A Study of Relationship of Service Quality, Customer Satisfaction and Service Value with Customer Loyalty of Life Insurance Customers in India

While the Indian Life insurance Industry was privatized and liberalized in early 1990's, it's still underpenetrated and in an emerging state. With the focus shifting to customer centered strategies, retaining customers has become a key differentiator. The paper develops and empirically tests the relationship between the service encounter constructs of service quality, customer satisfaction and service value with customer loyalty related intentions in life insurance services in India. A second order scale of service quality was developed and tested by integrating the American and Nordic approach to Service Quality using exploratory factor analysis and confirmatory factor analysis. The constructs of Customer satisfaction, service value and Behavioral intentions were validated using confirmatory factor analysis. Two competing models of effects of the three service encounter constructs on Behavioral Intentions were tested using structural equation modeling (SEM). The results show that Service quality is a second order construct consisting of the dimensions of Core service, Service Delivery, Sales Agent Quality, Tangibles and Empathy. The process dimensions (sales Agent Quality and Service delivery) are most important in overall service quality perceptions. The effect of service quality on positive behavioral intentions is both direct and indirect with the moderating effect of service value and customer satisfaction being significant.