The Insurance Sector In India

Published Date: 02 Nov 2017

Assistant Professor,

Department of Business Administration (Autonomous),

Annamacharya Institute of Technology and Sciences,

Rajampet, Kadapa District, AP – 516126.

Cell: +91-9491422998

E-mail: [email protected] or [email protected]

Abstract

Since two decades, the insurance sector in India has grown as a booming market. Indian Life Insurance industry has emerged as one of the largest life insurance markets in the globe after liberalizing the economy. The liberalizing policy opened the doors for the new entrants into the life insurance sector, as a result numerous service firms of life insurance have been offering a wide variety of insurance services irrespective of age, gender and class of economy of the public. Among the numerous life insurance companies, Bajaj Allianz Life Insurance Company, a joint venture between Bajaj Auto Limited and Allianz AG of Germany, has become one of the key competitors for the traditional life insurance company i.e., LIC of India. The service quality is imperative to achieve competitive advantage in insurance sector. Poor quality places a life insurance firm at a competitive disadvantage. The present study was investigating the Service Quality of Bajaj Allianz Life Insurance among the states of Andhra Pradesh, Karnataka, Tamil Nadu and Kerala in South India. In this research, an attempt was made on finding the service gap on the basis of six service dimensions viz., assurance, personalized financial planning, competence, tangibles, corporate image and technology using SERVQUAL instrument and all the calculations made with SPSS 19.00.

Key Words

Life Insurance, Service Quality (SERVQUAL), Gap Analysis.

Introduction

The insurance sector in India has grown at a fast rate post-liberalization in 1999. In the last decade, total premium grew at a CAGR of 25% and reached a total of $67 billion in 2010. Indian Life insurance industry (which contributes 88% of total Life and General insurance premium in India) has emerged as the 9th largest life insurance market in the world. Yet, Insurance penetration (measured as ratio of premium underwritten to GDP) was only at 5.2 % in 2010 – significantly lower than Asian peers like South Korea, Taiwan, Japan and Hong Kong which boast an insurance density greater than 10% (IRDA Annual Report, 2010).

Services are economic activities offered by one party to another. Often time-based, performances bring about desired results to recipients, objects, or other assets for which purchasers have responsibility. In exchange for money, time, and effort, service customers expect value from access to goods, labor, professional skills, facilities, networks, and systems; but they do not normally take ownership of any of the physical elements involved (Lovelock & Wirtz, 2011).

Service quality is an important means of differentiation and path to achieve business success in insurance sector. Such differentiation on the basis of service quality can be a key source for gaining competitive advantage for insurance companies.

Reliability Analysis

Table : Reliability Analysis

Dimension

Cronbach's Alpha

Number of Items

Perception

Assurance

0.704

5

Personalized Financial Planning

0.758

4

Competence

0.728

5

Tangibles

0.849

4

Corporate Image

0.801

5

Technology

0.839

3

Total

0.897

26

Expectation

Assurance

0.787

5

Personalized Financial Planning

0.797

4

Competence

0.764

5

Tangibles

0.878

4

Corporate Image

0.927

5

Technology

0.702

3

Total

0.925

26

Means values of various Dimensions of SERVQUAL

Table : Means values of various Dimensions of SERVQUAL

S.No.

Dimensions

Perception

Expectation

ASSURANCE

1

Trained and well-informed agents

3.23

3.09

2

Approaching from customer's point of view

3.46

3.19

3

Trusting agents when explaining policies

3.40

3.05

4

Clarity in explaining policy's terms and conditions

3.19

3.13

5

Understanding intimately specific needs

3.58

3.41

PERSONALIZED FINANCIAL PLANNING

6

Provision of Flexible payment schedule

3.51

3.40

7

Availability of flexible product solution

3.50

3.30

8

Provision for Convertibility of products

3.41

3.25

9

Supplementary services

3.39

3.53

COMPETENCE

10

Staff dependable in handling customer's problem

3.21

3.37

11

Efficient staff

3.25

3.46

12

Easy access to information

3.14

3.45

13

Prompt & Efficient Grievance handling mechanism

3.40

3.49

14

Prompt and hassle free claims settlement

3.46

3.06

TANGIBLES

15

Adequate number of branches

3.65

2.88

16

Accessible location of the branch

3.67

2.74

17

Good ambience of the branch

3.55

2.79

18

Possessing good certification and credentials

3.53

2.95

CORPORATE IMAGE

19

Innovativeness in introducing new products

3.47

2.88

20

Courteous Agents

3.56

3.05

21

Value for money

3.59

2.79

22

Simple and less time consuming procedure for purchasing a policy

3.76

2.84

23

Financially stable company

3.27

2.96

TECHNOLOGY

24

Easy online transaction

3.16

2.90

25

Prompt complaint handling online

3.35

2.94

26

Proactive information through e-mail or SMS

3.34

3.14

Note: Calculated with SPSS 19.0.

S.No.

Dimensions

Perception

Expectation

Gap Score

1

Assurance

3.3730

3.1760

0.197

2

Personalized Financial Planning

3.4541

3.3689

0.085

3

Competence

3.2921

3.3655

-0.073

4

Tangibles

3.6011

2.8408

0.760

5

Corporate image

3.5296

2.9056

0.624

6

Technology

3.2871

2.9963

0.291

Total

1.884

Average of Un-weighted SERVQUAL Score (Total/6)

0.314

Table : Un-weighted SERVQUAL Score

Table : Weightages to various Dimensions of SEVQUAL

1

Assurance -Trained and well-informed, Approaching from customers, Trusting agents, Clarity in explanation, Understanding needs.

24

2

Personalized Financial Planning - Provision of flexible payment, Flexible product, Convertibility of products, Supplementary services.

20

3

Corporate Image - Innovativeness, Courteous Agents, value for money, Simple and less time, Stable Company.

18

4

Technology - Easy online transaction, Prompt complaint handling,

Proactive information through e-mail.

16

5

Competence - Handling customer’s problems, Efficient staff, Easy access, Grievance handling mechanism, Free claims settlement.

12

6

Tangibles - Adequate No. of branches, Accessible location, Good ambience, Good certification and credentials.

10

Total

100

Table : Weighted SEVQUAL Scores

S.No.

SERVQUAL Dimension

Gap Score

Weights

Weighted Score

1

Assurance

0.197

0.24

0.0473

2

Personalized Financial Planning

0.085

0.20

0.0170

3

Competence

-0.073

0.18

-0.0131

4

Tangibles

0.760

0.16

0.1216

5

Corporate image

0.624

0.12

0.0749

6

Technology

0.291

0.10

0.0291

Total

0.2767

Average SERVQUAL Weighted Score (Total/6)

0.0461