G sugumaran

National Seminar on Emerging Issues in Indian Economy

CONSUMER PREFERENCE IN SERVICE INDUSTRY

(WITH REFERENCE TO LIFE INSURANCE INDUSTRY IN LIBERALIZED ECONOMIC

SCENARIO)

By G.SUGUMARANResearch scholar , Asst. Prof. in commerceKanchi Shri Krishna CASKanchipuram.

Life Insurance – A professional service Insurance is an important tool in the overall

financial planning purview of any individual’s life. Potential buyers are driven to buying life

insurance policy – security of money invested, saving for one or more specific purposes and the availability of tax benefits.

It is characterised by high involvement of the consumers, due to the importance of tailoring specific need, the variability of the products available, the complexity involved in the policies and processes and ultimately the need to involve the consumer in every aspect of the transaction

Global Life Insurance Life insurance companies continue to experience

modest growth in most lines of business. In 2008, statutory net operating gains for the industry

are projected to rise from $33.1 billion in 2007 to $33.5 billion

Seven issues for life insurance companies are identified by 2008 Outlook: Retirement Income, Financial Events, Technology, off shoring, Solvency II, International Financial Reporting Standards, Tax Issues and Implications.

Processes like claim management, policy administration, accounting and underwriting were meted out to countries like India

Need for the Study The rising customer awareness and aspiration

of quality service and availability of alternative service providers in the Indian market has made customers more demanding.

Individual evaluates his insurance need, considering his age, following which he can arrive at a suitable protection and investment mix and tenure

Life insurance companies have to understand the requirements of the customers.

Statement of the Problem The pre-purchase and post-purchase services

perception and expectations from the services determines the quality and customer satisfaction from services.

Poor persistency may be due to ‘churning’, where the salesperson persuades the policyholder to withdraw from an existing contract in order to switch insurers.

The foundation for true loyalty lies in customer satisfaction.

Objectives of the Study To observe the current scenario of the Life

insurance Industry in India.

To identify and the attributes relating to customer expectation and their influence on the purchase of Life insurance products from LIC and PLIC.

Research Methodology

Pilot Study - A preliminary investigation is undertaken by contacting 75 policyholders of selected companies.

Main Study - This study is based on both primary data as well as secondary data.

Data Collection - The primary data is collected from the policyholders of life insurance through a well framed questionnaire consisting of 27 prominent questions.

The secondary data is collected from reports, journals, newspapers, magazines and websites.

Sample Size - In order to obtain different perceptions of customers of LIC and PLIC, totally 746 well framed questionnaires are circulated in different parts of Chennai city on a random basis.

Out of 746, only 719 are returned. Among 719 questionnaires it is found that 700 as suitable for primary data analysis.

Out of 700, it is found that 454 are customers of LIC and 256 are from selected PLICs.

The top five private life insurance companies were chosen on the basis of the number of policies and premium collected.

Data Analysis The primary data collected in the form of

responses from the customers are systematically analysed by identifying the independent as well as dependent variables.

All the responses of the customers obtained through Likert’s Five Point Scale forms the domain of dependent variables and the questions about life insurance policies, information search and demographic background are taken up as independent variables.

Statistical Tools Used One sample t-test is used to ascertain the

nature of opinion of respondents regarding the various consumer behavioural aspects of life insurance policies.

One sample t-test is used to ascertain the nature of opinion of respondents regarding the various consumer behavioural aspects of life insurance policies.

Scope of the Study The study focuses on the consumer behaviour

relating to the areas of customer preference, customer satisfaction, loyalty, repurchase decision and complaining behaviour of customers in the purchase of life insurance products.

In the current scenario the life insurance business has become liberalized and competitive.

It is found that exploring the behaviour of the customers will give an insight to life insurance companies to maximize their customers.

ANALYSIS AND INTERPRETATIONS The study aims at ascertaining the awareness of

the insurance product, the influence of advertisement, performance and guarantee, service quality, loyalty and persistency on customer satisfaction.

Their opinion on regular income, agents recommendation and tax benefits are also explored.

The research also, observes that information search on new schemes, transparency, bonus and adoption of innovative technology are also studied microscopically.

PLICLIC

Variables MeanStd.

Deviation tSig. (2-tailed) Mean

Std. Deviation t

Sig. (2-tailed

Awareness 3.5381 1.20565 9.426 0 3.5354 1.11968 7.621 0Advertisement 3.5919 1.04691 11.941 0 3.6024 1.03847 9.244 0Performance 3.935 0.93269 21.17 0 3.8543 0.94012 14.483 0Assured return 3.7646 1.0432 15.478 0 3.7441 0.96657 12.269 0Regular income 3.4619 0.9771 9.983 0 3.4882 0.9099 8.551 0Agents recommendation

3.8498 0.8956 20.038 0 3.7441 0.96247 12.321 0Tax benefits 3.9283 0.97578 20.09 0 3.8307 0.90611 14.611 0Speed of decisions 3.4507 0.99934 9.524 0 3.4921 0.98904 7.93 0Service behaviour 3.5538 0.9946 11.759 0 3.4961 1.01276 7.806 0Appealing facilities

3.5785 0.90784 13.457 0 3.5276 0.8512 9.878 0Product features 3.5807 1.13632 10.793 0 3.5472 1.04623 8.336 0Transparence 3.5964 0.97076 12.975 0 3.6102 0.91629 10.614 0Bonus 3.6794 0.97744 14.679 0 3.622 1.02482 9.674 0Technology 3.491 1.11724 9.282 0 3.5118 1.03585 7.875 0Competence 3.8184 0.92929 18.598 0 3.8228 0.97605 13.436 0Corporate image 4.0135 0.94562 22.634 0 3.9843 1.01362 15.476 0

OPINION OF CONSUMERS ON SEARCH, EXPERIENCE AND CREDENCE ATTRIBUTES

Table shows that the LIC customers expectations of the life insurance products and services vs. the mean values range from 3.0381 to 4.0135 with varying standard deviations.

It is observed that the standard deviations of some variables are less than 1 and some variables possess more variability with greater than 1 value.

The one sample t-test table reveals that the t-test values are highly significant except appealing facilities and product features attributes

This shows that the consumers of LIC have high expectations on awareness of the product and advertisement.

The great expectation of LIC consumers are regular income and proper agent’s recommendation.

Transparency and extra coverage are steadfastly fixed in the minds of the LIC consumers for their personal benefits.

The consumers are highly convinced on the adoption of innovative technology and competency in their dealing with LIC.

Their expectation of the corporate image of LIC of India is very high.

The table also shows that the PLIC customers expectations of life insurance products and services vs. the mean values range from 3.0079 to 3.9843 with varying standard deviations.

It is observed that the standard deviations of some variables are less than 1 and some variables possess more variability with greater than 1 value.

The one sample t-test table reveals that the t-test values are highly significant except appealing facilities and product features attributes

This shows that the consumers of private life insurance companies have high expectation on awareness of the products and advertisement.

The great expectation of the consumers of private life insurance companies are regular income and proper agents recommendation.

Tax benefits and speed of decisions are highlighted by consumers of the private insurance companies in their expectation process.

The consumers are highly convinced on the adoption of innovative technology and competency in their dealings with the private life insurance companies.

ENTRY OF PRIVATE PLAYERS With the entry of private players, the

insurance landscape is witnessing a revolution.

The post liberalization period has witnessed a manifold market.

India’s enormous population and the ever growing middle class continue to offer positive figures to the insurers.

Life insurance remains the primary focus of the state as well as non state players.

  LIC PLIC

Variable MeanStd.

Deviation t

Sig. (2-tailed)

MeanStd.

Deviation t

Sig. (2-tailed)

Product features 3.8206 1.02513 16.906 0 3.7323 1.11723 10.446 0Feedback 3.574 0.83875 14.452 0 3.5394 0.80783 10.641 0Quick delivery 3.6076 0.99248 12.929 0 3.6378 1.02282 9.938 0Product advise 3.5628 0.90658 13.11 0 3.5512 0.89539 9.811 0Simple payment

3.6211 1.02218 12.832 0 3.5315 1.09119 7.763 0Convenience 3.7668 0.99859 16.217 0 3.7441 1.02608 11.558 0Technology 3.6211 0.9421 13.922 0 3.6181 0.92816 10.613 0Post purchase 3.3184 0.94903 7.085 0 3.3031 0.8749 5.522 0Complete information

3.6794 0.80049 17.923 0 3.6614 0.79743 13.219 0Wide range 3.639 0.87008 15.51 0 3.7323 0.9019 12.94 0Facilities 3.8655 0.95273 19.184 0 3.9488 0.89428 16.909 0Quality 3.7152 0.84646 17.845 0 3.7402 0.85013 13.876 0Reputation 4.2085 0.73072 34.928 0 4.2992 0.72029 28.747 0Size & level of operations

4.1323 0.75132 31.827 0 4.2323 0.75782 25.916 0

OPINION OF CONSUMERS ON FEATURES EXHIBITED

Table shows that customer’s opinion about the characteristics features exhibited by LIC Vs the mean values range from 3.3184 to 4.2085, with varying standard deviations.

The one sample t-test table reveals that the t-test values are highly significant.

This shows that the consumers of LIC feel that the Life Insurance products offered by the LIC of India exhibit the characteristic features like unique product features, quick delivery, product advice and simple payment system.

It is found that customer’s opinion about the characteristics features exhibited by Private Insurance Companies Vs the mean values range from 3.3031 to 4.2992, with varying standard deviations.

The one sample t-test table reveals that the t-test values are highly significant.

This shows that the consumers of Private Insurance Companies feel that the Life Insurance products offered by the Private Insurance Companies exhibit the characteristic features like reputation, product features, simple payment system and feedback from customers.

FINDINGS Opinion of customers on expectations, perceptions,

various features of life insurance policies Transparency and extra coverage expectations are

high in the case of LIC and the PLIC customers. The customers of both the sectors are of the opinion

that the various characteristic features are present. The driving force for being loyal to LIC is

Corporate Image and customer satisfaction whereas it is the corporate image for the private sectors.

The customers of LIC have affinity with the agent whereas the customers of PLIC look for excellent services for being persistent.

CONCLUSION The business environment for the insurance sector

is changing fast, bringing new opportunities as well as posing challenges.

The opening up of the insurance sector to the private players has definitely been a positive development.

The globalization of the sector has created many opportunities and challenges to the insurers.

The first challenge comes from market turbulence. The second challenge comes from rapidly

changing customer expectations. The last challenge is the organizational constraint.