Diagnosis and Improvement of Service Quality in the Insurance Industries of Greece and Kenya

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Lancaster University Management School
Working Paper
2004/046
Diagnosis and Improvement of Service Quality in the
Insurance Industries of Greece and Kenya
Rand, Graham K
The Department of Management Science
Lancaster University Management School
Lancaster LA1 4YX
UK
©Rand, Graham K
All rights reserved. Short sections of text, not to exceed
two paragraphs, may be quoted without explicit permission,
provided that full acknowledgement is given.
The LUMS Working Papers series can be accessed at http://www.lums.co.uk/publications/ LUMS home page: http://www.lums.lancs.ac.uk/
Diagnosis and Improvement of Service Quality
in the Insurance Industries of Greece and Kenya
(mr )Evangelos Tsoukatosa,b, Simmy Marwaa, Graham K. Randa
a Department of Management Science, Lancaster University Management School, Lancaster LA1 4YX, UK.
b School of Management and Economy, TEI of Crete, Estavromenos, P.O. Box 1939,71004,Heraklion, Crete, Greece.
Abstract
There is widespread customer dissatisfaction in the
insurance industry, stemming from insurers’ failure to
satisfy customers’ needs. Therefore, further research to
improve the industry’s understanding of service quality is required. Using data from the Greek and Kenyan insurance
industries, service quality is measured using the SERVQUAL
methodology to identify quality determinants and existing
quality gaps in the industries. Quality improvement
strategies are recommended in each case. Some observations
are made on the efficacy of the SERVQUAL diagnostic in
assessing service quality in the insurance industry.
1. Introduction
Previous studies, notably those of Wells & Stafford (1995),
the Quality Insurance Congress (QIC) and the Risk and
Insurance Management Society (RIMS) (Friedman, 2001a,
2001b), and the Chartered Property Casualty Underwriters
(CPCU) longitudinal studies (Cooper & Frank, 2001), have
confirmed widespread customer dissatisfaction in the
insurance industry, stemming from poor service design and
delivery. Ignorance of customers’ insurance needs (the
inability to match customers perceptions with
expectations), and inferior quality of services largely
account for this. The American Customer Satisfaction Index
shows that, between 1994 and 2002, the average customer
satisfaction had gone down by 2.5% for life insurance and
6.1% for personal property insurance respectively
(www.theacsi.org). In Greece, for example, 48% of consumers
consider that the industry as a whole is characterized by
lack of professionalism. Furthermore, 34% believe that
insurers find various pretexts to avoid promised
compensations (www.icap.gr). This is a legacy the industry
has cultivated, sparking a host of controversies, denials
and counter denials which unfortunately have not helped to
1
bolster its image worldwide. Several causes of poor service
quality have been suggested: some with general application
in the service industry and some specific to the insurance
industry.
It is therefore not surprising that measurement of service
quality has generated, and continues to generate, a lot of
interest in the industry (Wells & Stafford, 1995). Several
metrics have been used to gauge service quality. In the
United States, for example, the industry and state
regulators have used "complaint ratios" in this respect
(www.ins.state.ny.us). The “Quality Score Card”, developed by QIC and RIMS, has also been used. However, both the
complaints ratios and the quality scorecards have been
found to be deficient in measuring service quality and so a
more robust metric is needed.
Therefore, further research to improve the industry’s
understanding of service quality is imperative. Using data
from the Greek and Kenyan insurance industries, diagnostics
have been constructed and service quality measured with a
view to identifying quality determinants and existing
quality gaps in the industries. Quality improvement
strategies are recommended in each case.
In...
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