurance?

Interviewed: Totally, there is no insurance culture in Peru, so we cannot sell something that
people do not know, the insurance market is a novelty. The massive profile is guided by an
analyst, the profile of the most expert businessman is guided by themselves.

Interviewer: What do you think explains the little culture of prevention amongst MSMEs?
Do you think people underestimate the risks to which they are exposed?

Interviewed: Yes, because unlike an auto insurance, your company does not go out, then
people think that nothing will happen to them, they believe that a strong earthquake like the one
we had in the seventies will not happen to us again, but they forget that we can have seismic
movements of less intensity than for example can damage the walls of the companies, they
forget that there are many recent fires. Even robberies seem very far away. People continue to
see insurance as an expense and not as an investment, and that is our great challenge. There is
some distrust in the "small letters" of insurance services and what they actually cover. People
also think that insurance is expensive because they associate it with what they usually pay in
car insurance, but there are insurance services from 150 dollars a year that can cover up to fifty
thousand dollars. Insurance even has tax benefits.

77
Interviewer: Which are the active actors in communicating the importance of insurance
for companies in the country?

Interviewed: We do many interviews and talks to help companies know insurance services,
and we do not expect sales, we hope to generate insurance culture. But beyond this, there are
no courses in universities that talk about insurance, some people have no idea they exist.
Entrepreneurs are people from 28 to 60 years old, because of lack of time they like text
messages and communication on social networks such as Facebook, communication with them
must be digital and not only in the capital, also in the provinces. This helps because we are still
talking about a small segment in which we cannot allocate an advertising budget of 100
thousand dollars.

Interviewer: Do you think the state should have a more active role in insurance
communication?

Interviewed: Yes, and not only in communication, in some countries the possession of
insurance is mandatory, some experts say that if insurance is not made compulsory, people will
not buy it.

Interviewer: Do you think that the communication strategy of insurance services for
companies currently used in the market is effective? Why? What would you change?

Interviewed: Making a parenthesis, when I joined the company, they wanted to use in
insurance communication people with caucasian characteristics, and that is not the profile of an
average Peruvian. Changing corporate communication was very difficult. Other campaigns
went to the other extreme, so the first change was to use more common and average characters.
Then we used an insight that we found: "insurance is like your son", because that is how they
see insurance, insurance grows with them, as the company grows.

Interviewer: Now let's talk about the content of the communication, there are companies
that use humor, animated characters, some others communicate the importance of
companies for people, etc. at any time has statistical data been reported about the risk
exposure of companies?

Interviewed: We have used radio campaigns in which we are talking about a business and a
robbery happens at that precise moment. Because of a corporate issue and our image, we cannot
talk about the likelihood of occurrence of an earthquake in the future for example, but it is valid
to talk about past events and the impact that accidents had in the companies and the costly
repairs. On our website there are videos of SME´s testimonials, real testimonies.
Press releases are an opportunity to talk about this, about the number of fires that occur each
year, about the number of companies that don´t have insurance. This works very well and has
a lot of rebound.

78
Interviewer: Data from the Peruvian Society of SMEs indicate that 90% of SMEs in the
country do not survive their first year of operations. Of course, issues related to the
inexperience and lack of knowledge of the market by the owners are important reasons,
but would you also attribute part of this high mortality rate of SMEs to the accident rates
in the country and the lack of prevention of SMEs?

Interviewed: I do not have the statistics, but since their businesses are their primary source of
income, and many live from day to day, as they do not have insurance that responds to a
catastrophe, most are out of the market after a sinister. We have done for example some
simulations with some stores, about what would happen with or without insurance in the context
of a sinister, and we also used it in a commercial. This is to make them think about a situation
of for example that would happen in a robbery of twenty thousand dollars, what implies for the
business? And the family? They will go out of the market.

Interviewer: To conclude, in general terms, how has been the evolution of insurance for
SMEs in Peru (grows? remains? decreases?)? And what would you say are the primary
drives that have influenced this evolution?

Interviewed: It´s growing, 80% of SMEs that want insurance, need it for a loan, a lease, a
property purchase. As loan placements for SMEs are growing, insurance for SMEs also grows.
And because of recent natural phenomena, people are a little more aware of insurance, but the
problem is that people are very reactive, not preventive. They do not care to buy insurance until
something happens.

Interviewer: Is the current level of penetration of SME insurance from your perspective
the right one?

Interviewed: No, in large companies the insurance penetration is almost total, but in small
companies, which are the majority of the 1.8 million companies in the country, only three
hundred thousand have operating licenses, and only 5% of these companies have insurance.
There is much to be done, both in the formal sector and in the informal sector.

Interviewer: Thank you very much for your help

79
Appendix 22: Interview 2

Name of the Interviewed: Brenda Silupu

Organization: University of Piura (Advisory Center for MSMEs)
Position: Director
Date: 24/01/2018

Interviewer: Thank you for your participation, as I told you what this research aims to
analyze is how different communication formats can influence MSME´s owners to adopt
insurance to protect their businesses and thus find the most effective communication
formats.
In that context, do you think is the adoption of insurance for companies an issue that is
usually discussed in the context of business consulting for micro, small and medium
enterprises? Do you feel that there is a particular concern in the business sector regarding
protection against accidents/ theft/fire/floods / etc. or regarding the exposure to this type
of risks?

Interviewed: The issue of resilience in the SME sector is about how a company can recover
before some shock. When we asked about how “el niño costero” affected the businesses and
microenterprises, what were the losses, and if entrepreneurs think they should invest to reduce
those climatic risks of floods, etc, we found companies that have been harmed by “el niño
costero” and others that have benefited because of it. There are companies that, due to the
phenomenon, have had large construction contracts, for example, they have had to hire people
to make renovations to other companies that were affected. Vehicle washing and maintenance
companies have also benefited from the impact of the phenomenon, windshield breakage,
general cleanup. So never before has this type of business been so demanding. But other
companies have done poorly, there are companies that flooded and companies that have lost
machinery. The economic crisis also affected them, because consumers have prioritized the
reconstruction of their homes, so demand has decreased.

When we have deepened the issue of resilience to understand how entrepreneurs face these
types of shocks. If you ask me if they want to invest in insurance to protect against this type of
natural disaster, we do not see interest among entrepreneurs because they know is very unlikely
that this would happen again soon. I doubt that they are willing to pay for insurance, because
they have other priorities. Companies must address other problems that are structural, and
owners are more interested in solving internal problems than in protecting the company from
external problems like this despite having lived them. Even the MIT with whom we are working
has told us that they do not believe that the issue of resilience is a very relevant issue for micro
businesses.

Maybe insurance is relevant for medium or large companies that are a little more organized and
are seeing other types of factors that may affect their performance and seeing insurance issues.
But the microentrepreneur is thinking about improving their management now because they
think in the short term, they make decisions on a day-to-day basis, and insurance is a long-term
decision. Because they see the probability of occurrence of a disaster as very low. There is no
interest on the part of micro-enterprises to invest in prevention even after “el niño costero”.

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Interviewer: What do you think are the main barriers to the adoption of insurance for
companies from a business perspective? (Little interest in underestimating risks, the little
culture of prevention, negative attitudes towards insurance (distrust), little formalization?

Interviewed: Even after “el niño costero”, I do not think that an insurance campaign would be
so welcome amongst enterprises, because now they want to use their money to improve or
implement their business. Even those affected think more about recovering and not too much
about preventing with insurance. These companies see the day to day. If you ask them about
their investment plans for the next five years they do not know what it is. They see the business
as a source of liquidity that depends on the demand, there is no growth projection.

For entrepreneurs over 50 years old it is a bit difficult to change their mentality, they are a little
more closed-minded. On the other hand, younger entrepreneurs are more open to change and to
technology. Age and education are important factors because educated people have a broader
perspective to analyze things, even in comparison to a person with a lot of experience but
without education. But there is a lot of secrecy among the entrepreneurs; they do not allow their
children to enter their businesses.

Interviewer: From your perspective, do you feel that communication efforts on the
importance of insurance for companies in the country should be higher? Should it be an
effort only of the insurance companies or do you feel that the state should also intervene
in communication (through financial education programs for example)?

Interviewed: Insurance is part of the culture that an entrepreneur must have. Entrepreneurs
must know all the alternatives that give them advantages for prevention. But I criticize the
communication. Success depends a lot on who promotes or who sells insurance, because the
insurance salesman is just focused on selling a product, and what I believe is that he should be
an advisor. It's like a credit; credit analysts should not only sell credits, they should be advisors
and show that the alternatives they offer suit the entrepreneur. Entrepreneurs are tired of sellers.
Entrepreneurs must see insurance as a long-term investment alternative and not a loss of
liquidity. So, the way in which the insurance is communicated is very important, and if it is
done through the government or the SBS, it must be done thinking about this type of profile
and the language they use. The microentrepreneur requires a simple language without
technicalities.

Interviewer: Something I want to analyze is the best source for communicating insurance.
Currently, in some insurance ads, it is the executive of the insurance company who
presents the insurance and its benefits. In other insurance ads, entrepreneurs talk about
their experience with insurance. We want to analyze which could generate a better
reception.

Interviewed: The best source would be other entrepreneur because entrepreneurs learn from
themselves and their experiences. For instance, including testimonials from other entrepreneurs
has been very successful in entrepreneurial seminars oriented to SMEs. Entrepreneurs value the
experience of other entrepreneurs; they want to see how they have emerged and want to know
the problems they have had.
If they see that other entrepreneurs have adopted insurance and feel protected, I think that will
have more impact than an executive representing an institution. An entrepreneur would be much
more attractive.

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Interviewer: Data from the Peruvian Society of SMEs indicates that close to 90% of micro,
small and medium enterprises in the country do not survive their first year of operations.
Of course, issues related to the inexperience and lack of knowledge of the market by the
owners are important reasons, but would you also attribute part of this high mortality
rate of SMEs to accident rates in the country and the lack of prevention of SMEs? Do you
think that contracting insurance and promoting a higher culture of prevention that makes
more micro, small and medium-sized companies secure (and therefore less exposed)
would have a significant impact on their survival rate?

Interviewed: I personally believe that it is a relevant factor but not so important and a priority
to determine the failure of companies. I believe that survival will depend on the degree of
entrepreneurialism that the entrepreneur has. The entrepreneur goes ahead despite everything.
It is essential to make this differentiation because not all business owners are entrepreneurs.

The entrepreneur looks for the way and the necessary means to continue with his business.
Entrepreneurs know that the basis of their success are all the failures they have had in the past.
Business owners who are not entrepreneurs close the business with the first failure.
Entrepreneurs, however, get the resources to succeed. Entrepreneurs would be more open to
adopting insurance.

Interviewer: Thank you very much for your help.

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Appendix 23: Interview 3

Name of the Interviewed: Eduardo Moron

Organization: Peruvian Association of Insurance Companies (APESEG)
Position: President
Date: 26/01/2018

Interviewer: Thank you for your participation, as I told you what this research aims to
analyze is how different communication formats can influence MSME´s owners to adopt
insurance to protect their businesses and thus find the most effective communication
formats.
Do you think that the current offer of insurance for MSMEs in Peru (if we consider their
level of income and cost structure) is designed for the three categories of MSMEs (Micro,
Small and medium-sized)? Do you think there are insurances that everyone could acquire
(even the micro ones), or do you feel that the market is limited only to some companies?

Interviewed: The smaller the companies, the smaller the persistence of insurance contracts,
companies take insurance services for six months, and in the seventh month they end up with
the contract because they feel that they are not receiving anything in return and partly because
sometimes they choose products outside of their budget. The big challenge in small segments
is the like of products suited for their budget. If you buy expensive insurance for a sinister that
is rare, you will have the feeling of being paying for something that never happens, and that
plays against the logic of maintaining insurance. Companies feel they pay for nothing because
risks are infrequent.

Interviewer: What do you think are the main barriers in business insurance adoption?
(Little interest in underestimating risks? Little prevention culture? Negative attitudes
towards insurance (distrust)? Little formalization?

Interviewed: Something must be tangible for the MSMEs so that they feel that they are paying
for something. You need to add theft coverage for example that is more frequent, something
that makes you feel that you are receiving something in return. Microinsurance is quite cheap
in the face of economic barriers.

Any large company can handle losses like a fire or robbery, but those events in a small company
cause them to close the business. Our task is to try to make them understand that they are at risk
and that sometimes this risk can be catastrophic for the company. They feel that they are
spending money with fire insurance because they have never experienced a fire.

In general, there is little culture of prevention, even if we consider that Peru is a seismic country.
Even those who own a $ 2 million dollars house do not buy insurance to protect it, and that
could cost just a thousand dollars a year, that does not make any financial sense. It is merely
because they feel that an earthquake will never happen. But the day that occurs that house will
not be worth anything. You can see that at all income levels. Another issue is that insurance
products are not easy to understand, there is a lack of contact with insurance products. People
do not feel a return on insurance investments. They do not feel that they are compensated. In
other countries, some products cover events of high frequency because they want people to feel
that the insurance does pay.

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The intricate part here is that in segments of small companies the level of bancarization is low
and that makes the work more difficult. Sales channels also make the products more expensive,
the insurers are forced to remove some elements of the insurance products to reduce costs, and
these products end up being less attractive. We need scale, we need volume, in Asia, they have
10 million people paying pennies for insurance, and in Peru, we do not have that volume.

Interviewer: About communicating the importance of insurance for companies in the

country, is it an effort only of the insurance companies or do you feel that the state also
makes efforts to communicate the importance of insurance? Do you think that the
communication strategy of insurance services for companies currently used in the market
is effective? Why? What would you change?

Interviewed: When the last government created the financial inclusion strategy, we told them
that they should not only sell the idea that the solution to their problems is always "credits."
Sometimes insurance is the most effective option. So, I do believe that part of the work of the
state should be the promotion of insurance. In Peru, no entity has the role of communication.
The SBS is only responsible for regulation even though they are the experts in these matters.
The MEF (Ministry of Economy and Finance) does not have a communication role either, even
though in a study they did themselves, one of the recommendations was to have a unit that deals
with insurance communication. People only know credit products, but they must know all the
tools offered by the financial world. Many times, the most appropriate tool for business is
insurance or risk transfer, and that is our role.

Regarding showing probabilistic data of occurrence of accidents. It's something that has been
discussed a lot. What many people suggest is not to use fear because fear does not trigger a
purchase. The communication we use is much more informative and in various media. We use
a message that shows that insurance is not complicated to understand, demystify the idea that
it is a complicated product. That is the strategy that has been followed for the promotion of
insurance. We have also partnered with COFIDE, which already has a relationship with this
segment and also with the SBS and the Ministry of Education, we are changing teaching
materials in universities so that all children regardless of their career have a notion of financial
education with virtual courses because it is essential to understand these products.

Interviewer: Data from the Peruvian Society of SMEs indicate that close to 90% of micro,
small and medium enterprises in the country do not survive their first year of operations.
Of course, issues related to the inexperience and lack of knowledge of the market by the
owners are important reasons, but would you also attribute part of this high mortality
rate of SMEs to accident rates in the country and the lack of prevention? Do you think
that contracting insurance and fostering a higher culture of prevention would have a
significant impact on their survival rate?

Interviewed: Yes, because these are companies that do not have any financial support, then, a
company that has merchandise an experience a fire would be ruined because it cannot withstand
a hazard of this nature, this generates impoverishment. It is part of the nature of companies to
go bankrupt, but they should go bankrupt for the right reasons and not for the wrong ones. If
assets of a small business are set on fire, it will not have the resources to replace everything,
and it will probably migrate to a smaller business to survive.

Interviewer: Thank you very much for your help

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Appendix 24: Interview 4

Name of the Interviewed: Charlie Valderrama

Organization: Y&R
Position: Creative Art Director
Date: 30/01/2018

Interviewer: Thank you for your participation, as I told you what this research aims to
analyze is how different communication formats can influence MSME´s owners to adopt
insurance to protect their businesses and thus find the most effective communication
formats.
What determines the decision to use animated characters vs. Real characters in an
advertising piece? Is it a decision of the clients? Does the advertising agency recommend
its use for some specific cases? Which ones? Does this selection also depend on the
production costs of each case?

Interviewed: I have the experience of working with both sides of the coin (from the side that
needs the service as a creative in advertising agencies and as a provider of audiovisual
developments. Many factors define the development of these motives, primarily is the concept
and idea that you want to communicate which should command any action. For example, the
use of animation and unreal characters serves to achieve things that are perhaps making a filmed
and real spot would not be able to cover the idea or concept completely. The costs are variable,
there are animated productions that are much more expensive than those filmed in a traditional
way and vice versa, if we talk about Peru, in my opinion, it is a consequence issue, and I will
comment on why:

In the school there was always the one who knew how to draw and that the rest asked him to
draw in the notebook with arguments like: "For you it's easy," "you do it quicker," etc. etc. That
same idea continues and continues. It is in the head of those who do not know the processes
that doing something animated or graphic will always be easier, faster and more controllable,
but is entirely different. A development with real characters involves more talents, more
creative than operative heads. In a film there are many participants, but to a large extent they
are more technical than bearers of ideas, an animation studio develops ideas as it progresses,
being clear on what it is required to develop, in a shoot with actors, directors, cameramen, etc.
you must follow an order of development subject to marked times, that is, films in a day, you
demand the most to the actors and the production, and then you pass to the post production, in
animation the process is longer, it can take weeks to complete sequences and not until the last
day, everything is working together.

In Peru the client does not understand this and asks for schedules even tighter, they ask for
lower costs because they consider that they cannot pay the same for something real than for
something unreal.

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Interviewer: What do you think are the advantages and disadvantages of using animated
characters versus real characters in advertising?

Interviewed: The idea and the concept to communicate is what should command the spot.
There are no advantages or disadvantages, in my opinion, there are needs. For example, in a
country as diverse as Peru where there are racism and classism, you need to make
communications that reach them all without stereotypes. "Gloria Milk only uses white
children," "Falabella, is racist because it puts a black girl with a black doll," "in Peru all live in
Lima," etc. Animated characters soften all these issues, but I repeat, it depends on the idea and
the concept, the identification of the spectator towards the animated or drawn characters or in
3D is greater since they are just unreal, we have all grown up with cartoons, we have felt respect
and admiration for mutant beings or not even humans, robots or extraterrestrials and there was
never a problem, that same tendency is accepted when you communicate something in an
animated way, with an actor you will always see it too white, too black, too Chinese or too
“cholo”, it does not reach to everyone directly, in animation whomever it is you take it more as
an animated character than as a black and white character. Technically an animated character
can do things that his animated nature allows, a real character could not or would look very
strange, grotesque or even bizarre.

Interviewer: Which format (animated vs. real characters) do you think could be more
effective (the terms of recall, liking, persuasion) when the advertising is aimed at
entrepreneurs / SMEs?

Interviewed: There are many essays and proposals to talk to SMEs in an animated or playful
way. I think the format is indifferent, and the message is more important. An animation can be
fantastic, creative, didactic and exciting, but if what you have to say is not clear, it won´t work.
The same would happen with a real or filmed spot.

For example, if SUNAT (National Superintendency of Customs and Tax Administration)

makes an animation to explain a new process or clarify the procedures that you must do, if you
present them to me in an animation it is more digestible than a real spot, since it makes it
friendly and understandable (although the state almost always lacks animated quality, even if it
works). Another contrary example: if the SUNAT presents me with an adviser explaining
something while walking around the offices of the SUNAT saying how easy it is for a procedure
or that they are at my service, the first thing is that I do not believe anything, I am distracted by
details like those offices do not look like the real ones at all, that lady does not work in SUNAT,
when you go to the SUNAT is more likely for you to talk with an elderly lady in a bad mood,
etc.

Interviewer: Which format (animated vs. real characters) do you think could be more
effective (the terms of recall, liking, persuasion) when advertising talks explicitly about
insurance?

Interviewed: It depends on the message, it depends on the product, it depends on the client. An
animation is always faster when the concept is clear, but as I say it depends, maybe the value
of an insurance product is stronger if real evidence is shown, the animation is not only
characters, it is everything.

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For example: in Argentina a few years ago, for the first time hail caused material damage in
automobiles. Insurers launched a product that covered this claim (before there was not).
An animation would not convince me, animation uses a comical or emotional language, in this
case maybe it would present an animated car with animated hail falling on it showing that it
generates damage, maybe even including a colossal meteor destroying the car. I would not
believe it because I would not see the real damage. But if this same product makes a spot
showing a real car with broken glass, that would make me think that it could happen to me, it
would convince me more. As I said, it depends on the message.

Interviewer: Thank you very much for your help.

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