Early researchers focused mostly on Banking, healthcare, retail, education etc What is the existing situation of Service Quality in Sri Lankan Life Insurance Industry? Does Service Quality affect on Customer Satisfaction in Life Insurance Industry? What are the most important Services Quality dimensions which affect on Customer Satisfaction in Life Insurance Industry?

1. 12/15/2018
Service Quality and Customer
Satisfaction
An Assessment with Special Reference to Life
Insurance Companies in Colombo District

2. 2/15/2018 2
Outline
1. Introduction
2. Research Problem
3. Research Objectives
4. Conceptual Framework
5. Hypothesis
6. Methodology
7. Research Findings
8. Concluding Remarks
9. Suggestions and Policy Implications

3. 2/15/2018 3
 Customer Satisfaction and Service Quality remain
vital issues in most service industries, including
financial service providers
 E.g. The insurance industry,
The major approach to differentiation and
distinguish from other insurers is service before and
after the sale of the policy
(Stafford and Wells, 1996)
Introduction

4. Service Quality
• Service Quality is the extent to which a service meets
customers’ needs or expectations
Asubonteng et al (1996)
• Service Quality is meeting or exceeding customer
expectations, or the difference between customer
perceptions and expectations of service
Nitecki et al. (2000)
42/15/2018
Cont’d

5. Customer Satisfaction
• Satisfaction / dissatisfaction is the consumer’s
fulfillment response, the degree to which the level of
fulfillment is pleasant or unpleasant
Oliver (1997)
• Satisfaction is the customer’s overall judgment of the
service provider
McDougall G. H. G. and Levesque. T (2000)
2/15/2018 5
Cont’d

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•When Perceived Service Quality is high, then it will
lead to increase in Customer Satisfaction. He supports
that fact that Service Quality leads to Customer
Satisfaction
Parasuraman et al. (1985 )
•Customer Satisfaction is based upon the level of Service
Quality provided by the service provider
Saravana and Rao (2007);Lee et al. (2000)
Cont’d

7. 2/15/2018 7
Author Research Title Findings
Siddiqui. M.H and
Sharma T. G,
Analyzing customer
satisfaction with service
quality in life insurance
services
competence, assurance,
corporate image
strongly affect on
customer satisfaction in
life insurance industry
in Indi
Upadhyaya. D and
Badlani M. (2011)
An empirical examination of
a model of perceived service
quality and satisfaction
customers go for better
priced life insurance
policy
• Contradictory Ideas
Research Problem

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• Rare in Research World
Early researchers focused mostly on Banking,
healthcare, retail, education etc
(Gyasi and Azumah, 2009; Mehdi, 2007;
Asubonteng, McCleary, & Swan, 1996; Rust, & Oliver,
1994; Gronroos, 1994; Rust Zahorik, 1993)
Cont’d

9. 2/15/2018 9
•What is the existing situation of Service Quality in Sri Lankan
Life Insurance Industry?
•Does Service Quality affect on Customer Satisfaction in Life
Insurance Industry?
•What are the most important Services Quality dimensions which
affect on Customer Satisfaction in Life Insurance Industry?
Research Questions

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• To identify existing situation of Service Quality in
Life Insurance Industry in Colombo District
• To identify the relationship between Service
Quality and Customer Satisfaction in Life
Insurance Industry
• To determine the impact of Service Quality
dimensions on Customer Satisfaction in Life
Insurance Industry
Research Objectives

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Service Quality
•Assurance
•Personalized
Financial Planning
•Technology
•Competence
•Tangibles
•Corporate Image
Overall Customer
Satisfaction
•Satisfaction with
Agents
•Satisfaction with
Functional Services
•Satisfaction with
Company
Independent Variable Dependent Variable
Conceptual Framework
Source: Siddiqui M.H. and Sharma T.G. (2010)

12. 2/15/2018 12
Hypothesis
H0: There is no relationship between Service Quality and Customer Satisfaction
H1: There is a relationship between Service Quality and Customer Satisfaction
H0: There is no relationship between Competence and Customer Satisfaction
H1: There is a relationship between Competence and Customer Satisfaction
H0: There is no relationship between Personalized Financial Planning and
Customer Satisfaction
H1: There is a relationship between Personalized Financial Planning and
Customer Satisfaction
H0: There is no relationship between Assurance and Customer Satisfaction
H1: There is a relationship between Assurance and Customer Satisfaction

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H0: There is no relationship between Tangibles and Customer Satisfaction
H1: There is a relationship between Tangibles and Customer Satisfaction
H0: There is no relationship between Corporate Image and Customer Satisfaction
H1: There is a relationship between Corporate Image and Customer Satisfaction
H0: There is no relationship between Technology and Customer Satisfaction
H1: There is a relationship between Technology and Customer Satisfaction
Cont’d

14. 2/15/2018 14
Sampling
Population
Life Insurance Policyholders in Colombo District
Sample
100 Life Insurance Policyholders of Five Life Insurance
Companies in Colombo District
Unit of Analysis
Life Insurance Policyholder
Sampling Technique
Simple Random Sampling
Methodology

15. Sample Selection
2/15/2018
Population
Life Insurance Policyholders
in Colombo District
Life Insurance Policyholders of
Five Life Insurance Companies
in Colombo District
20 Life Insurance
Policyholders from each
company
Sample
100
15 Life Insurance Companies
5 Life Insurance Companies
Highest Market Share
of GWP (IBSL, 2011)

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Primary Data
Questionnaire
(2 Parts)
Secondary Data
•IBSL annual reports
•Journal articles
•Company annual
reports
Data Collection
For Service Quality
For Customer
Satisfaction

17. Descriptive statistics
Graphical representations : Graphs
Numerical representations : mean, variance
Pearson Correlation Coefficient Analysis
Regression Analysis
Simple Regression
Multiple Regression
172/15/2018
Data Analysis

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Research Findings

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Background of the Sample
Figure 1 - Gender Distribution of the Sample
Source: Field Survey 2012
61% of the Sample is
Represented by Male
Life Policyholders
Gender Distribution of the Sample

20. 2/15/2018 20
Figure 2 - Monthly Premium Expenses of the Sample
Source: Field Survey 2012
Monthly Premium Expenses of the Sample
Highest
Premium
Expenses group
is
Rs. 500-2000
Cont’d

21. 2/15/2018 21
1. Existing situation of Service Quality in Life Insurance
Companies
Table 1 – Mean and Standard Deviation of Service Quality dimensions
Dimension Mean Standard Deviation
Assurance 3.6625 0.45418
Personalized Financial Planning 3.9925 0.52639
Competence 3.7150 0.37776
Tangibles 2.8925 0.68742
Corporate Image 3.5900 0.51198
Technology 3.7900 0.66609
Overall Service Quality 3.6015 0.29657
Source: Field Survey 2012

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2. There is a strong positive relationship between four Service
Quality dimensions and Customer Satisfaction
Dimension Pearson correlation P-value Null Hypothesis
Accepted/ Rejected
Assurance 0.618 0.000 H0 Rejected
Personalized Financial
Planning
0.561 0.000 H0 Rejected
Competence 0.012 0.905 H0 Accepted
Tangibles 0.159 0.114 H0 Accepted
Corporate Image 0.579 0.000 H0 Rejected
Technology 0.654 0.000 H0 Rejected
Not Significance
Table 2 - Correlation between Service Quality Dimensions and Customer Satisfaction
Source: Field Survey 2012Significant at the 0.05 level .

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3. 59% of total variation in Customer Satisfaction is explained
by Service Quality in Life Insurance companies
Figure Value
R 0.768
R square 0.590
Adjusted R Square 0.586
Standard Error of Estimate 0.19077
Table 3-Model Summery of Simple Linear Regression Analysis
Source: Field Survey 2012

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Model Sum of
Squares
DF F Significant
Regression 5.141 1 141.267 0.000
Table 4 - Analysis of Variance for Simple Linear Regressions
Source: Field Survey 2012
Significant at the 0.05 level
4. Simple Regression Model is Statistically significant

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Predictor ß Coefficients Standard Error P-Value
Constant 1.080 0.238 0.000
Service Quality 0.784 0.066 0.000
5. The Regression Equation
Table 5- Simple Linear Regression Analysis of Service Quality
versus Customer Satisfaction
Source: Field Survey 2012
Significant at the 0.05 level
CS = 1.080 + 0.784 SQ

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6. 74.4% of total variation in Customer Satisfaction is
explained by Service Quality Dimensions in Life Insurance
companies
Figure Value
R 0.862
R square 0.744
Adjusted R Square 0.727
Standard Error of Estimate 0.15493
Table 6-Model Summery of Multiple Linear Regression Analysis
Source: Field Survey 2012

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Model Sum of
Squares
DF F Significant
Regression 6.475 6 44.964 0.000
Table 7 - Analysis of Variance for Multiple Linear Regressions
Source: Field Survey 2012
Significant at the 0.05 level
7. Multiple Regression Model is Statistically significant

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Predictor ß Coefficients Standard Error P-Value
Constant 0.786 0.282 0.006
Assurance 0.225 0.041 0.000
Personalized Financial Planning 0.161 0.062 0.011
Competence 0.094 0.043 0.031
Tangibles 0.040 0.025 0.114
Corporate Image 0.268 0.032 0.000
Technology 0.058 0.053 0.272
Table 8 - Multiple Linear Regression Analysis of Service Quality dimensions
versus Customer Satisfaction
Source: Field Survey 2012
Not Significance
8. Corporate Image is the major predictor of Customer
Satisfaction
Significant at the 0.05 level .

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CS = ß0 + ß1AS + ß2PFP + ß3TC + ß4CM + ß5TA + ß6CI + ε
Where,
CS = Customer Satisfaction TC = Technology
ß0 = Intercept of the equation CM = Competence
ß1, ß2, ß3, ß4 , ß5 , ß6 = Slope of the Equation TA = Tangibles
AS = Assurance CI = Corporate image
PFP = Personalized Financial Planning ε = Error term
9. The Regression Equation
CS = 0.786 + 0.225 AS + 0.161 PFP + 0.094 CM + 0.268 CI
Technology and Tangibles are removed from the regression model
because they are insignificant.

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Concluding Remarks

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First Objective
Highly agree with existing conditions of Assurance, Personalized Financial
Planning, Competence, Corporate Image and Technology of Life Insurance
Companies in Colombo District
Moderately agree with the existing situation of Tangibles in Life Insurance
Companies
Second Objective
Significant Positive relationship between Overall Service Quality and
Customer Satisfaction
Competence and Tangibles are not significantly associated with Customer
Satisfaction in Life Insurance Companies

32. 2/15/2018 32
Third Objective
Corporate Image, Assurance, Personalized Financial Planning and
Competence are significantly impact on Customer Satisfaction
Customer Satisfaction is highly influenced by Corporate Image in life
Insurance Industry in Colombo District
However, Tangibles and Technology are not significantly influence on
Customer Satisfaction in Life Insurance Industry in Colombo district
Cont’d

33. 2/15/2018 33
Suggestions
and Policy Implications

34. 1) Improve satisfaction through Corporate Image of Life
Insurance Company
• Continuous innovations in life insurance policies
• Provisions for Corporate Social Responsibility (CSR) activities
• Invest in advertising and conduct road shows
2/15/2018 34
2) Improve satisfaction through Assurance of Life Insurance
Company
• Ensure the policyholders’ transactions are safety
• Ensure truthfulness in keeping to promises to customers
• Insist on error-free records regarding customer information
• Recruiting knowledgeable and skilled employees’ who are polite and
capable on providing information required by customers

35. 3) Improve satisfaction through Personalized Financial
Planning of Life Insurance Company
• Formulate flexible life insurance product solutions which match to the
individuals’ income level, risk level, age and career status
• Develop flexible premium payment schedule
• Provide loan facilities, bonuses and other incentives to customers
2/15/2018 35
4) Improve satisfaction through Competence of Life Insurance
Company
• Recruiting employees who have knowledge and skills regarding the
insurance business and who can provide correct information to the customer
• Formulate online complaint handling procedure
• Claim settlement process should be made fast and must not involve lengthy
decision making process
Cont’d

36. 2/15/2018 36

37. 2/15/2018 37
Supportive Slides

38. Independent variable (Service Quality)
2/15/2018 38
Dimension Indicators Measurement
Assurance 1. Safety transaction Five point Likert
scale2. employee behavior
3.employee politeness
4.employee knowledge and skills
Personalized
Financial
Planning
Provision of flexible payment schedule Five point Likert
scale2.Availability of flexible product solution
3.Provisions for Convertibility of products
4.Supplementary services

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Dimension Indicators Measurement
Competence 1.Efficient staff Five point Likert
scale2.Easy access to information
3.Prompt & Efficient complaint handling
mechanism
4.Prompt and hassle free claims settlement
Tangibles 1.up-to-date equipments Five point Likert
scale
2.visual appearance
3.employee appearance
4.physical environment

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Dimension Indicators Measurement
Corporate
Image
1.Innovativeness in introducing new products Five point
Likert scale2.reputation
3.Financially stable company
4.social responsiveness
Technology 3.Financially stable company Five point
Likert scale4.social responsiveness
5.brand image

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Dependent variable (Customer Satisfaction)
Dimension Indicators Measurement
Satisfaction
with Agents
1. Trusting agents when explaining policies Five point
Likert scale2. Trained and well-informed agents
3.Clarity in explaining policy’s terms and conditions
Satisfaction
with
Functional
Services
1.policy features Five point
Likert scale2.policy returns
3.responsiveness
Satisfaction
with
Company
1.Reccomendation Five point
Likert scale2.Re-purchasing
3.Long term relationship

42. • The study is specifically only to the five life insurance companies out of
fifteen life insurance companies that offer life insurance services in
Colombo district
• Because of time constraint sample size was restricted to 100 respondents
and this is relatively small
• Though, structured questionnaire method was used to collect data for this
research it may not be sufficient. In addition to questionnaire method, direct
interview may provide sufficiency information
2/15/2018 42
Limitations

43. 2/15/2018 43
Author Research Title Findings
Oliver, Richard.
L,1997
Satisfaction: A behavior
perspective on the
consumer
Perceived Service
Quality and
Customer
Satisfaction is
distinct constructs
Spreng, R. A. and
Mackoy, R. D,
1996
An empirical
examination of a model
of perceived service
quality and satisfaction
There is a causal
relationship between
Service Quality and
Customer
Satisfaction
Literature Review

44. 2/15/2018 44
Author Research Title Findings
Evangelos
Tsoukatos,
Graham K. Rand,
(2006)
Path analysis of
perceived service
quality, satisfaction and
loyalty in Greek
insurance
positive correlation
between the levels of
the service’s
tangibility with the
importance of its
tangible dimension to
the customers
Upadhyaya. D and
Badlani M. (2011)
An empirical
examination of a model
of perceived service
quality and satisfaction
customers go for
better priced life
insurance policy
Cont’d

45. References
• Asubonteng, P., McCleary, K.J. and Swan, J.E., “SERVQUAL revisited: a
critical review of service quality”, The Journal of Services Marketing,
Vol.10, (1996) pp.62-81
• Lee, H., Lee, Y. & Yoo, D. , “The determinants of perceived service quality
and its relationship with satisfaction”, Journal of Service Marketing, Vol.
14, Number 3, (2000), p.217-231
• McDougall. G. H. G. and Levesque. T,, “Customer satisfaction with
services: Putting perceived value into the equation”, Journal of Services
Marketing, Vol.14 (5), 2000, pp.392 – 410
• Niteki D.A. and Hernon P., “Measuring Service Quality at Yale university’s
libraries”, journal of Academic Librarianship, Vol. 26 (4), (2000), pp. 259-
273
2/15/2018 45

46. • Oliver, Richard L. Satisfaction: “A behavior perspective on the consumer,
New York Irwin McGraw Hill, (1997)
• Parasuraman, A., Zeithaml, V. A., and Berry, L. L, “A conceptual model of
service quality and its implications for future research”, Journal of
Marketing, Vol. 49, (1985 ), p.41-50.
• Saravanan, R. and Rao, K. S. P. , “Measurement of service quality from the
customer’s perspective – An empirical study”, Total Quality Management,
Vol. 18. No. 4, (2007), p.435-449
• Siddiqui. M.H and Sharma T. G, “Analyzing customer satisfaction with
service quality in life insurance services”, Journal of Targeting,
Measurement and Analysis for Marketing, Vol. 18, 3/4,2010,pp.221–238
• Stafford and Wells, 1996 "Path analysis of perceived service quality,
satisfaction and loyalty in Greek insurance", Managing Service Quality,
Vol. 16 Iss: 5 pp. 501 – 5192/15/2018 46
Cont’d

47. Measurement Criteria
• If mean value:
1<= X< 2.5 Not at all agree
2.5<= X<3.5 Moderately agree
3.5<= X<5 Almost agree
• If correlation value is:
r = +1 (perfect positive correlation)
0.5 < r < +1 (strong positive correlation)
0 < r < 0.5 (weak positive correlation)
r = 0 (no correlation)
-0.5 < r < 0 (weak negative correlation)
-1 < r <-0.5 (strong negative correlation)
r = -1 (perfect negative correlation)
2/15/2018 47

48. 2/15/2018 48
Figure - Linear Relationship between Service Quality and Customer Satisfaction
Source: SPSS output from field information

49. 2/15/2018 49

50. Life insurance companies in SL
2/15/2018 50
1. Amana Takaful PLC
2. Asian Allianz Insurance PLC
3. AVIVA NDB Insurance PLC
4. Ceylinco Insurance PLC
5. Cooperative Insurance company Ltd
6. HNB Assurance PLC
7. Janashakthi Insurance PLC
8. LOLC Insurance PLC
9. MBSL Insurance PLC
10. Seemasahitha Sanasa Rakshana Samagama
11. Sri Lanka Insurance Corporation Ltd
12. Union Assurance PLC
13. Life Insurance Corporation
14. Arpico Insurance Limited
15. Allianz Life Insurance Lanka Ltd

51. Time Frame
2/15/2018 51
Activity
November December January February March April
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
Finalizing the
Topic Selection and
Proposal Writing
Questionnaire
Design and
finalizing
Data Collection
Data analysis
Drafting Chapters
Preparation an
Submission of final
report
Final Presentation