service quality and customer satisfaction with reference to insurance sector in india

Service Quality and Customer Satisfaction with reference to

Insurance sector in India

A

Marketing of Services Project

Submitted to

Dr. Garima Malik

Amity Business School

Amity University

By

Owais Ashraf

MBA-M&S / Section –C / C41

1. Title of Project

Impact of Service Quality on Customer Satisfaction with reference to Insurance

sector in India

2. Summary of Project

Insurance in India is usually understood as a measure to save the tax for an

individual. I t is never considered as a medium for investment for a long

t ime. In Indian mentali ty savings can be done only in banks in terms of fixed

deposits and other investment facil i t ies available to them. Some people also

l ike to invest in gold. After the independence, the Life Insurance

Corporation was nationalized in 1956, and then the general insurance

business was nationalized in 1972. Life Insurance Corporation of India has

monopoly over Indian Life Insurance sector. But after the entry of private

insurance players having all iance with foreign insurance experts, Indian

insurance market has turned into highly competit ive market. The Insurance

Regulatory and Development Authority Act 1999 (IRDA Act) was passed by

parliament of India and in 2000 President of India gave his consent to the

act . IRDA consists of a one chairman, f ive full- t ime members and four part-

t ime members. The LIC Act, 1956 brought remarkable change in the way the

insurance industry functioned particularly, the l ife insurance business. Til l

the end of 1999-2000 fiscal year, Life Insurance Corporation (LIC) and

General Life Corporation (GIC) were the monopoly insurance (both l ife and

non-life) providers in India. Under GIC, there are four subsidiaries –

National Insurance Company Limited, Oriental Insurance Company Limited,

New India Assurance Company Limited and United India Assurance

Company Limited. In fiscal year 2000-01, the Government of India l if ted the

entry restrict ions for private sector insurance players. Foreign investment

insurance market was allowed with 26 percent cap.

Up to end 2001, sixteen insurance players had made a total investment of Rs.

1910.95 crores including investments made from policyholders’ funds. Life

insurance business has witnessed significant growth because of the

increasing customer awareness and better marketing strategies by insurance

companies.

Indian market is one of the biggest markets in the world having huge population of more than

one billion. Insurance is one of the best sectors presenting ascendant growth in the market.

According to India Brand Equity Foundation, April, 2009, Insurance is a US$ 41-billion

industry in India. At world level, India ranked as the 5th largest life insurance market in the

rising economies having high growth rate of 32-34 per cent yearly. As competition is

mounting among all the insurance players, they are coming up with new inventive insurance

products to catch the attention of more and more customers. The total number of life

insurance companies operating in India is currently 22.

While the competition has sent strong signals to the state-owned enterprises, LIC still controls

the life insurance market. The insurers in non-life segment are finding it difficult to compete

with the new private insurance companies.

3. OBJECTIVES OF THE STUDY

In the light of the above background, the main objective of this study is to identify the

dimensions of service quality in the Insurance industry using the SERVQUAL scale and to

assess the importance of each of these dimensions in the Insurance industry. The study is

conducted with the following three objectives:

1. To determine the perceptions of customers regarding the service quality in

insurance companies.

2. To analyse and compare the service quality perceptions of the customers in public

and private insurance companies.

3. To determine the relevant dimensions of service quality.

SCOPE OF THE STUDY

The study was conducted in Noida. The conclusions cannot be extended to Whole of Delhi or

India. Further study on a bigger scale can be conducted to validate the results.

This study has been conducted for LIC only considering the time constraint and on the basis

of the findings, I will try to generalize the results for the insurance sector in India

Research Methodology

I conducted a primary study to evaluate the customer satisfaction with the insurance sector in

India.

Questionnaire was used as a tool for data collection in this study.

A total of 30 questionnaires have been filled by the respondents

The questionnaire was based on the standard SERVQUAL format containing 22 questions

Sample size- 30

Data collection instrument- questionnaire

Questionnaire to Measure Service quality through SERVQUAL

Please rate the following statements on a scale of 1 to 5

(1) Strongly agree (2) Agree (3) Neither agree nor disagree (4) Disagree (5) Strongly disagree

Statement Expectation Perception

Q1 LIC has up-to-date equipment. 1 2 3 4 5 1 2 3 4 5

Q2 LIC's physical facilities are visually appealing

1 2 3 4 5 1 2 3 4 5

Q3. LIC's employees are well dressed and appear neat.

1 2 3 4 5 1 2 3 4 5

Q4. The appearance of the physical facilities of LIC is in keeping with the type of services provided.

1 2 3 4 5 1 2 3 4 5

Q5 When LIC promises to do something by a certain time, it does so.

1 2 3 4 5 1 2 3 4 5

Q6. When you have problems, LIC is sympathetic and reassuring

1 2 3 4 5 1 2 3 4 5

Q7 LIC is dependable 1 2 3 4 5 1 2 3 4 5

Q8. LIC provides its services at the time it promises to do so

1 2 3 4 5 1 2 3 4 5

Q9. LIC keeps its records accurately

1 2 3 4 5 1 2 3 4 5

Q10. LIC does not tell customers exactly when services will be performed.

1 2 3 4 5 1 2 3 4 5

011. You do not receive prompt service from LIC's employees.

1 2 3 4 5 1 2 3 4 5

Q12 Employees of LIC are not always willing to help customers.

1 2 3 4 5 1 2 3 4 5

Q13. Employees of LIC are too busy to respond to customer requests promptly.

1 2 3 4 5 1 2 3 4 5

Q14. You can trust employees of LIC

1 2 3 4 5 1 2 3 4 5

Q15. You feel safe in your transactions with LIC's employees

1 2 3 4 5 1 2 3 4 5

Q16 Employees of LIC are polite 1 2 3 4 5 1 2 3 4 5Q17 Employees get adequate support from LIC to do their jobs well.

1 2 3 4 5 1 2 3 4 5

Q18. LIC does not give you personal attention.

1 2 3 4 5 1 2 3 4 5

Q19 Employees of LIC do not give you personal attention

1 2 3 4 5 1 2 3 4 5

Q20. Employees of LIC do not know what your needs are

1 2 3 4 5 1 2 3 4 5

Q21. LIC does not have your best interest at heart

1 2 3 4 5 1 2 3 4 5

Q22 LIC does not have operating hours convenient to all customers

1 2 3 4 5 1 2 3 4 5

Thank you

Analysis of questionnaire and interpretation of information gathered there in

I have used a standard SERVQUAL questionnaire to conduct service quality analysis of insurance

Sector in India.

A total of 30 questionnaires were filled by the respondents on the basis of which the following

interpretations can be made.

LIC has up-to-date equipment.

Before Purchase belief (Expectation)

85% of the respondents strongly agreed to the fact that they believe LIC assists its customers with the

latest up to date technology

After Purchase/ Consumption (Perception)

70% of the respondents after involvement with LIC disagreed to the same statement

INFERENCES

70% of the customers would have experienced dissatisfaction because the companies service quality

could not match up to their expectations.

LIC's physical facilities are visually appealing


70% of the respondents agreed to the fact that they LIC's physical facilities are visually appealing


80% of the respondents after involvement with LIC strongly agreed to the same statement

INFERENCES

80% of the customers would have experienced Delight because the company’s service quality

exceeded their expectations.

When LIC promises to do something by a certain time, it does so.


90% of the respondents agreed to the fact that When LIC promises to do something by a certain time,

it does so.



INFERENCES

Here 15% of the respondents would have experienced a feeling of satisfaction because the company

fulfilled its promises, while the other 75% of the respondents would have experienced delight because

the company exceeded their expectations.

When you have problems, LIC is sympathetic and reassuring


70% of the respondents agreed to the fact that when they have problems, LIC is sympathetic and

reassuring



INFERENCES


fulfilled its promises, while the other 5% of the respondents would have experienced delight because

the company exceeded their expectations.

LIC is dependable


95% of the respondents strongly agreed to the fact that LIC is dependable


80% of the respondents after involvement with LIC agreed to the same statement

INFERENCES


fulfilled its promises, while the other 15% of the respondents would have experienced dissatisfaction

because the company could not meet their expectations.

LIC provides its services at the time it promises to do so


65% of the respondents strongly agreed to this fact



INFERENCES

Here 80% of the respondents would have experienced a feeling of dissatisfaction because the

company could not meet their expectations.

You do not receive prompt service from LIC's employees.


74% of the respondents disagreed to this fact



INFERENCES


was able to meet their expectations.

Employees of LIC are too busy to respond to customer requests promptly.


91% of the respondents disagreed to this fact


51% of the respondents after involvement with LIC agreed to the same statement

INFERENCES


company was unable to meet their expectations.

You can trust employees of LIC


30% of the respondents agreed to this fact



INFERENCES



Employees of LIC are polite





INFERENCES

Here 35% of the respondents would have experienced a feeling of delight because the company was

able to exceed their expectations.

Employees of LIC do not know what your needs are





INFERENCES



SERVICE QUALLITY IMPROVEMENT SUGGESTIONS

There is need of hour for the insurance services to reaff irm themselves in view of

the st i ff competit ion. The insurance companies shal l have to reorient themselves in

terms of the customer service parameters to inst i l the concept of qual ity service in

the mind of the customer and further in terms of growth.

In the language of strategy, the insurance companies in the publ ic sector should

focus more on improving the infrastructure. The infrastructure not only involves

the information technology input in the branches, regional off ices and head off ice,

but also the physical evidence, ambience and layout. This is due to the fact that

l ike in other service organizations, in insurance services also the internal

ambience of the organization has a posit ive impact on the customers.

The customers trust the publ ic sector insurance companies s ince these insurance

companies have existed in the market for a longer period than the private sector

insurance companies. The rel iabi l i ty factor is a posit ive factor for these publ ic

sector insurance companies. These publ ic sector insurance companies should

posit ion themselves in the market on the basis of this dimension and promote

themselves aggressively. This step wil l not only help them survive the present

onslaught from private sector insurance companies, but also be able to compete in

the market.

LIMITATIONS OF THE STUDY

The study was l imited only to Noida. Due to the l imitat ions in the t ime factor, the

study was l imited only to one l i fe insurance Company. A s ingle measure of service

qual ity was used to measure the service qual ity of the service providers.

SCOPE FOR FURTHER RESEARCH

Taking into account the l imitat ions of the present study mentioned above, future

research could focus on expanding the study to other non-l i fe insurance

companies and also by expanding the geographic reach of the study. Another

comparison can be done among private and publ ic sector insurance companies in

terms of products offered. Study can be done to measure the gap between

expectation and perception of service qual ity for publ ic and private sector

insurance companies.

References

www.icindia. in

www. managementparadise .com

www.wikipedia.com

www.business.mapsofindia.com

http://www.business.mapsofindia.com/

http://www.wikipedia.com/

http://www.managementparadise.com/

http://www.icindia.in/