Service Quality And Customer Satisfaction In Insurance Sector : In Indian Perspective Insurance Portal

Customer service is an integral part of life insurance organization. It is necessary to identify the key success factors in life insurance industry, in terms of customer satisfaction so as to survive in intense competition and increase the market share. Companies involved in the insurance industry offer a wide variety of products and supplementary services that consumers in need of insurance coverage could readily infer as being "insurance" related. Insurance in India has been spurred by product innovation, streamlining of sales and distribution channels along with targeted advertising and marketing campaigns. With increased globalization and presence of a large number of players in the market place, the very definition of customer relationship and satisfaction is in danger of being proved incomplete.

From a company value perspective, fulfilling customer needs are a key source of income to an organization and achieving complete customer satisfaction is the only key for the company to succeed.

Service cannot be subjected to objective quality control tests before it is provided to the general marketplace; it is only with experience that we know how consumers perceive the quality of the services they receive.

Customer service has become a distinct component of both product and service sectors and with the developments in information technology many businesses find demanding and knowledgeable customers.

Service quality, customer satisfaction and customer value have become the main concern of service organizations in the increasingly intensified competition for customers in today's customer-centred era.

Service quality improvements will lead to customer satisfaction and cost management that result in improved profits. Contemporary service sector firms are compelled by their nature to provide excellent service in order to prosper in increasingly competitive domestic and global marketplaces.

As service firms find themselves in an increasingly competitive and complex business environment, they are inevitably driven to examine their service delivery processes critically. The focus of such internal analysis is ultimately about customer satisfaction, and how bottom-line results can be actualized through delivering quality services to customers via flawless interface platforms. This is not only the case in the private sector, but it also is increasingly so in the public sector. Public sector firms are trying to make administration more efficient and more citizen-oriented.

The insurance industry affects money, capital markets and the real sectors in an economy, making insurance facility necessary to ensure the completeness of a market. It is an industry with strategic importance for any country as it contributes to the financial sector as well as confers social benefits on the society.

At the micro-level, an insurance policy protects the buyer against financial loss arising from a specified set of risks at some cost. It thus reduces anxiety and promotes financial stability by providing a much needed social security net, especially in times of crumbling family ties and nuclear households in developing countries. The role of life insurance is undergoing a phenomenal change today as is evident from the service bouquet and the product advertisements. The emphasis lies on insuring oneself and one's close family members for self-reliance more-so because nuclear families are the emerging trend in India.

To meet the varying needs of various individuals, the life insurance players have a vast foray of products and services in their bouquet. Besides this, almost all companies offer the flexibility to customers to choose the most suitable product for themselves by combining features of a number of products and services together. Thus life insurance companies have to customize the services to improve the quality of service to suit the customer as per their needs.

The insurance industry forms an integral part of the Indian financial market, with insurance companies being significant institutional investors. In recent decades, the insurance sector, like other financial services, has grown in economic importance. This growth can be attributed to a number of factors including rising income and demand for insurance, rising insurance sector employment, and increasing financial intermediary services for policy holders.

A sound national insurance market is an essential characteristic of economic growth. This is not surprising as the insurance industry forms a major component of an economy by virtue of the amount of premiums it collects, the scale of its investment, and, more fundamentally, the essential social and economic role it plays by covering personal and business risks. By encouraging these factors that promote insurance demand and aid financial development, policymakers possess a strong tool to stimulate economic growth.

A number of foreign insurance companies have set up representative offices in India and have also tied up with various Life Insurance companies. The business environment is constantly changing and demand for adaptability among the organizations tends to increase. Demands from customers, technological development, change of value and globalization are the factors that drive the need to change and develop an organization. It is hard to get advantages by quickly adapting technology to product or service in an efficient manner. The ability to handle organizations intangible assets such as service is of great importance to reach success, then the ability to invest and manage tangible assets.

The quality of the service is a pre-requisite for financial institution' market performance and subsequently, economic performance.The companies that offer the best technologies and great quality in every service and that have trained and motivated its employees in order to provide an efficient service are creating adequate framework for the success of a relationship marketing orientation. Financial sector as such is broad and has a wide scope and includes Banks, Insurance companies and Brokerage Firms.

While the natural tendency of many Life Insurance Companies to better price the product and services so as to increase the market share. More specifically the "Service Cost" was found to lead to the policy of "Efficiency pricing". Regarding the pricing behaviour of companies operating in different service industries, insurance companies are mainly endeavouring to offer unique services in their market. Moreover, they are bound to place an emphasis on their broader social and political environment due to their social character and the high regulation. They are also endeavouring to incorporate their pricing strategy into their overall marketing strategy and, thus, formulate a cohesive marketing strategy. This might be attributed to the fact that most life insurance companies operating in India have established well-organized marketing departments. It is also interesting that, while they use some standard list prices, they are also negotiating their prices individually with some key customer.

"The cost of the service" along with "competitors' prices" is the two most important characteristics that trigger pricing decisions. Other important characteristics are the "service quality", the "market strategy", the "customer orientation", the "intensity of competition among the existing companies" and the "type of the service", which indicate that the companies in our sample tend to place their emphasis on service and organizational rather than environmental characteristics when they set their prices. Once it is recognized that competition takes place between companies' offerings and not the companies themselves, it becomes apparent that a "market" focus is appropriate.

As most life insurance companies would recognize, the offering, which is presented to potential customers through the market, is the primary focus of competitive strategy. While accepting that the resources and reputation of a company may add value to an offering, this does not alter the fact that customers choose between offerings. Although the two ways split works well for product offerings and some service offerings, for many financial services the advice and assistance are core parts of the service and are in many cases indistinguishable from the "product" being offered. However, the distinction remains useful in that it highlights the fact that both product features and advice and assistance provide options for differentiation. These options are developed by introducing the concepts of content or image differentiation for merchandise or personalized differentiation for support.

Although intangibility is certainly a key characteristic of services, tangibility performs an important role, particularly in service industries which have high tangible components. A certain degree of tangibility and intangibility exists in both service process and service output. Even in service industries involving less prominent tangible elements, tangibility cannot be completely ignored. In particular, the more a service has tangible components, the more important are these tangible dimensions in service quality.

During the service process, if there are tangible actions physically involving people, security and reliability are perceived as being more important than in those services which predominantly involve intangible actions directed at people's minds. In addition, if tangible actions directed at goods and other physical possessions are involved, customers perceive tangible dimension as being more important. Finally, with respect to service output, if a service involves the making of a tangible product, or providing added value to a tangible product, the importance of perceived value increases.

Further, many customers who are strongly familiar with interpersonal services may never be satisfied with purely technology-based services. This is probably even more important in the relationship-based cultures of India. Customers seem to want technology to be integrated into interpersonal relationships, not to replace them, regardless of their own personal technology readiness. The perception of customers is that salespeople can use technology to solve their problems, helping to develop a sense of trust and satisfaction that is likely to extend their relationship. The salespeople are the critical element in the interaction and relationship, and technology's role is a support element that helps them develop their relationships.

The world is currently witnessing uncertainty and volatility in financial markets, arising out of concerns over the fiscal position and weak growth outlook for developed markets. However, India's strength lies in its domestic growth drivers, which position our country for strong and sustained growth over the long term. Several growth fundamentals are in place, which include rising savings and demand, growing global competitiveness and a favourable demographic profile. Rapidly rising per capita incomes have translated into rising demand for goods and services, and the desire for higher standards of living. The rural economy has also been transforming with rising incomes providing the impetus to consumption and savings. A growing consuming class combined with the human capital to drive growth will take India to higher levels in terms of inclusive and rising purchasing power. Future growth will be driven by the hopes and aspirations of over a billion people. Life insurance is a key sector in the financial services space, which is expected to see significant growth in the coming years as the growing savings pool seeks long-term investment options as well as products for mitigating the impact of potential future risks, including health and mortality.

Rising financial literacy levels in the country have increased the demand for financial solutions across the country. Penetration of life insurance solutions in particular has witnessed robust traction. Being sensitive to the needs of people and providing the highest quality of service has earned the loyalty of customers, which has enabled the companies to execute a strategy of profitable growth.

The financial year 2011 has been a defining year for the Indian life insurance industry. The Regulator introduced significant and exciting changes that altered the dynamics of the life insurance industry.

These changes further reinforced the proposition of life insurance as a means of ensuring protection and providing financial security in the case of an eventuality. It also ensured a greater balance of power amongst all stakeholders of the industry, namely the insurer, customer and distributor. These structural changes were introduced to further augment the customers trust in life insurance and simultaneously protecting his interests. This, we believe, is extremely positive for the industry in the long run and these changes have taken us a step closer to building a world class life insurance industry.

With an annual growth rate of 15-20% and the largest number of life insurance policies in force, the potential of the Indian insurance industry is huge. Total value of the Indian insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion). According to government sources, the insurance and banking services' contribution to the country's gross domestic product (GDP) is 7% out of which the gross premium collection forms a significant part. The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP.

The year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place with the ending of government monopoly and the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. In 2000, when private players entered the Indian life insurance market, they brought their own share of dynamism into the sector. At that time, life insurance was purchased primarily as a tax-saving tool.

The life insurance industry in India grew by an impressive 36%, with premium income from new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff competition from private insurers. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 2005-06 also speak of the growing share of the private insurers.

It is now a decade since the insurance industry was opened up for private participation. In the initial stages after the liberalisation of the sector, the new entrants into the life insurance industry focused on expanding operations and establishing a national footprint. This business model focused on enabling future growth in volumes through large scale expansion. While the insurance industry gained traction in this phase, the next phase of growth witnessed companies focusing on achieving profitable growth. The new regulations also required companies to re-evaluate business models and achieve a balance between top-line and bottom-line growth. It is our firm belief that the new regulations have nudged the industry in a direction which holds a very promising future.

Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer.

The opening up of the sector brought about a paradigm shift and led to the emergence of a multiple Insurance companies. The Indian customer was provided innovative and world-class solutions that offered a combination of protection and long-term wealth creation. With an increasing number of private players, the customer had an array of customised solutions to choose from. More importantly, these solutions were developed keeping in mind the diverse needs of customers at varying stages in their life cycle. Access to these financial solutions was provided through a range of distribution channels such as banks, agents, direct offices and online platforms. This revolutionised the distribution network and led to the emergence of a more diversified and multichannel distribution network, thereby providing better penetration and accessibility to customers. This was critical given the very low level of penetration of insurance in the country. In such a scenario, innovative products, improved services and the approach of providing advice were by-products of liberalisation of the sector. The customer indeed became the king.

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