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ife Insurance is a Contract between an Insured and an insurer where the insured agrees to pay premiums for his/her life insurance policy in due dates and the insurer agrees to pay sum of money under agreeable contract upon the occurrence of death or other event, such as illness or accident of policy owner. Customer service is an integral part of life insurance organization. It is necessary to identify the key success factors in life insurance industry, in terms of customer satisfaction so as to survive in intense competition and increase the market share. Customers often react strongly to service failures, so it is critical that an organization‟s recovery efforts be equally strong and effective. The life insurance providers need to reconfigure their strategy and business to sustain or improve their competitive advantage, and for this they first need to consider how to create a satisfied customer base. For answering this fundamental question, these companies must realize the necessity of studying and understanding various antecedents of customer satisfaction. A number of studies in different fields confirmed that service quality is the antecedent towards customer satisfaction. Therefore, the Life insurance players need to realize that their business depends on client service and the satisfaction of the customer and therefore it is imperative for them to improve customer service quality.In Sri Lankan insurance industry Life insurance is still not reach to the expected level of the market. Most of the customers who have taken a life insurance policy bought that policy with the intention of having long term protection for their lives. At the time of death, Hospitalization or disability they expect protection from their life insurance policy. But, some of them are not totally satisfied with the service which they get from their insurers. The most common reasons for their negative image involve bad claim experience, dissatisfaction with agents, dissatisfaction with functional services and service delays. Therefore it‟s crucial for Life insurers in Sri Lanka to improve their service quality ensuring customer satisfaction in order to successful in the market.
The companies that offer the best technologies and great quality in every service and that have trained and motivated its employees in order to provide an efficient service are creating adequate framework for the success of a relationship marketing orientation. Most of the researchers are dealing with identification of attributes of service quality. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy. Within organizations, customer satisfaction ratings can have powerful effects. They focus employees on the importance of fulfilling customers‟ expectations. When a brand has loyal customers, it gains positive word-of-mouth marketing, which is both free and highly effective. Therefore, it is essential for businesses to effectively manage customer
satisfaction.
Page 2 In Life Insurance Industry the “Brand” is the service standards provided by its employees. Therefore, it‟s crucial to maintain better service standards through quality employees in order to fulfill customer expectations in Life Insurance Industry. Service standards and service levels should be maintained not only by the operational staff who is involve with the technical decision making process and payments, but also it should be maintained and practiced by sales staff and call center agents who directly involve with the customers.
The level of satisfaction a customer has with a company has profound effects. Studies have found that the level of customer‟s satisfaction has a positive effect on profitability:
A totally satisfied customer contributes 2.6 times as much as revenue to a company as a somewhat satisfied customer.
A totally satisfied customer contributes 17 times as much as revenue as a somewhat dissatisfied customer.
A totally dissatisfied customer decreases revenue at a rate equal to 18 times what a totally satisfied customer contributes to a company.
Research has shown that when a person is satisfied with a company or service they are likely to share their experience with other people to the order of perhaps five or six people. However, dissatisfied customers are
likely to tell another ten people of their unfortunate experience. With social media readily available for consumers to tell their story to all of those online, you can easily go to Twitter or Facebook and read about someone‟s experience with a company or service. However, merely focusing solely on customer satisfaction has its drawbacks in the marketplace as well. For those companies that focus only on customer satisfaction run a real risk a failing to differentiate their brand from others. In order to achieve long-term sustainability companies must seek to establish ties of loyalty with consumers that are strong enough to ward off the advances of competitors. Customer loyalty is much harder to obtain than satisfaction. Even though customers are satisfied with the company there are several factors that could cause the customer to defect to the competition, such as finding a better value or the competitor is more convenient. With that said, having high levels of customer satisfaction does not always lead to customer loyalty. However, a company cannot achieve customer loyalty without having customer satisfaction.
Page 3 We all have stories about when we were treated exceptionally well or extremely poorly. We tend to share these extraordinary stories with others. We all know that word of mouth marketing can be the absolute best advantage or the worst drawback for a company. Warren Buffett said it best: “It takes 20 years to build a reputation and five minutes to ruin it. Therefore, it‟s clear that for what extend the service quality will be effect on customer satisfaction. Therefore it‟s important to discuss on Top Five Customer service Metrics when considering about the customer satisfaction upon service quality of Life Insurance Industry. Following are the Top Five Customer Service Metrics;
Top Five Customer Service Metrics
Service Level – For call centers, support, and service desks, first call resolution is the Holy Grail. The first interaction with a customer will be a key determinant of whether the customer will return. Don‟t underestimate the importance of timeliness and thoroughness.
Customer Retention – For Service businesses like insurance, Utilization is the best indicator of a customer‟s dedication to your service. Use this metric to understand who is at risk at contract renewal time or claim settlement time. You should know which customers are using or buying different parts of your business. These customers who are with you for a long period of time are perhaps your most important customers to focus on for your retention strategies.
Response time – You‟d be surprised how many customer surveys come back with comments such as “your service is great, you got back to me right away….” “I was surprised with how quickly you responded to my inquiry and it made all the difference even if I didn‟t get the answer I was hoping for…” In today‟s world of electronic relationship management, response time is one of the only ways we can communicate our sense of urgency and concern for our customers and their experience with our service.
What is your Response goal – within X hours? Set one and achieve it. You should know what your competition is doing and beat their goal. Want to really blow away a customer and cement your relationship? Pick up the phone and give them a personal call.
Time with the Customer – Are your customer-facing employees incentivized to keep calls short or to move too quickly from customer to customer? If so, you are sending the wrong message and subsequently affecting the quality of the customer interaction. There is a definite happy medium between the overly chatty service provider and the thorough and efficient provider. Set your benchmarks for call duration and general time with the customer in relation to the ultimate goal of first call resolution, NOT the other way around. In other words, a completely satisfied customer not requiring a follow-up call or visit is much preferred over a quick, unresolved interaction.
Churn – Cancellations and returns are the equivalent to churn. If you don‟t know how much business you are losing, you won‟t be able to understand how much new business you will require to stay out of the red. As important as knowing how much, understands
Page 4 WHY you are losing customers. Take it to the next level and use follow-up surveys, phone calls, personalized „how can we get you back‟ emails. This survey information is the real business insight for understanding your lost business.
Service quality is usually defined as the customer‟s impression of the relative inferiority / superiority of a service provider and its services, and is often considered similar to the customer‟s overall attitude towards the company. Researchers have tried to conceptualize and measure service quality and explain its relation to the overall performance of companies and organizations. A common denominator of research on service quality is the conclusion that, because services are intangible, heterogeneous, and their „production‟ and „consumption‟ are usually inseparable, the process used by customers to evaluate service quality is exceptionally composite and cannot be easily identified.
The insurance industry affects money, capital markets and the real sectors in an economy, making insurance facility necessary to ensure the completeness of a market. It is an industry with strategic importance for any country as it contributes to the financial sector (and hence the GDP) as well as confers social benefits on the society. At the micro-level, an insurance policy protects the buyer against financial loss arising from a specified set of risks at some cost. It thus reduces anxiety and promotes financial stability by providing a much needed social security. The role of life insurance is undergoing a phenomenal change today as is evident from the service bouquet and the product advertisements. The emphasis lies on insuring oneself and one's close family members for self-reliance high because of nuclear families are the emerging trend in Sri Lanka.
To meet the varying needs of various individuals, the life insurance players have a variety of Life insurance plans and services in their Companies. Thus life insurance companies have to customize the services to improve the quality of service to suit the customer as per their needs.
Page 5 The insurance industry forms an integral part of the Sri Lankan financial market, with insurance companies being significant institutional investors. In recent decades, the insurance sector, like other financial services, has grown in economic importance. This growth can be attributed to a number of factors including rising income and demand for insurance, rising insurance sector employment, and increasing financial intermediary services for policy holders.
A sound national insurance market is an essential characteristic of economic growth. Therefore maximizing Policyholder‟s satisfaction is integral for any Life insurance company in-order to attract and retain profitable customers. Service quality is playing a vital role in life insurance companies to retain and attracting customers by satisfying their expectations.
According to the current researches, when considering on overall customer satisfaction level towards service quality of life insurance industry in Sri Lanka it can be concluded that most customers have negative view on service quality and also most of the customers who experienced the service of the life insurance industry are not satisfied with their service due to the fact that the current practices of the life insurance industry are failed to fulfill the customer expectations up to the expected level. Therefore, all of the Insurance companies who are offering life insurance coverage and services for customers need to contemplate their customer expectations and review their current service standards and also their service procedures so as to accomplish accepted level of customer satisfaction.
Article By: Anne Ineshka Janz – Executive Life (Bsc.(Special) in Insurance and Valuation, PGDIP in Marketing,SLIM)
