Digital insurance adoption and financial inclusion among urban consumers in Chennai: Mediating effects of awareness, digital literacy, and trust

Abstract

Type of the article: Research ArticleAbstractInsurance penetration in India remains critically low (2.7 per cent life, 1.0 per cent general) despite two decades of market liberalization and substantial digital infrastructure expansion. This study investigates how insurance awareness and digital literacy translate into digital insurance adoption among Chennai's urban consumers, with perceived usefulness, perceived ease of use, and trust as cognitive and relational pathways linking capability to market action. Data were collected in August-September 2024 from 405 purposively sampled consumers with digital device access, comprising existing insurance holders and potential first-time buyers, using a structured questionnaire. Chennai, a theoretically relevant research setting with mature digital infrastructure and diverse urban demographics, allows perceptual and informational barriers to be examined independently of connectivity constraints, offering transferable insights for comparable Indian urban markets. Structural equation modeling showed excellent measurement model fit across standard indices, explaining 50.2 per cent of adoption intention variance. Awareness was the strongest predictor of perceived ease of use (β = 0.758, R2 = 57.5 per cent) and digital literacy of perceived usefulness (β = 0.752, R2 = 56.5 per cent). Both influenced adoption intention entirely through their respective mediators without significant direct effects, consistent with complete statistical mediation. Trust added serial mediation pathways, reinforcing the role of institutional confidence in credence good markets. Awareness campaigns and literacy programs yield negligible adoption gains unless designed to strengthen perceived platform utility and navigability. Insurers and policymakers should prioritize interface design optimizing functional value and operational ease, with transparent claims processes converting platform confidence into durable institutional trust.AcknowledgmentsThe authors used an AI language tool (Claude, Anthropic) for assistance with language editing, readability improvement, and proofreading of this manuscript. All intellectual content, research design, data collection, analysis, interpretation, and conclusions are solely the work of the authors. The authors reviewed and verified all AI-assisted text and take full responsibility for the accuracy and integrity of the final manuscript.