Impact of Customer Services in the Insurance Sector - Research Paper Example

Impact of Customer Services in the Insurance Sector Introduction It has been observed that the tertiary or the service sector has become one of the most important components of global economics in the 21st century. There has been realised that in the face of global competition customer service is an integral part of a company’s customer value proposition. Scott (2002) states that “Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer expectation.” There has been realised that an important part of marketing of any service is customer service. Peppers and Rogers in their book Rules to break and Laws to Follow has clearly stated that “customers have memories. They will remember you, whether you remember them or not.” They also add that “customer trust can be destroyed at once by a major service problem, or it can be undermined one day at a time, with a thousand small demonstrations of incompetence.” In the case of the insurance companies, the whole sector is based on customer services and therefore the impact of customer services that are provided on customer satisfaction is of great significance. In the following paper there shall be attempt made to critically analyze and evaluate the impact that the customer care services have on customer satisfaction in the insurance sector (Dall, Michael; Bailine, Adam 2004). This shall be achieved through conducting a comparative study on the customer services that are provided by two insurance companies in Sri Lanka, the Sri Lanka Insurance Corporation Limited, which is a public sector corporation and the Ceylinco Insurance Company Limited, which is a private sector enterprise (Berry, Leonard L.; A. Parasuraman 1991). This shall be done through the gathering of various data, and then carrying out an analytical study of these two on the basis of the data collected with strategy, hypothesis and then summarise. Research Philosophy: There has to be realised that there exists a close relationship between the research philosophy and developing knowledge in any chosen field of study. Thus, in the beginning of any research project there has to be clear statement of the philosophy behind it. In the case of this paper the philosophy that has been applied is a combination of both positivism and realism. The research conducted realises that there is a social world which functions externally which when viewed objectively can lead to the development of independent research, but along with this it combines the realist view point, and the researcher establishes that there are certain facts that are already established, which when studied will lead to development of an objective but factually correct assessment. Thus with the help of these two philosophies the paper will be able to ensure that the research that is conducted is able to study in great details the customer services that are provided by these two companies and comparatively analyse the two in the basic form of their functioning. Research Methods: The paper will follow the basic pattern of collection assimilation and presentation as its basic research methodology. The research methodology can be either quantitative or qualitative or both. If the quantitative method is employed, then the focus is on building and testing theories, as has been mentioned by Coolican H (1999) who states that “Research focuses on describing, explaining and predicting the research issues”. On the other hand qualitative method looks at the understanding and comprehension of the data that is gathered and complied. The paper will look at employing both the above mentioned methodologies of quantitative as well as qualitative research to ensure that the final result of the paper is all encompassing and complete. Thus, there shall be collection of data carried out through the questionnaire, and then theory will be built on what is the best possible method of customer services. Then on the basis of this information a detailed analytical study will be conducted on the services provided by these two companies. This will help ensure that an overall developed research is conducted that takes into account all the various variables and components of the process. Conceptual Framework on the basis of Variables: In the following paper, on the basis of the research topic of customer service’s impact the following variables have been recognised and documented. These are infrastructure, consistency and stability, sensitivity, assertion and social accountability. Infrastructure: The infrastructure includes the basic tangibles that are included in the process. This includes the performance of the company management of its infrastructure which includes lighting, colouring, carpeting, plumbing, brochures, and the daily correspondence of the bank with its customers and the presentation of the company’s personnel. Consistency and stability: This is one of the most important variables in the working of any company, but in the case of insurance company this is of even greater importance because this helps build the trust among the customer base of the company. This variable includes the dependability of the firm. This looks at whether a company or organization is able to uphold the same performance over a period pf time or not. This would also look at whether the services that are provided at different counters are the same of different. Thus, it looks at the quality and the quantity of the services that are provided by the personnel of the corporation or company to the customers. It looks at whether the company upholds his promises, keep accurate records, provide timely updates and uphold proper billing strategies. This is of great importance as for a company the trust and the faith that it builds with its customer base is of the greatest consequence. Sensitivity: The sensitivity of the bank is another important variable that has to be considered in this perspective. The sensitivity of the firm extends to its responsiveness to the needs and the demands of the customers. It is reflected in the employer’s readiness to help and assist the customers. It looks at whether the personnel that is employed by the corporations are willing to provide services intermittently (Ennew C T, Reed G V B M R 1993). There have been reported instances where the customers face problems but the employees are busy in their own conversations and are ill disposed at serving the demands of the customer Assertion: This is a variable that is seen present in all services that are provided by all companies and is of considerable importance in the case of insurance companies and corporations because it addresses the capability and aptitude of the firms in providing services to the customers. This helps ensure that the services that are provided are secure and stable. It helps assert that the company has knowledge and skills while looking at the performance of its services. Accountability and Empathy: This variable helps the company look at the situation that exists from the perspective of the customers. According to this the companies have to sensitive to the needs of the people and to the requirements of the society as a whole. Customer Satisfaction and Service Quality: The basic criterion on which customer satisfaction is measured includes the five variables as have been stated and enlisted above. The service quality of any facility that is rendered by any company or firm is measured on the basis of the above mentioned variable. Thus, there exist a clear relationship between customer service and service quality (Nyeck, S., Morales, M., Ladhari, R., & Pons, F, 2002). It is believed that in accordance to the service quality provided by the employees of the firm, the level of satisfaction of the customers is achieved. If the expectations of the customers exceed the service quality that is provided then the firm then the result is dissatisfaction of the customers with the corporation or company (Lages L F & Fernandes J C, 2005). But if the services that are provided by the firm and its quality meets the expectation or is more than the expectation of the customers then the customers are satisfied (Gitman, Lawrence J.; Carl D. McDaniel 2005). Researches on the relationship that exist between the two have been conducted since time immemorial and are an important component while setting up the marketing strategy of any company. Customer satisfaction is defined as an attitude, and in this paper the assumption has been made that the simple and overall assessment of satisfaction would be acceptable. Research Hypothesis: The research of this paper will be based on the basic principles of the service quality model or the SERVQUAl (Buttle F 1996), on the basis of which the following hypothesis has been established. These are: The level of customer satisfaction is higher if the level of the tangibles in the company is higher. The level of customer satisfaction increases with the increase in the responsiveness of the employees. If the level of reliability of a company is high then the level of satisfaction of the customer is also high. The customer satisfaction is high if the assurance that the company extends to its customers is high. Finally, if the accountability and the empathy that the employees show towards any problems faced by the company is high then the corresponding level of customer satisfaction is also high. Research sample: The research that has been conducted by this paper has been carried out in the northern part of the country of Sri Lanka, which has been conducted in the district of Jaffna. This research has been carried out with regards to two insurance companies located in the area, the Sri Lanka Insurance Corporation Limited, Jaffna branch and the Ceylinco Insurance Company. Data collection: The data that was collected includes information from journal and newspapers. It also includes information that was gathered by conducting a survey, where a questionnaire was prepared. 50 customers from each insurance company were questioned and the conclusions were reached on the basis of these which were then analyzed. Questionnaire: The questionnaire is a list of questions that are prepared by the students to help him or her in the facilitation of his or her research. The questionnaire that was prepared in relation to this research includes three parts. The first part contains questions relating to the personal information of the customers; the second part pertains to the variables that are involved in ensuring the quality of services provided while the third part of questionnaire looks at establishing the customer’s expectations and demands. Research Limitation: There are certain limitations that are involved in all studies and researches that are conducted. These issue from the fact that there are certain assumptions that are made while conducting a research. Thus, the research cannot be a 100 percent accurate. The basic limitations of this research are: The research is limited to the Jaffna district and it is assumed that it is sufficient representation. Only two companies of the region have been surveyed. The customers and the samples have been taken randomly. The conclusions have been drawn from the analysis of the samples that have been collected. There are a number of other factors, such as the gender, age group, social background, etc that also determine the customer satisfaction but only the quality of service provided has been considered in this paper. Research Ethical Issues: While conducting any research programs there are certain ethics that have be maintained. Ethics has been described as the appropriateness of behaviour by Sanders (2008). The ethical standard that has been maintained while carrying out this research is in sync with the standards that have been set up by the Northumbria University in its ‘ethics in research and consultancy-policy statement’. The research that has been conducted includes only complying adults who were either 18 years and above and does not include any children. All those who participated knew what the research was being conducted for and where the information was going to be utilised. It does not include any confidential information of any of the participating individuals or groups. Summary: In the following section of the paper, on the basis of the data that was gathered, conclusions will be drawn, where the basic relationship between customer satisfaction and service quality will be established. Customer services: It has been defined by Liu as “a result of a cognitive and affective evaluation, where some comparison standard is compared to the actually perceived performance. If the perceived performance is less than expected, customers will be dissatisfied (Paul H. Selden 1998). On the other hand, if the perceived performance exceeds expectations, customer will be satisfied”. Thus, for the establishment of customer satisfaction evaluation of performance of the companies is required. Definition of Service quality: The have been a number of definitions of service quality that have been provided over the years. This includes service quality as the subjective comparison that customers make between the quality of the service that they want to receive and what they actually get as defined by Gefan in 2002. Feedback on the two: The research that has been conducted of the two show that there are two aspects that have to be considered, the first is the quantity of service provided, that is, what is being provided (Leszinski R, Weber F A, Paganoni R, Baumgartner T 1995), and the second is the quality of the service provided (Reed D 1997), which includes how the service is being provided. For example in the case of Ceylinco Insurance Company the company launched an On the Spot policy where the claims of the customers are settled immediately (McCabe D, Rosenbaum M S, and Yurchisin J, 2007). This service is available 24 hours through out the year, which has lead to greater satisfaction among the customers (Lilly C and Wood D A 1997). Thus, the pricing packaging and service encounter also effect satisfaction levels. Both the companies reflect a high percentage of customer retention, though it is slightly higher in the case of Ceylinco Insurance Company (Joby J 2003). This topic of research has gained a lot of importance in the recent times, especially since the time of liberalization and emergence of global economics. It is believed that it is only through the study of this that companies will be able to establish themselves (Zeithaml, Parasuraman & Berry 1990) and be able to meet the changing expectations of the customers, which will help them overcome competition and help them establish themselves. Conclusion:  It may be concluded that the responsiveness of service quality provides maximum customer satisfaction to the insurance companies in the country. With the increase in the overall market size of the industry as well as increasing competition since 2000, different players of the industry should invest to improve the customer relationship. This would not only involve implementation of CRM solutions, but also internal marketing of the CRM concept. This would naturally require giving more emphasis on giving training to the insurance agents. Proper CRM implementation would not only ensure increased customer satisfaction but also help in acquiring new customers, at the same time retaining the old customers. Improved customer satisfaction would also result in positive word-of-mouth and consequently better customer acquisition and retention. Reference: Berry, Leonard L.; A. Parasuraman 1991, Marketing Services: Competing Through Quality. New York: Free Press Buttle F, 1996, SERVQUAL: review, critique, research agenda, European Journal of Marketing, Vol.30, Issue 1, pp.8-31 Dall, Michael; Bailine, Adam 2004, Service this: Winning the war against customer disservice, 1st ed, Chpt 1 Ennew C T, Reed G V B M R 1993, Importance/performance Analysis and the Measurement of Service Quality, European Journal of Marketing, Vol. 27, No. 2, pp. 59-70. Gefan, D. 2002, Customer Loyalty in e-Commerce, Journal of the Association of Information Systems 3, 27-51 Gitman, Lawrence J.; Carl D. McDaniel 2005, The Future of Business: The Essentials. Mason, Ohio: South-Western Joby J 2003, Fundamentals of Customer-Focused Management: Competing Through Service. Westport, Conn.: Praeger Khalifa, M. and Liu, V 2003, Determinant of satisfaction at different adoption stages of internet –based services, Journal of the ass ociation for information systems, Vol.4 NO. 5, PP. 206-232/October Lages L F & Fernandes J C, 2005, The SERPVAL scale: A multi-item instrument for measuring service personal values, Journal of Business Research, Vol.58, Issue 11, pp. 1562-1572 Leszinski R, Weber F A, Paganoni R, Baumgartner T 1995, Profits in your backyard, pp 118-128, Chpt Customer Profitability. Lilly C and Wood D A 1997, Who will Market Insurance at the Beginning of the Twenty-first Century? CPCU Journal, Vol. 50, Issue 4, pp. 210-227 McCabe D, Rosenbaum M S, and Yurchisin J, 2007, Perceived Service Quality and Shopping Motivations: A Dynamic Relationship, Services Marketing Quarterly, 29 (1), 1-21. Nyeck, S., Morales, M., Ladhari, R., & Pons, F, 2002, 10 years of service quality measurement: reviewing the use of the SERVQUAL instrument Cuadernos de Difusion, 7(13), 101-107. Paul H. Selden 1998, Sales Process Engineering: An Emerging Quality Application. Quality Progress: 59–63 December 1998 Reed D 1997: Trouble at till (Customer Loyalty), Marketing Week (UK), pp 51-53 1997. Zeithaml, Parasuraman & Berry 1990, Delivering Quality Service; Balancing Customer Perceptions and Expectations, Free Press, 1990 .    . .   Read More