Academic journal article IUP Journal of Marketing Management

The Effect of Demographic Variables on Customer Satisfaction: An Empirical Study of Indian Life Insurance Industry

Academic journal article IUP Journal of Marketing Management

The Effect of Demographic Variables on Customer Satisfaction: An Empirical Study of Indian Life Insurance Industry

Article excerpt


The large population base and huge untapped market make life insurance industry a big opportunity area in India for national as well as foreign investors. According to the World Economic Forum, India tops the list of countries in terms of life insurance density, followed by China and Japan in second and third positions, respectively. Life insurance industry has been focusing on quality, and certain positive measures have been taken with regard to service quality in the industry. However, in terms of customer satisfaction, the industry seems to be recluse. Further, there is not enough research work on customer satisfaction in life insurance industry in India. The literature reveals that there are very few studies on the effect of demographic variables on customer satisfaction for the life insurance industry, and more so in the Indian context. The present study attempts to fill this gap in literature by analyzing the effect of demographic variables on customer satisfaction for services of life insurance industry.

Literature Review

Overall, the causal relationships between demographic variables, service quality and customer satisfaction have been examined by a number of studies, in service settings around the world. Crosby and Stephens^(1987) in their study explained that highly intangible services such as life insurance consist largely of credence properties and insurance providers should engage themselves in relationship-building activities that emphasize buyer-seller interaction and communication. The results suggest that though relationship marketing adds value to the service package, it is not a substitute for strong, up-to-date core service and this factor is especially true for a 'pure' service such as insurance, which has minor tangible representations of its quality and is highly relational during most transactions. The study also concluded that there is also a lack of price signal in the market due to specialized customer needs and difficulty in comparing prices. Thus, consumers cannot rely solely on price as an extrinsic cue to signal quality. The outcomes of life insurance purchase are often delayed, and thus do not allow immediate post-purchase valuation. As such, the consequences of a purchase do not produce an immediate reaction towards overall satisfaction.

Berry (1995) showed that because of the amount of money that is typically invested in an insurance policy, customers seek long-term relationships with their insurance companies and respective agents in order to reduce risks and uncertainties.

Arora and Stoner (1996) conducted an experimental study to investigate the impact of service quality and name familiarity on the respondents' attitudes and intention to use these services. The researchers opined that the 1990s has been referred to as the era of customer service, and product (brand or service) name familiarity is another variable that has been recognized as having a major influence on the choice of products (services). Results show that perceived service quality has a significant effect on the attitude towards obtaining insurance.

Stafford and Wells (1996) conducted a research on four major insurers. In this study, the researchers examined the differences in perceived service quality among different age groups, education levels and gender. Results suggest that males and females are, overall, identical in their perceptions of claims' service quality. However, there are distinct differences in perceptions between different age groups and educational levels.

Chow-Chua and Lim (2000) in their study found that insurers are widely disliked by customers, and insurance agents talk to clients on average once ever y eight years. Results found that approximately 44% of the population does not own any form of insurance, for example, life insurance, personal accident insurance, etc. The study also shows that information from customers plays a major role in the demand-auditing process. …

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