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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS An Empirical study on Customers attitude towards the services of Insurance Companies in India

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Dr. K.Karthikeyan (Corresponding Author) Master of Business Administration (MBA) , Ph.D in Management , Post Graduate Diploma in Human Resource Management (PGDHRM) Assistant Professor Management Studies Saranathan College of Engineering,Venkateswara Nagar, Panjapur Tiruchirappalli620012,Tamilnadu, South India R.Karthi MBA, M.Phil, EGS Pillay Engineering College,Nagapattinam Assistant Professor Management Studies Perumal Sannathi Velippalayam Nagapattinam 611001 S. Sakthivel Diploma in Computer Technology (DCT) Saranathan College of Engineering,Venkateswara Nagar, Panjapur Trichy-12 Abstract Life insurance is an important need for each and every individual both covering the life risk and to provide economic security to the dependent members of the family. Each of us has some goals in life for which we need to save. This study is conducted mainly to find out the customers attitude towards the services of various insurance companies at Nagapattinam (Dt)- Tamilnadu in India. The present day economy is very much dependent upon the various functions of service sector. The role of insurance is essentially carried out by the people; therefore it is essential that the employees as well as the agents must have the knowledge about offering better service to the customers. According to customers point of view how for the services offered by the insurance companies is really bringing satisfaction to them. The aim is to assess the quality of services offered by the insurance company; attitude towards the customers regarding the policy and the services; and the behavior of the customers towards future bustle. Customers of various insurance companies that are taken for this study are 1. LIC of India 2. HDFC 3. ICICI Prudential 4. Birla Sun Life 5. TATA AIG and 6. Reliance Insurance. Primary data was collected by the researcher with the help of structured questionnaire administered to 602 customers from leading 6 insurance companies at Nagapattinam District- Tamilnadu that constitute as sample size for this study.
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The method adopted to get the data was Interview Schedule. Some of the major findings were derived, that will be useful, relevant and significant to the present Indian scenario. Keywords: Customer attitude, Life insurance, Services, Behavior 1. Introduction Services are marketed in much the same manner as goods and commodities. Still there are obvious differences between goods and services that are analyzed based on characteristics of each. A good is a tangible object used either once or repeatedly. A service is intangible. Good customer service is the lifeblood of any service industry. Service is always important, and in this period of keen competition takes on an even more vital role. 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. Good customer service is much cheaper and far more effective then obtaining new customer through expensive marketing ploys. 2. Customer Attitude towards Life Insurance Life insurance is an important need for each and every individual both covering the life risk and to provide economic security to the dependent members of the family. Each of us has some goals in life for which we need to save. It is said that the life insurance is never bought, it is always sold. It is quite obvious that earning individuals with dependant family members or financial liabilities should have adequate life insurance cover. The tremendous growth of the economy and the consequential growth of the organized sector lead the insurers play a decisive role in designing various life insurance schemes. Numerous benefits offered by the insurance companies for the well being of the society such as tax benefits, source for obtaining finance, business continuation, family protection, medical benefit, educational benefit, innumerable death benefits and premium options are encouraging the individuals to purchase policy for their future happiness. 3. Life Insurance services Many life insurance companies are committed to delivering customer delight by adhering to the gold standards of customer service. Companies are offering various services such as Insurance on credit card, Insurance on Home Loan, Travel insurance, Health insurance, critical illness, Income protection, Mortgage payment protection, intimation of premium payments, premium

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payments through net banking/phone banking, policy servicing forms, grievances / complaints analysis, Policy update on SMS and details of queries related to policy through internet. 4. Literature Review Anbil Battacharya (2000) in his article Indian Banks-Entry in to Insurance sector has stated that the banking industry is penetrating in to the insurance industry. He suggested that the eligibility criteria(framed by the IRDA-minimum net worth to the extent of Rs 500 crores, reasonable level of Non Performing assets of the Bank, continuous profits for the first three years) might be relaxed(10% of the net worth Rs 50 crores as minimum net worth). Anne M. Smith, Barbara R. Lewis (1994) emphasized in their article, Customer Care in Financial Service Organisations that the findings are presented from an investigation of customer care in major UK organisations in the financial services sector, to include banks, building societies and insurance companies. Attention was focused on the need for customer care and service quality, and the development, implementation and evaluation of customer care/service programmes, as well as associated staff and management training activities. Phillip K. Hellier, Gus M. Geursen, Rodney A. Carr and John A. Rickard (2003) suggested a general service sector model of repurchase intention from the consumer theory literature. A key contribution of the structural equation model is the incorporation of customer perceptions of equity and value and customer brand preference into an integrated repurchase intention analysis. The model describes the extent to which customer repurchase intention is influenced by seven important factors service

quality, equity and value, customer satisfaction, past loyalty, expected switching cost and brand preference. The general model is applied to customers of comprehensive car insurance and personal superannuation services. The analysis finds that although perceived quality does not directly affect customer satisfaction, it does so indirectly via customer equity and value perceptions. Shekar Chandra Sahoo (1998) in his article Future marketing Strategies for Life Insurance discussed various issues relating to life insurance marketing. He has given a detailed note about new kinds of products and intimacy with the market and a constant technology adoption for survival as well as for a consistent growth. Innovative business concepts will have an even more powerful impact on the organization future and its place in the global market. 5 .Importance of the study The study is conducted mainly to find out the customers attitude towards the services of various insurance companies at Nagapattinam (Dt)- Tamilnadu in India. The present day economy is

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very much dependent upon the various functions of service sector. The role of insurance is essentially carried out by the people; therefore it is essential that the employees as well as the agents must have the knowledge about offering better service to the customers. According to customers point of view how for the services offered by the insurance companies is really bringing satisfaction to them. All the above mentioned aspects impressed the researcher to study the customers attitude towards the services of insurance companies and come out

recommendations for future. 6. Statement of the Problem Customer service is becoming a necessity to every organization now-a-days. Good service creates good impressions among the customers. Many private players are ready to offer the best services to the customers. The aim is to assess the quality of services offered by the insurance company; attitude towards the customers regarding the policy and the services; and the behavior of the customers towards future bustle. Customers of various insurance companies that are taken for this study are 1. LIC of India 2. HDFC 3. ICICI Prudential 4. Birla Sun Life 5. TATA AIG and 6. Reliance Insurance. 7. Objectives of the study To examine the factors that influences the customers attitude towards services offered by insurance companies in Nagapattinam Distirct- South India To investigate the customers outlook regarding the risk coverage & procedures of Claim settlements practiced by various insurance companies. 8. Research Methodology This study is a descriptive one. Primary data is mainly used for analysis.A well structured questionnaire was used to collect the primary data. The questionnaire was finalized based on the comments and suggestions given by the insurance employees, development officers, agents. Secondary data for the study were collected from reputed journals, magazines, websites and insurance records. The method adopted to get the data was Interview Schedule. 602 customers from leading 6 insurance companies at Nagapattinam District- Tamilnadu constitute as sample size for this study.

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8.1.Hypotheses i.

There is relationship among the factors that influences the services offered by insurance companies.

ii.

No problem for my family to receive the insurance amount from the company and No delay in settlement of sum assured can predict Customer satisfaction

8.2.Limitations of the study i. The respondents were customers and always had a busy schedule with their work, which was a barrier in filling up the questionnaire. ii. iii. Attitude of the respondents may change over time and situation. There may be changes in services which in turn may influence the customer attitude.

8.3.Statistical Tools Used Using Statistical Package for Social Sciences (SPSS) the following tools were administered in this study 1) Factor Analysis 2) Multiple Regression 3) Percentage Analysis and 4) Reliability Test. 9. Reliability Statistics Insert Table 1 Here An examination had been made from the reliability of the data to check whether random error causing inconsistency and in turn lower reliability is at a manageable level or not, by running reliability test. From table 1 it is clear that values of Coefficient alpha (Cronbach s Alpha) have been obtained, the minimum value of Coefficient alpha obtained was .676 .This shows data has satisfactory internal consistency reliability. Insert Table 2 here From the above table it is inferred that majority of the respondents prefer endowment policy, while money back and whole life policy is preferred by 22 percent of the respondents respectively. ULIP is preferred by only 16 percent of the respondents.

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10.Factor Analysis 10.1 KMO and Bartlett's Test

The individual statements on consumer expectation was examined using factor analysis based on 20 individual statements and the reliability of the samples collected was tested for internal consistency of the grouping of the items.

Insert Table 3 here KMO measure of sampling adequacy is an index to examine the appropriateness of factor analysis. High values between 0.5 and 1.0 indicate factor analysis is appropriate. Values below 0.5 imply that factor analysis may not be appropriate. From the above table it is seen that Kaiser Meyer Olkin measure of sampling adequacy index is 0.504 and hence the factor analysis is

appropriate for the given data set. Bartlett s Test of Sphericity is used to examine the hypothesis that the variables are uncorrelated. It is based on chi- Square transformation of the determinant of correlation matrix. A large value of the test statistic will favor the rejection of the null hypothesis. In turn this would indicate that factor analysis is appropriate. Bartlett s test of Sphericity Chi-square statistics is 4978.978, that shows the 20 statements are correlated and hence as inferred in KMO, factor analysis is appropriate for the given data set. Insert Table 4 here Eigen Value represents the total variance explained by each factor. Percentage of the total variance attributed to each factor. One of the popular methods used in Exploratory Factor Analysis is Principal Component Analysis, Where the total variance in the data is considered to determine the minimum number of factors that will account for maximum variance of data. Insert Table 5 here Interpretation of factors is facilitated by identifying the statements that have large loadings in the same factor. The factor can be interpreted in terms of the statement that loads high on it. The factors that influences the customer s attitude towards services offered by insurance companies in Nagapattinam Distirct-comprises of 20 individual statements. Out of 20 factors, 8 individual factors influences the customers more, the factors are: i. ii. iii. Company is not charging heavy interest to revive the policy Getting House loan is easy with my help of my policy Policy covers all the benefits like loan, accidental death etc.,

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iv. v. vi. vii. viii. No problem in receiving the amount after maturity At the time of lapse company reminds me to continue Repayment system is easy Receiving the pledged documents after the full settlement is not difficult Additional benefit at the time of settlement.

11. Multiple Regressions Insert Table 6 here The above model summary table shows R-Square for this model is .478. This means that 47.8 percent of the variation in overall satisfaction of the consumers (dependent variable) can be explained from the 8 independent variables. The table also shows the adjusted R-square for the model as .471. Any time another independent variable is added to a multiple regression model, the R-square will increase (even if only slightly). Consequently, it becomes difficult to determine which models do the best job of explaining variation in the same dependent variable. The adjusted R-Square does just what its name implies. It adjusts the R-square by the number of predictor variables in the model. This adjustment allows the easy comparison of the explanatory power of models with different numbers of predictor s variable. It also helps us to decide how many variables to include in our regression model. Insert Table 7 here The ANOVA table, as displayed in the above table-6 shows the F ratio for the regression model that indicates the statistical significance of the overall regression model. The larger the F ratio there will be more variance in the dependent variable that is associated with the independent variable. The F ratio = 67.877. The statistical significance is .000 - the Sig . There is relationship between independent and dependent variables. Insert Table 8 here To determine if one or more of the independent variables are significant predictors of overall satisfaction of the consumers, we examine the information provided in the coefficient table. From the above eight independent statements only three independent statements are not statistically significant. The standardized coefficient beta column reveals that There is no

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problem in case of any unforeseen events my family can receive the amount has a beta coefficient .378, which is significant (.000). There is no delay in the settlement of sum assured has a beta coefficient .308, which is significant (.000). I can get additional benefit at the time of settlement of bonus has a beta coefficient .255, which is significant (.000). I am satisfied with the duration of the risk coverage has a beta coefficient .039, which is not significant (.246). Increasing and decreasing the duration of the scheme is possible has a beta coefficient .201, which is significant (.000). The human life value is recognized has a beta coefficient .029, which is not significant (.407). The policy is giving protection to my family members has a beta coefficient .051, which is not significant (.158). There is no problem in case of any unforeseen events the can receive the amount and There is no delay in the settlement of sum assured can influence the overall satisfaction of consumers. There is no problem in case of any unforeseen events my family can receive the amount and There is no delay in the settlement of sum assured predict 47% of overall satisfaction of customers. 12. Conclusion In order to remain competitive in a deregulated industry that has more or less encroached on all financial service providers, insurance companies and their sales representatives have to reevaluate their traditional methods of attracting and keeping customers. To be successful in this endeavor, agents must take a closer look at just how they treat their customers. There is no problem in case of any unforeseen events my family can receive the amount and there is no delay in the settlement of sum assured can influence the overall satisfaction of consumers. However, in spite of the availability of many techniques and systems for monitoring and measuring customer satisfaction and using it in decision making, there are major implementation problems facing a customer satisfaction strategy which have been totally ignored. Insurance companies must concentrate on overcoming these setbacks and improve their standard in order to attract and retain the customers.

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Annexure Table 1: Cronbach's Alpha Cronbach's Alpha .676 N of Items 31

Table 2 : Most preferred Type of policy Type of policy Endowment Policy Money-back policy Whole Life Policy ULIP Total No. of Respondents 242 132 132 96 602 Table 3: KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. ChiSquare df Sig. .504 4978.97 8 190 .000 Percent 40 22 22 16 100

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Table 4: Total Variance Explained Extraction Sums of Squared Component Initial Eigenvalues Loadings % of Cumulative % of Cumulative Total Variance % Total Variance % 1 3.775 18.876 18.876 3.775 18.876 18.876 2 2.691 13.455 32.330 2.691 13.455 32.330 3 1.782 8.910 41.240 1.782 8.910 41.240 4 1.689 8.446 49.686 1.689 8.446 49.686 5 1.525 7.627 57.313 1.525 7.627 57.313 6 1.236 6.181 63.493 1.236 6.181 63.493 7 1.195 5.977 69.471 1.195 5.977 69.471 8 1.067 5.335 74.805 1.067 5.335 74.805 9 0.861 4.304 79.110 10 0.778 3.890 83.000 11 0.632 3.158 86.157 12 0.519 2.595 88.753 13 0.510 2.549 91.301 14 0.402 2.011 93.312 15 0.357 1.786 95.098 16 0.279 1.395 96.493 17 0.256 1.282 97.775 18 0.212 1.061 98.836 19 0.146 0.731 99.567 20 0.087 0.433 100.000 Extraction Method: Principal Component Analysis.

Rotation Sums of Squared Loadings % of Cumulative Total Variance % 2.227 11.134 11.134 2.159 10.794 21.928 2.109 10.547 32.475 1.954 9.772 42.247 1.761 8.805 51.052 1.717 8.584 59.636 1.554 7.769 67.405 1.480 7.400 74.805

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Table 5: Rotated Component Matrix (a) Component 1 2 3 4 5 Company provides sufficient Information Regarding policy Policy covers all the benefits No rigid formalities Getting house loan is easy Getting personal loan is easy -.060 .007 -.219 .027 .023 -.002 .062 .285 .941 .902 .235 .164 .193 .128 .308 -.157 .055 .020 -.193 .172 -.005 .128 .152 .097 .006 .383 .777 .576 .167 .009 .262 -.022 .186 -.106 -.016 .103 .093 -.004 .067 -.036 .025 .540 .050 .071 .748 6

7 -.452 -.001 .347 -.002 .027 .143 .111 .345 .155 .665 .702

8 .181 .292 .023 .004 .096 .247 .054 -.419 -.026 .078 .220 .228 .029 -.197 .294 .053 -.133 .405 .820

-.098 -.247 .548 .158 .056 .181

-.313 -.042 -.038 .056 .076 .048 .057 .080 .246 .021 .120 -.106 .007 -.016 .022 .902 .683 .628 .131 .150 .045 .077

-.079 .094 -.678 -.062 .385 .497 .029 .605 .234 .804

No ambiguous terms and condition while -.073 applying the policy No hidden charges Interest is nominal Repayment system is easy Intimation regarding the market changes Receiving the pledged documents after the full settlement is not difficult At the time of lapse company reminds me to continue Not charging heavy interest to revive the policy Minimum time to revive the policy Revival of policy is not difficult No problem in receiving the amount after maturity No problem in receiving the amount by family members No delay in settlement Additional benefit at the time of settlement Purchased after depth analysis .456 .347 .019 .282 -.005 .027 .810 .703 .756 -.015 -.039 .084 .120 .124

-.230 .135 -.019 .060

.845 -.013 -.071 -.056 -.199 .074 .170 .310 .145 .058 .133 -.013 .045 .071 .121 .262

-.110 .028 .058 .121

-.050 .232 .044 .020

-.078 -.221 -.020 -.153

Extraction Method: Principal Component Analysis.Rotation Method: Varimax with Kaiser Normalization aRotation converged in 14 iterations. Rotation Method: Varimax with Kaiser Normalization

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Model 1 R .691(a) Table 6: Model Summary R Square Adjusted R Square .478 .471

Std. Error of the Estimate .328

a Predictors: (Constant), production to my family member, additional benefit, alteration of duration of the scheme, no problem in receving the amount by family memebers, duration of the risk coverage, life value recogonise, no delay in settlement, no problem to receving the amount after maturity Table-7: REGRESSION ANOVA (b)
Model 1 Regression Residual Total Sum of Squares 58.354 63.726 122.080 df 8 593 601 Mean Square 7.294 .107 F 67.877 Sig. .000(a)

a Predictors: (Constant), production to my family member, additional benefit, alteration of duration of the scheme, no problem in receving the amount by family memebers, duration of the risk coverage, life value recogonise, no delay in settlement, no problem to receving the amount after maturity b Dependent Variable: Overall Satisfaction Table 8: Coefficients(a)
Model 1 (Constant) There is no problem to receiving the amount after maturity There is no problem in case of any unforeseen events my family can receive the amount There is no delay in the settlement of sum assured I can get additional benefit at the time of settlement of bonus I am satisfied with the duration of the risk coverage Increasing and decreasing the duration of the scheme is possible The human life value is recognized The policy is giving protection to my family members Unstandardized Coefficients B 2.063 -.115 .167 .153 .132 .015 .075 .014 .020 Std. Error .122 .030 .017 .019 .018 .013 .013 .016 .014 Standardized Coefficients Beta 16.969 -.165 .378 .308 .255 .039 .201 .029 .051 -3.867 9.831 7.951 7.504 1.160 5.806 .830 1.415 .000 .000 .000 .000 .000 .246 .000 .407 .158 t Sig.

a Dependent Variable: Overall Satisfaction

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Anne M. Smith, Barbara R. Lewis, Customer Care in Financial Service Organisations International Journal of Bank Marketing,1994 Vol 7, Iss 5 pp 13 22 Czinkota and Kotabe, Marketing management, second edition, Thomson South publications 2001 pp2&3 western

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