Service quality: a study of life insurance industry in Punjab

Abstract

The insurance industry of India has started to reveal the potential after the process of reforms were started on the basis of recommendation of R.N. Malhotra Committee, which was set up in 1993 with an objective of creating a more efficient and competitive financial system suitable for the Indian economy. The Committee strongly felt that in order to improve the customer services and increase the spread of the insurance, this sector should be opened up to competition. The reforms in insurance sector resulted in to liberalization, privatization and globalization of insurance industry in India. LIC has for a long period of time has enjoyed a dominant market of life insurance and the fact cannot be denied that LIC has a pre accomplished market leadership which makes it difficult for the new players to compete. While the new players struggle to increase their market in India, LIC continues to leverage advantage of its old establishment and government support for maintaining its growth. However, the private insurance companies are fast penetrating into the customer base of LIC. Privatization of insurance has eliminated the monopolistic business of LIC. It has resulted in better customer services and has improved the variety and price of insurance products. As the private companies have raised the yardstick of the quality of services being provided, it has led to an improvement in the service quality provided by LIC also. So, there has been a huge improvement in the performance of LIC in the post reform period. The entry of new players has also resulted in an increase in the spread, penetration and density of the life insurance industry. The present study is an endeavor to examine the effect of reforms on the performance of the LIC, to assess the comparative service quality level of life insurance companies in India, analyze the effect of service quality on customer loyalty and finally to identify the gaps in the performance so as to make suggestions to improve the performance of the life insurance Industry in India.