The Relationship Between Service Quality Dimensions and Customer Satisfaction in the Insurance Industry in Kenya

The Insurance industry is fundamental to the economic course of every nation, realizing sustainable growth and opulence. The industry’s contribution to the Kenyan economy is through provision of fiscal security, mobilization of savings and investment inducement. The industry has entered into new businesses and has become a big investor in real estate, stocks and bonds and is determined to enhance its market share. This can only be achieved if the industry is able to maximize customer satisfaction and acquire new customers as well as retain the old ones. The service provider’s perception of service quality is often quite different from the customer’s perception and hence the need for a tool to measure service quality. Insurance companies must identify the service quality dimensions that drive their customers’ perceived quality so that they can enhance them and improve customer satisfaction. The purpose of this study was to investigate the relationship between service quality dimensions and customer satisfaction in the insurance industry in Kenya. Specifically, the study sought to determine the relationship between service reliability and customer satisfaction in the insurance industry in Kenya, to examine the relationship between service empathy and customer satisfaction in the insurance industry in Kenya, to establish the relationship between service blue print and customer satisfaction in the insurance industry in Kenya and to find out the relationship that exists between service assurance and customer satisfaction in the insurance industry in Kenya. The study was anchored on the service quality (SERVQUAL) model which was founded on the expectancy disconfirmation theory, assimilation contrast theory, equity theory, script theory and the negativity theory. The study applied epistemology philosophy with a positivist paradigm. A descriptive research design was adopted with the study population comprising of policy holders from the 17 licensed composite insurance companies in Kenya. A sample size of 400 respondents was drawn using simple random sampling technique. Primary data was collected using a structured self-administered questionnaire. Data analysis was conducted using descriptive statistics where the mean and standard deviation were determined. Inferential statistics were done through multiple regression and the Pearson correlation coefficient analysis to measure the statistical relationship between the service quality dimensions (reliability, empathy, service blueprint and assurance) and customer satisfaction. Correlation results showed that there was a statistical positive significant relationship between customer satisfaction and service reliability (β =1.263, p-value= 0.0001: Empathy; β =1.244, p-value= 0.0001: Service Blue-print; β =1.519, p-value= 0.0001: Assurance; β =0.996, p-value= 0.0001) hence proposing the “RESA” model for the insurance industry in Kenya. The regression model confirmed that 76.4% of variation in customer satisfaction was due to the service quality dimensions. The conclusion made was that service reliability, service empathy, service blue print and service assurance dimensions have a significant relationship with customer satisfaction in the insurance industry in Kenya. The study recommended that insurance firms invest in enhancing the four service quality dimensions as a strategy of achieving maximum customer satisfaction. This study will benefit management of insurance firms, policy makers, academicians and insurance customers.