Using the SERVQUAL model, this project report tries to analyse the satisfaction of customers with reference to the insurance sector in India

1. 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

2. 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. It is never considered as a medium for investment for a long
time. In Indian mentality savings can be done only in banks in terms of fixed
deposits and other investment facilities available to them. Some people also
like 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 alliance with foreign insurance experts, Indian
insurance market has turned into highly competitive 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, five full-time members and four part-
time members. The LIC Act, 1956 brought remarkable change in the way the
insurance industry functioned particularly, the life insurance business. Till
the end of 1999-2000 fiscal year, Life Insurance Corporation (LIC) and
General Life Corporation (GIC) were the monopoly insurance (both life 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 lifted the
entry restrictions 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.

3. 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

4. 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

5. 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 w ell
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 w ith
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 w hen services w ill 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
alw ays w illing 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 w ith 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 5
Q17 Employees get adequate
support from LIC to do their jobs
w ell.
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 w hat 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

6. Analysis of questionnaire andinterpretationof informationgatheredthere 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
Before Purchase belief (Expectation)
70% of the respondents agreed to the fact that they LIC's physical facilities are visually appealing
After Purchase/ Consumption (Perception)
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.

7.  When LIC promises to do something by a certain time, it does so.
Before Purchase belief (Expectation)
90% of the respondents agreed to the fact that When LIC promises to do something by a certain time,
it does so.
After Purchase/ Consumption (Perception)
75% of the respondents after involvement with LIC strongly agreed to the same statement
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
Before Purchase belief (Expectation)
70% of the respondents agreed to the fact that when they have problems, LIC is sympathetic and
reassuring
After Purchase/ Consumption (Perception)
75% of the respondents after involvement with LIC strongly agreed to the same statement
INFERENCES
Here 70% of the respondents would have experienced a feeling of satisfaction because the company
fulfilled its promises, while the other 5% of the respondents would have experienced delight because
the company exceeded their expectations.
 LIC is dependable
Before Purchase belief (Expectation)
95% of the respondents strongly agreed to the fact that LIC is dependable
After Purchase/ Consumption (Perception)

8. 80% of the respondents after involvement with LIC agreed to the same statement
INFERENCES
Here 80% of the respondents would have experienced a feeling of satisfaction because the company
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
Before Purchase belief (Expectation)
65% of the respondents strongly agreed to this fact
After Purchase/ Consumption (Perception)
80% of the respondents after involvement with LIC disagreed to the same statement
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.
Before Purchase belief (Expectation)
74% of the respondents disagreed to this fact
After Purchase/ Consumption (Perception)
80% of the respondents after involvement with LIC disagreed to the same statement
INFERENCES
Here 80% of the respondents would have experienced a feeling of satisfaction because the company
was able to meet their expectations.
 Employees of LIC are too busy to respond to customer requests promptly.

9. Before Purchase belief (Expectation)
91% of the respondents disagreed to this fact
After Purchase/ Consumption (Perception)
51% of the respondents after involvement with LIC agreed to the same statement
INFERENCES
Here 50% of the respondents would have experienced a feeling of dissatisfaction because the
company was unable to meet their expectations.
 You can trust employees of LIC
Before Purchase belief (Expectation)
30% of the respondents agreed to this fact
After Purchase/ Consumption (Perception)
81% of the respondents after involvement with LIC disagreed to the same statement
INFERENCES
Here 59% of the respondents would have experienced a feeling of dissatisfaction because the
company was unable to meet their expectations.
 Employees of LIC are polite
Before Purchase belief (Expectation)
67% of the respondents agreed to this fact
After Purchase/ Consumption (Perception)
35% of the respondents after involvement with LIC strongly agreed to the same statement
INFERENCES
Here 35% of the respondents would have experienced a feeling of delight because the company was
able to exceed their expectations.

10.  Employees of LIC do not know what your needs are
Before Purchase belief (Expectation)
80% of the respondents agreed to this fact
After Purchase/ Consumption (Perception)
80% of the respondents after involvement with LIC strongly agreed to the same statement
INFERENCES
Here 35% of the respondents would have experienced a feeling of dissatisfaction because the
company was unable to meet their expectations.
SERVICE QUALLITY IMPROVEMENT SUGGESTIONS
There is need of hour for the insurance services to reaffirm themselves in view o f
the stiff competition. The insurance companies shall have to reorient themselves
in terms of the customer service parameters to instil the concept of quality
service in the mind of the customer and further in terms of growth.
In the language of strategy, the insurance companies in the public sector should
focus more on improving the infrastructure. The infrastructure not only involves
the information technology input in the branches, regional offices and head
office, but also the physical evidence, ambien ce and layout. This is due to the fact
that like in other service organizations, in insurance services also the internal
ambience of the organization has a positive impact on the customers.
The customers trust the public sector insurance companies since these insurance
companies have existed in the market for a longer period than the private sector
insurance companies. The reliability factor is a positive factor for these public
sector insurance companies. These public sector insurance companies should
position themselves in the market on the basis of this dimension and promote
themselves aggressively. This step will not only help them survive the present
onslaught from private sector insurance companies, but also be able to compete
in the market.

11. LIMITATIONS OF THE STUDY
The study was limited only to Noida. Due to the limitations in the time factor, the
study was limited only to one life insurance Company. A single measure of service
quality was used to measure the service quality of the service providers.
SCOPE FOR FURTHER RESEARCH
Taking into account the limitations of the present study mentioned above, future
research could focus on expanding the study to other non -life insurance
companies and also by expanding the geographic reach of the study. Another
comparison can be done among private and public sector insurance companies in
terms of products offered. Study can be done to measure the gap between
expectation and perception of service quality for public and private sector
insurance companies.
References
 www.icindia.in
 www.managementparadise.com
 www.wikipedia.com
 www.business.mapsofindia.com