International Conference on Technology and Business Management March 28-30, 2011

Service Quality Perception and Customer Satisfaction in Life Insurance

Companies in India

Deepika Upadhyaya
deepikaupadhyaya@gmail.com
MDS University, Ajmer
Manish Badlani
manish.f45@gmail.com
Government Engineering College, Ajmer
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. The study is based on 206 insurance customers from four major cities of India. This
study emphasizes the role of technology to improve quality and hence customer satisfaction. The study intends to
promote a better theoretical understanding and recognition of the complexities to service quality and its
measurement with respect to life insurance.

1. Introduction
This section includes introduction to the financial service industry and also establish the need of customer
service and perception in financial services in life insurance service in particular. Companies involved in the
insurance industry offer a wide variety of products and supplementary services that consumers in need of
insurance coverage could readily infer as being “insurance” related. The financial service industry has not been
immune from, or ignored, the quality revolution. Insurance in India has been spurred by product innovation,
streamlining of sales and distribution channels along with targeted advertising and marketing campaigns. With
increased globalization and presence of a large number of players in the market place, the very definition of
customer relationship and satisfaction is in danger of being proved incomplete. Firms use technology as a key
tool to enhance the information flow within their various business units, helping their employees better
understand the ever changing and increasing needs and wants of their customers. From a company value
perspective, fulfilling customer needs are a key source of income to an organization and achieving complete
customer satisfaction is the only key for the company to succeed.

2. Service Quality
Gronroos (2001) offer a comprehensive definition of services as “an activity or series of activities of a more or
less intangible nature than normal, but not necessarily, take place in the interaction between the customer and
service employee and/or physical resources or goods and/or system of service provider which are provided as
solution to customer’s problems.

Measuring Service Quality

Unlike the quality of tangible goods, such as computers, the intangible nature of services makes their quality
difficult to measure. Service cannot be subjected to objective quality control tests before it is provided to the
general marketplace; it is only with experience that we know how consumers perceive the quality of the
services they receive. In our study, we utilized a recently-developed measure of service quality:
SERVQUAL.
The SERVQUAL model was developed by Parasuraman, Zeithaml, and Berry (Gounaris, 2005). The aim of the
authors was to provide a generic instrument for measuring service quality across a broad range of service
categories and disciplines.

3. Review of Literature
Customer service has become a distinct component of both product and service sectors and with the
developments in information technology many businesses find demanding and knowledgeable customers. The
worldwide trend toward service quality was initiated in the 1880s when businesses realized that a quality
product, in itself, is not guaranteed to maintain competitive advantage (van der Wal et al., 2002). Many
researchers recognize that service quality can bring an organization a lasting competitive advantage (Moore
and Lewis). Quality of services can be the difference between success and failure in both service and manufacturing
firms. Service quality, customer satisfaction and customer value have become the main concern of both

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manufacturing and service organizations in the increasingly intensified competition for customers in today's
customer-centered era (Wang et al., 2004).
As a result, many organizations are paying increasing attention to improve service quality. In some
manufacturing industries "service quality" is considered a more important order winner than "product quality"
(Ghobadian et al., 1994). Service quality improvements will lead to customer satisfaction and cost management
that result in improved profits (Stevenson, 2002). Contemporary service sector firms are compelled by their
nature to provide excellent service in order to prosper in increasingly competitive domestic and global
marketplaces (Sultan and Simpson, 2000). As service firms find themselves in an increasingly competitive and
complex business environment, they are inevitably driven to examine their service delivery processes critically.
The focus of such internal analysis is ultimately about customer satisfaction, and how bottom-line results can be
actualized through delivering quality services to customers via flawless interface platforms. This is not only the
case in the private sector, but it also is increasingly so in the public sector. Public sector firms are trying to make
administration more efficient and more citizen-oriented (Scharitzer and Korunka, 2000).

4. Research Methodology
Need for Research
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 net, especially in times of crumbling family ties and nuclear households in
developing countries. 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 more-so because nuclear families are the emerging trend in India.
To meet the varying needs of various individuals, the life insurance players have a vast foray of products
and services in their bouquet. Besides this, almost all companies offer the flexibility to customers to choose
the most suitable product for themselves by combining features of a number of products and services
together. Thus life insurance companies have to customize the services to improve the quality of service to
suit the customer as per their needs.
Most of the studies in the review literature presented above have been done with a very limited purpose of
probing in to some of the facets of service quality and its perception by life insurance customer.
On the basis of the review of the studies, it can be deducted that service quality management is playing a
very significant role in the development of the economy in India. But as we have seen that lot of research is
done in manufacturing sector to improve the service quality but research on service quality of financial
service sector is very scare and scattered with very few in depth studies on life insurance of a very limited
nature. There is a wide scope for research on the perception of service quality of life insurance companies
operating in India. The present study is pioneering work, because this is the first time an attempt is being
made to study the service quality assessment of life insurance companies operating in states of Rajasthan
and Maharashtra. The review of literature gives an overall view of the researches conducted at international
level to facilitate identification and understanding the areas covered as far for the purpose of the research. It
also paves the way for future research. Empirical studies have not focused much on the service quality
perception by the life insurance customer in developing countries like India. There is no available literature
on service quality perception of life insurance Company by customers in Rajasthan and Maharashtra. It is in
this study the “Service Quality Perception and Customer Satisfaction in Life Insurance Companies in India”
with special reference to state of Rajasthan and Maharashtra.

Reason for Investigating Service Quality in Life Insurance Industry

The insurance industry forms an integral part of the Indian 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. This is not surprising as
the insurance industry forms a major component of an economy by virtue of the amount of premiums it
collects, the scale of its investment, and, more fundamentally, the essential social and economic role it
plays by covering personal and business risks. By encouraging these factors that promote insurance demand
and aid financial development, policymakers possess a strong tool to stimulate economic growth.

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A number of foreign insurance companies have set up representative offices in India and have also tied up
with various Life Insurance companies. The business environment is constantly changing and demand for
adaptability among the organizations tends to increase. Demands from customers, technological
development, change of value and globalization are the factors that drive the need to change and develop
an organization. It is hard to get advantages by quickly adapting technology to product or service in an
efficient manner. The ability to handle organizations intangible assets such as service is of great
importance to reach success, then the ability to invest and manage tangible assets.

Research Gap
The quality of the service is a pre-requisite for financial institution’ market performance and subsequently,
economic performance .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. Some work has been done in the area of identification of factor
related to service quality in the banking industry. Financial sector as such is broad and has a wide scope and
includes Banks, Insurance companies and Brokerage Firms.
The researcher has not come across any study specifically dealing with service quality attributes of Life
Insurance Sector in India. There is gap in the field of investigation specifically in the area of life insurance, what
the researcher wants to study and get inside into the quality aspect of life insurance service.

Research Design
The research design chosen for this study is descriptive research design. The main objective is to see the
factor affecting service quality which ultimately leads to customer satisfaction of life insurance customer in
India. A selected number of life insurance companies operating in state of Rajasthan and Maharashtra were
chosen for the study. The study is restricted to major city and districts of Rajasthan and Maharashtra that are
Mumbai, Pune, Jaipur and Ajmer.
The present study has been undertaken to study the customer’s perception of service quality offered by the
life insurance companies. More specifically, this study attempt to access the factors which affect the service
quality perception of life insurance customer those are in line with the objectives of the study.

Research Objective
The broad objective of the study is to study the customer’s perception of service quality offered by the life
insurance companies operating in the state of Rajasthan and Maharashtra (India). The specific objectives of
the study are as follows:
 To identify the factors of Customer Satisfaction in retail life Insurance in India.
 To study the importance of technology in fulfilling Customer Satisfaction.

Variables used for the Study

The following variables are used for collection of data:
 The demographic variable in the study include age, sex, educational qualification, marital status,
profession, income.
 SERVQUAL dimensions Tangibles, Reliability, Responsiveness, Assurance, and Empathy.
 Variables associated with Improvement of Service Delivery- Word of Mouth, Hygiene and
Motivational factors, Agency Channel Development factors, Advertising and Technology.

5. Database and Methodology

The study is based on both primary data and secondary data.
 Primary Data: The primary data were collected using a questionnaire. The researcher than approached
the respondents and explained to them the questionnaire in detail (including its purpose, the meaning of
the items and what was expected of the respondents). The respondents were asked to give their
perception of the level of service quality delivered by the insurance companies.
 Secondary Data: The secondary information was collected from the internet, government agencies and
publications.

Sample Selection
The questionnaire was administered through mail and in person to 300 respondents. The researcher got reply
from 206 respondents (68.7%). Respondents included were from a balanced mix of various demographic factors
(age, gender, marital status, education levels, and employment status and income group). The respondents
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consisted of Insurance customers of the ten public and private sector life insurance companies from major cities
of Rajasthan and Maharashtra state in India. The data was collected by using the convenience sampling
technique. Statements related to service quality dimensions were based on past literature. The respondents
were asked to rate each statement on the Likert scale of 1 to 3 (1 = Disagree, 3 = Agree).

Schedule Design
A structured Questionnaire was designed to collect the primary data. The interview schedule was kept
respondent friendly to make a quality of questionnaire. The questionnaire was developed by identifying the
variables based on literature review and the objective of the study. The help of experts, professionals, and
trainers in the field of life insurance was taken so as to ensure the content validity. Further to prepare
questionnaire ten Public and Private Sector Life Insurance Company customers were chosen for in depth
interview. On behalf of that, a questionnaire was prepared. The logical structure of questionnaire followed the
order of service quality dimensions. For understanding the importance and satisfaction of each service quality
dimension a three point Likert scale was used (1= Disagree, 2= Neutral, 3= Agree). In order to gain objective
views and guard against faulty assumptions and detect flaws in the questionnaire, consultation with the experts
was done. The questionnaire developed was reviewed by professionals, experts and trained personnel in order to
increase the validity and reliability of questionnaire and response. Further the questionnaire developed by the
researcher was pre tested on 30 respondents. Few minor modifications were made based on their feedback
regarding the clarity of some items. No major adverse comments were raised and thus the instrument was
deemed ready for actual respondents. The questions were designed on interval scale for effective analyzing the
data. The open ended questions sought respondent’s opinion about the quality of service provided by their life
insurance company.

6. Results and Interpretation

After collecting all the data the process of analysis begins. To summarize and rearrange the data several
interrelated procedures are performed during the data analysis stage Statistical tools of Microsoft Excel and
SPSS are used for data input and analysis. The statistics results were presented in graphical and tabular form
with detail description.

A Brief Description of the Sample Profile

Out of 206 respondents living mostly in Rajasthan and Maharashtra, 64% are male and 34% are females. 99% of
the respondents are financially independent. Marital Status of the respondents tells that 138 are married and 68
are unmarried. Distribution of the sample taking age, profession, academic qualification and monthly income of
respondents respectively. The Life Insurance Company and the percentage of respondents associated with each
company are detailed in Table (I) Researcher did not observe any significant difference between male and
female respondents in their Life Insurance Policy buying behavior.

Table I
Life Insurance Companies In India No. of Respondents Percentage
Life Insurance Corporation of India 68 33%
SBI Life Insurance Company 24 11%
ICICI Prudential Life Insurance Company 37 18%
Birla Sunlife Insurance Company 8 4%
Bajaj Allianz Life Insurance Company 19 9%
Reliance Life Insurance Company 16 8%
HDFC Standard Life Insurance Company 12 6%
Max New York Life Insurance Company 8 4%
Kotak Mahindra Old Mutual Life Insurance Company 6 3%
Tata AIG Insurance Company 8 4%
Total 206 100%

Demographic Profile of the Respondents

The profile of the respondents is shown in the Fig. The profile focus on the demographics of respondents.
It shows that out of 206 respondents, 64% of the respondents are male and 36% are males. Most of
the respondents are married (67%) and in the age group 25-35 year (48%). This range shows that married
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group always feels the importance of insurance policy to complement with their life and families. The
highest education level attained by most of the respondents was degree level (52%), followed by masters
(46%) and under graduation (2%). It shows that majority of respondents were educated with high
qualifications. The occupations of respondents were varied. The majority of the respondents were working
in private sector (62%) and included manager, executives, engineers, followed by government officers
(31%) and other white collar jobs, businessman and skilled or semiskilled workers (7%). In term of
household income, almost half of the respondents earned less than Rs.50,000 (per month).

Customer Usage of Insurance Counter

This study elaborates respondents as customers in using services offered by insurance counter. The focuses
on the duration of last visited insurance counter, category of service, availability of service facility and
problems at the time and last visit.
Majority of the respondents have visited insurance service counter every quarter (61.65%). In term of
category of service, 29.13% of the activities are process of payment, 18.45% respondents enquired about
claim process, service facilities and renewal policy. About 16.50% of the respondents wanted to know
about the new insurance product offerings and 35.92% of the respondents preferred services through
agent/advisors for responsive replies to questions of cost, benefits, and adequacy of coverage; availability of
agents locally to address insurance claims issues; and quick return of phone calls and fast turn-around times on
requests for information.
The result showed that the majority of the respondents visited service counter in Life Insurance
Corporation of India (33%), followed by I.C.I.C.I Prudential Life Insurance Company (18%), S.B.I. Life
Insurance Company (11%), Bajaj Allianz Life Insurance Company (9%), Reliance Life Insurance
Company (8%), HDFC Standard Life Insurance Company (6%), Birla Sunlife Insurance Company
(4%),Tata AIG Life Insurance Company (4%), Max New York Life Insurance Company (4%), Kotak
Mahindra Old Mutual Life Insurance Company (3%).

The Descriptive Statistics

The descriptive statistics have been used to find out the mean and standard deviation of each of each
SERVQUAL statement.

Table 1 SERVQUAL Measures

Variables Mean Std. Dev.
Overall
I am satisfied with the service of the Insurance Company 2.33 0.73
Tangibles
Physical appearance of the staff is professional 2.43 0.66
Physical appearance and surrounding of the branch office influence customer 2.36 0.70
I am sure that Insurance Company uses latest technology in providing services 2.47 0.72
Information is easily available through Product & Service Brochures, leaflets, letters 2.50 0.70
Company is having a memorable advertisement 2.41 0.73
Reliability
Staff provides error free services 2.27 0.73
Staff is committed to fulfill promises in timely manner 2.41 0.72
Company is having competitive pricing compared to others 2.32 0.75
Insurance company performs the service right in first instance 2.36 0.70
Customer can fully depend and rely on employee 2.00 0.84
Company provides accurate records such as payment record or any to customer 2.56 0.69
Company provides guarantee/warranty of the service performed 2.22 0.78
Responsiveness
Employees are in a position to inform the customer about the time it will take for compliance
2.31 0.78
of the service demanded
Employees of company provide prompt service to their customer 2.26 0.71
Employees give their customers shorter waiting time or fast service turnaround 2.17 0.73
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Employees in company are willing to help their customers 2.39 0.73

Assurance
Employees are trustworthy and honest 2.45 0.71
Employees in company have knowledge and competence to solve customers’ problem 2.44 0.70
Employees in company are very experienced in solving or diagnosing the customers problem 2.32 0.70
In case of complications managers are helpful by making prompt decisions 2.28 0.76
Privacy of customers information is maintained 2.49 0.68
You are assured about the agent/advisor who deliver the service 2.28 0.80
Company is widely known 2.58 0.74
Company is well liked 2.57 0.70
Company is unique compared to others 2.42 0.73
Empathy
Customer gets individual attention 2.12 0.76
Do you think that Managers of company understands their customer specific needs 2.15 0.77
Company keep customers informed about service that have been performed and price charged 2.27 0.83
Insurer has their customer best interest in heart 2.11 0.65
Company have convenient Business Hours 2.52 0.65
Staff calls customers by name 2.17 0.74
I trust staff of Insurance Company 2.32 0.70
Agents/advisors have concern and understanding of customers problem 2.23 0.84
Does company serve you during extended hour 1.88 0.77

It is revealed from the above (Table 1) that Life Insurance Companies are good at Tangibles and Assurance
features of Life Insurance Service when compared to Reliability, Responsiveness and Empathy Features of Life
Insurance Services. These Features are based on standard SERVQUAL dimensions.

Cronbach’s Coefficient Alphas for SERVQUAL Dimensions

Table 2 Cronbach’s Coefficient Alphas

Factor and Items
Overall (Cronbach’s Alpha = 0.912)
I am satisfied with the service of the Insurance Company
Tangibles (Cronbach’s Alpha = 0.551)
Physical appearance of staff is professional
Physical appearance and surrounding of the branch office influence customer
I am sure that Insurance Company uses latest technology in providing services
Information is easily available through Product & Service Brochures, leaflets, letters
Company is having memorable advertisement
Reliability (Cronbach’s Alpha =0.701)
Staff provides error free services
Staff is committed to fulfill promises in timely manner
Company is having competitive pricing compared to others
Insurance company performs the service right in first instance
Customer can fully depend and rely on employee
Company provides accurate records such as payment record or any to customer
Company provides guarantee/warranty of the service performed
Responsiveness (Cronbach’s Alpha = 0.733)
Employees are in a position to inform the customer about the time it will take for compliance of the service demanded

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Employees of company provide prompt service to their customer

Employees give their customers shorter waiting time or fast service turnaround
Employees in company are willing to help their customers
Assurance (Cronbach’s Alpha = 0.742)
Employees are trustworthy and honest
Employees in company have knowledge and competence to solve customers’ problem
Employees in company are very experienced in solving or diagnosing the customers problem
In case of complications managers are helpful by making prompt decisions
Privacy of customers information is maintained
You are assured about the agent/advisor who deliver the service
Company is widely known
Company is well liked
Company is unique compared to others
Empathy (Cronbach’s Alpha = 0.802)
Customer gets individual attention
Do you think that Managers of company understands their customer specific needs
Company keep customers informed about service that have been performed and price charged
Insurer has their customer best interest in heart
Company have convenient Business Hours
Staff calls customers by name
I trust staff of Insurance Company
Agents/advisors have concern and understanding of customers problem
Does company serve you during extended hour

Kaiser-Meyer-Olkin Measure and Bartlett's Test

Table 3 KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .779
Approx. Chi-Square 3.194E3
Bartlett's Test of Sphericity df 561
Sig. .000

Communalities of Perceived Variables

Table 4
Communalities
Initial Extraction
T1 1.000 .662
T2 1.000 .670
T3 1.000 .567
T4 1.000 .545
T5 1.000 .527
R1 1.000 .667
R2 1.000 .619
R3 1.000 .627
R4 1.000 .559

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R5 1.000 .656
R6 1.000 .604
R7 1.000 .489
P1 1.000 .665
P2 1.000 .679
P3 1.000 .772
P4 1.000 .598
A1 1.000 .712
A2 1.000 .720
A3 1.000 .785
A4 1.000 .661
A5 1.000 .720
A6 1.000 .736
A7 1.000 .449
A8 1.000 .498
A9 1.000 .665
E1 1.000 .634
E2 1.000 .632
E3 1.000 .645
E4 1.000 .686
E5 1.000 .599
E6 1.000 .600
E7 1.000 .611
E8 1.000 .741
E9 1.000 .521
Extraction Method Principal Component Analysis

Total Variance Explained

Table 5 Extraction Method: Principal Component Analysis

Extraction Sums of Squared Rotation Sums of Squared
Initial Eigenvalues
Loadings Loadings
Component
% of Cumulative Cumulative % of Cumulative
Total Total % of Variance Total
Variance % % Variance %
1 9.144 26.893 26.893 9.144 26.893 26.893 3.127 9.197 9.197
2 2.418 7.112 34.005 2.418 7.112 34.005 2.808 8.258 17.455
3 1.943 5.713 39.718 1.943 5.713 39.718 2.747 8.079 25.535
4 1.652 4.859 44.577 1.652 4.859 44.577 2.561 7.533 33.067
5 1.538 4.525 49.102 1.538 4.525 49.102 2.291 6.739 39.806
6 1.308 3.846 52.948 1.308 3.846 52.948 2.146 6.312 46.118
7 1.280 3.764 56.712 1.280 3.764 56.712 2.036 5.989 52.107
8 1.155 3.398 60.110 1.155 3.398 60.110 1.910 5.617 57.723
9 1.082 3.183 63.294 1.082 3.183 63.294 1.894 5.570 63.294
10 .995 2.927 66.220

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11 .975 2.869 69.089

12 .914 2.688 71.778
13 .866 2.548 74.325
14 .808 2.375 76.701
15 .775 2.281 78.981
16 .762 2.242 81.223
17 .725 2.131 83.355
18 .597 1.755 85.110
19 .560 1.647 86.757
20 .509 1.498 88.255
21 .473 1.391 89.646
22 .424 1.247 90.893
23 .421 1.239 92.131
24 .394 1.158 93.289
25 .357 1.051 94.340
26 .338 .994 95.334
27 .299 .879 96.213
28 .261 .767 96.981
29 .242 .712 97.693
30 .206 .606 98.299
31 .192 .564 98.863
32 .144 .425 99.288
33 .140 .411 99.699
34 .102 .301 100.000

Table 6 Rotated Component Matrixa

Component
1 2 3 4 5 6 7 8 9
T1 -.063 .125 -.012 -.004 .755 .060 .132 .224 -.004
T2 .221 .084 .172 -.002 .748 .078 -.066 -.065 .106
T3 -.127 .257 .111 .288 .587 -.017 .157 -.018 -.143
T4 -.110 .008 .292 .175 .005 .255 .187 .557 .086
T5 .152 .146 .066 .126 -.044 .065 .076 .669 .058
R1 .060 .599 -.051 .406 .103 .004 .288 .172 -.114
R2 -.005 .583 .239 .283 .215 -.040 .213 .103 .193
R3 .615 .111 .022 .072 .169 -.088 .376 .197 -.120
R4 .351 .312 .340 .338 .168 -.008 .150 .239 -.038
R5 .723 .085 -.044 .269 -.101 .133 .138 .019 .056
R6 .199 -.036 .186 .188 -.037 .224 .042 .227 -.624
R7 .157 .114 .154 .084 -.099 -.016 .475 .298 .310
P1 .079 .140 .025 .263 .233 .431 .123 .215 .518
P2 .007 .210 .268 .693 .060 .133 -.052 .181 .159
P3 .037 .078 .221 .768 .103 .289 .099 .093 -.119
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P4 .216 .168 .021 .430 .484 .181 .155 -.053 .210

A1 .228 .307 .333 .075 .099 .603 .061 -.123 -.238
A2 .021 .772 .162 -.020 .189 .222 -.081 .053 .047
A3 .154 .835 .049 .084 .073 .137 -.103 -.026 .139
A4 .152 .125 .698 .164 .040 .301 .095 .088 -.019
A5 -.046 .082 .728 .090 .156 .293 .101 .231 -.009
A6 .569 .091 .275 .032 .061 .093 -.064 .046 .556
A7 .262 -.037 .097 -.042 .179 -.012 -.060 .560 -.137
A8 .505 -.102 .240 .100 .150 .174 -.065 .309 .112
A9 .722 .094 .086 -.232 .010 .128 .208 .093 .069
E1 .220 .136 .362 .101 .276 .133 .561 .134 .006
E2 .269 .382 .265 .052 .188 .355 .390 -.096 .136
E3 .164 .168 .603 .283 .016 -.131 .230 .195 .195
E4 .411 .091 .474 .439 .253 .017 .092 -.042 .126
E5 -.039 .154 .229 .093 .101 .635 .117 .269 .117
E6 .129 -.206 .016 -.029 .194 .229 .668 .052 .018
E7 .305 .052 .046 .342 -.012 .606 .157 .063 .007
E8 .372 .146 .226 .158 -.060 .135 .186 .120 .659
E9 .201 .197 .239 .276 -.123 .061 .465 -.268 -.031
Extraction Method Principal Component Analysis
Rotation Method Varimax with Kaiser Normalization
Rotation Converged in 12 iterations

Table 7 Component Transformation Matrixa

Component 1 2 3 4 5 6 7 8 9
1 .398 .373 .437 .389 .276 .327 .307 .236 .163
2 .684 -.469 -.008 -.256 -.374 -.043 .175 .130 .239
3 -.243 -.492 .317 .194 -.170 .256 .080 .400 -.547
4 .224 -.207 -.202 -.279 .746 -.105 .266 -.021 -.386
5 -.309 -.251 .100 -.150 .351 -.124 -.164 .553 .581
6 .014 .078 -.174 .453 -.111 -.756 .299 .279 -.088
7 .262 .440 -.087 -.310 -.095 -.045 -.463 .543 -.336
8 -.316 .299 -.061 -.490 -.231 .116 .682 .187 .024
9 .012 -.054 -.785 .323 -.005 .461 .044 .230 .096
Extraction Method Principal Component Analysis
Rotation Method Varimax with Kaiser Normalization

Factor Analysis to Determine the Factors which Customers keep in Mind while purchasing Life
Insurance Policy from Life Insurance Companies
Trimming a large number of variables to reach at few factors to explain the original data more economically and
efficiently Factor Analysis, a widely used multivariate technique in research, reduces data complexity.
Researcher find that what exactly makes a customer buy the service and try to figure out what really drives
buyer behavior from large number of possible purchasing criteria. Factor Analysis is an important tool for
resolving this confusion and identifying factors from an array of seemingly important variables.
In the present study Factor Analysis exhibits the rotated factor loading for the statements (Variables) of
Quality of Service rendered by Life Insurance Companies in India. It is clear from the (Table 5) that all the 34
statements have been extracted into nine critical factors namely F1, F2, F3, F4, F5, F6, F7, F8, F9. The factors
Identified with new names which influence the Quality of Service are given below in table.
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Adequacy of the data is tested on the basis of results the Kaiser-Meyer-Olkin (KMO) measure of sampling
adequacy and Bartlett’s test of sphericity (homogeneity of Variance) provided. The KMO measure of sampling
adequacy is 0.779, which indicates the present data suitable for factor analysis.
This is a goodness fit coefficient whose value varies between 0 and 1 and we take values over 0.5 to represent
good factor analysis (i.e., data reduction is effective).
Similarly, Bartlett’s test of sphericity is significant (p < 0.001); that explains existence of sufficient correlation
between variables to proceed with the analysis (Table 3). The Bartlett’s test statistic is approximately distributed
and it may be accepted when it is significant at p < 0.05.
Most of the extracted Communalities are acceptable and all variables are fit for the factor solution as their
extraction values are large (Table 4).
The first nine components (factors) in the initial solution have an Eigenvalues over 1 and they account for
maximum observed variation in the consumers’ behavior about the purchase of Life Insurance policies from the
Life Insurance Companies in Rajasthan and Maharashtra. According to Kaiser Criterion, only first nine factors
should be used because subsequent eigenvalues are less than 1.
Cartell’s Scree test involves plotting each of the eigenvalues of the factors and inspecting the plot to find a
point at which the shape of the curve changes direction and becomes horizontal. This test recommends retaining
all factors above the elbow or break in the plot as these factors contribute the most to the explanation of the
variance of the data set.
Factor Loading are used to measure correlation between variables and the factors. A loading close to 1
indicates strong correlation between variable and the factor, while a loading closer to zero indicates weak
correlation. Unrooted solutions of factor loading are not suitable for interpretation purpose since the variables
generally tend to load on multiple factors.
The factor are rotated with Varimax with Kaiser Normalization rotation method ( Table 7).Research scholar
used Principal Component Analysis (PCA) method for factor extraction taking those factors only whose values
are greater than 0.5 for the purpose of interpretation.
After Analyzing the Total Variance Explained (Table 5) it can be found that 34 statements can be grouped
under 9 Factor Groups of questions.
The Factor Analysis made so far using SPSS version 16 helps extract nine factors, viz., Pricing, Employee
Competence, Product & Service, Technology, Physical Appearances, Trust, Service Delivery, Advertising and
Service Management from variables and these factors contributed variation in consumer behavior in purchase of
Life Insurance Policy from any Life Insurance Company existing in India.

Interpretation of Results
So the rank of the factors according to importance the consumer reckon can be written in the descending order
as Pricing > Employee Competence > Product & Service > Technology > Physical Appearances > Trust >
Service Delivery > Advertising >Service Management. It implies that customers go for better priced life
insurance policy.

Pricing with Quality of Service was Ranked the Highest in Terms of Participant Satisfaction with Life
Insurer
While the natural tendency of many Life Insurance Companies to better price the product and services so
as to increase the market share. More specifically the “Service Cost” was found to lead to the policy of
“Efficiency pricing”. Regarding the pricing behavior of companies operating in different service industries,
insurance companies are mainly endeavoring to offer unique services in their market. Moreover, they are bound
to place an emphasis on their broader social and political environment due to their social character and the high
regulation. They are also endeavoring to incorporate their pricing strategy into their overall marketing strategy
and, thus, formulate a cohesive marketing strategy. This might be attributed to the fact that most life insurance
companies operating in India have established well-organized marketing departments. It is also interesting that,
while they use some standard list prices, they are also negotiating their prices individually with some key
customer.
When combined with the findings that are related to the service and organizational characteristics, it seems
that "the cost of the service" along with "competitors' prices" are the two most important characteristics that
trigger pricing decisions. These findings are consistent with those put forward by in the literature review
section. Other important characteristics are the "service quality", the "market strategy", the "customer
orientation", the "intensity of competition among the existing companies" and the "type of the service", which
indicate that the companies in our sample tend to place their emphasis on service and organizational rather than
environmental characteristics when they set their prices.

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Employee Competence with Quality of Service for Customer Satisfaction was ranked the Second
Highest in Terms of Participant Satisfaction with Life Insurer
Researcher examines satisfaction at the encounter level rather than overall satisfaction, primarily because overall
satisfaction is a cumulative evaluation resulting from multiple experiences over time. When customers are
processing the encounter at the peripheral level, they rely on peripheral cues to evaluate the encounter. Customer
satisfaction, then, may be the result of things not remotely connected to the service encounter, such as pre-encounter
stimuli (e.g., audio, visual). When a more central processing cognitive evaluation is tapped, however, customers may
focus on evaluating the service based less upon fuzzy and possibly irrelevant criteria and more on the core,
technical elements of the service employee, dismissing peripheral cues as unimportant. Thus, we expect to see that
perceived service quality will explain more of the customer's satisfaction with the encounter for socialized and
competent employees.

Products with Quality of Service for Customer Satisfaction was ranked the Third Highest in Terms of
Participant Satisfaction with Life Insurer
Once it is recognized that competition takes place between companies' offerings and not the companies
themselves, it becomes apparent that a "market" focus is appropriate. As most life insurance companies
would recognize, the offering, which is presented to potential customers through the market, is the primary
focus of competitive strategy. While accepting that the resources and reputation of a company may add
value to an offering, this does not alter the fact that customers choose between offerings. Although the two-
way split works well for product offerings and some service offerings, for many financial services the advice
and assistance are core parts of the service and are in many cases indistinguishable from the "product"
being offered. However, the distinction remains useful in that it highlights the fact that both product
features and advice and assistance provide options for differentiation. These options are developed by
introducing the concepts of content or image differentiation for merchandise or personalized differentiation
for support.

Technology with Quality of Service for Customer Satisfaction was Ranked the Fourth Highest in Terms
of Participant Satisfaction with Life Insurer
The most prominent contribution of this discussion is proposing a way to the role of Sales force
automation (SFA) technology in contributing to customer satisfaction. Technology integration allows
improvement in interpersonal interactions and enhances personal relationships, which is especially critical in
high level financial services. In fully integrated SFA systems, customers might not even think about the
technology at all, because it becomes simply a routine part of their interpersonal interaction. This is critical, as
is the need for the salesperson him/herself to play an important role in this integration. SFA integration, then, is
about salespeople using SFA to enhance relationships with customers, not about using technology to replace the
salesperson's role in the customer interaction.

Physical Appearances with Quality of Service for Customer Satisfaction was ranked the Fifth Highest
in Terms of Participant Satisfaction with Life Insurer
This empirical study has shown that there is a positive relationship between the level of tangible components like
Physical appearance of branch office and staff in a service industry and the importance of the other tangible
dimension. Although intangibility is certainly a key characteristic of services, tangibility performs an important
role, particularly in service industries which have high tangible components. A certain degree of tangibility and
intangibility exists in both service process and service output. Even in service industries involving less prominent
tangible elements, tangibility cannot be completely ignored. In particular, the more a service has tangible
components, the more important are these tangible dimensions in service quality.
During the service process, if there are tangible actions physically involving people, security and reliability are
perceived as being more important than in those services which predominantly involve intangible actions directed
at people's minds. In addition, if tangible actions directed at goods and other physical possessions are involved,
customers perceive tangible dimension as being more important. Finally, with respect to service output, if a
service involves the making of a tangible product, or providing added value to a tangible product, the importance
of perceived value increases.

Trust with Quality of Service for Customer Satisfaction was ranked the Sixth Highest in Terms of
Participant Satisfaction with Life Insurer
Quality of Service increases customers' satisfaction with the encounter, their trust in the service provider and
anticipation of future interaction. Researcher found that the customers' overall satisfaction, trust and anticipation
of future interaction seem to decline as they are socialized toward their role in the service production process - in

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other words, as customers are provided with information about the service provider's expectations of them (the
customer), customer perceptions of service outcomes may initially decline.
The findings suggest that caution is necessary when attempting to increase the customer's involvement in the
production of the service. This is not necessarily negative, if for no other reason than the sentiments are much
more enduring. It does, however, make it more critical that the service provider become more adept at delivering
service quality as customers becomes more socialized and knowledgeable about their role in service provision.

Service Delivery with Quality of Service for Customer Satisfaction was ranked the Seventh Highest in
Terms of Participant Satisfaction with Life Insurer
The processes, procedures, systems and technology that would make a service a seamless one. Customers
would always like and expect the service delivery processes to be perfectly standardized, streamlined, and
simplified so that they could receive the service without any hassles, hiccups or undesired/inordinate
questioning by the service providers.

Advertising with Quality of Service for Customer Satisfaction was ranked the Eight Highest in Terms of
Participant Satisfaction with Life Insurer
Consumers buy a certain brand because it is preferable to competing brands; they have implicitly or explicitly
anticipated that the selected brand will yield more satisfaction than the other brands and that it will respond
more appropriately to the relevant set of felt needs. Hence, the amount of satisfaction consumers anticipate they
will receive from a certain brand constitutes the expectations raised by the selected brand.

Service Management with Quality of Service for Customer Satisfaction was ranked the Ninth Highest
in Terms of Participant Satisfaction with Life Insurer
It is only recently that Service Quality Management has begun to receive substantial attention from Human
Resource Management.

7. Conclusion
A major contribution of this study is the provision of an approach for the managers to identify the factors of
service quality and customer satisfaction in retail life Insurance in India. Although the satisfaction levels are on
the higher side, yet there remains a lot to be done by the management of the retail life Insurance companies to
maximize their customers’ satisfaction and improve the quality of service. The satisfaction of the customer with
the services of Life Insurance Companies is linked with the performance of the service.
Further, many customers who are strongly familiar with interpersonal services may never be satisfied with
purely technology-based services. This is probably even more important in the relationship-based cultures
of India. Customers seem to want technology to be integrated into interpersonal relationships, not to replace
them, regardless of their own personal technology readiness. The perception of customers is that salespeople
can use technology to solve their problems, helping to develop a sense of trust and satisfaction that is likely
to extend their relationship. The salespeople are the critical element in the interaction and relationship, and
technology's role is a support element that helps them develop their relationships.

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8. Carmen Camarero, (2007), “Relationship orientation or service quality? What is the trigger of
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