Quality of ecrm Services and Customer Satisfaction in Life Insurance Sector in India Prof. Dr. Shivaji Borhade Head, Department of Commerce Bharati

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1 1 Quality of ecrm Services and Customer Satisfaction in Life Insurance Sector in India Prof. Dr. Shivaji Borhade Head, Department of Commerce Bharati Vidyapeeth University Abstract Purpose: The purpose of this paper is to examine the quality of electronic Customer Relationship Management (ecrm) services offered by life insurance companies in India and also measure the impact of ecrm services on the level of customer satisfaction. Design/Methodology/Approach: This study was exploratory cum descriptive in nature. Policyholders of five life insurance companies were considered as sample. The primary data were obtained from 100 policy holders of the selected life insurance companies of India. These policy holders were selected from Western India. Secondary data were collected from the reference books, published journals, annual reports etc. The responses from the respondents were coded and tabulated in SPSS. For the data analysis simple and advanced statistical tools were used. On the basis of the analysis and interpretation of the collected data, conclusion has been drawn. Findings: On the basis of security, convenience, easy to use, reliability, responsiveness, competence and product portfolio the study concluded that all the service quality dimensions of ecrm services were found to have positive gap, implying the policy holder s expectations regarding the ecrm services in life insurance sector of India were met by the selected life insurance companies of India. The result indicated that the attributes of security, convenience and easy to use had been identified by the respondents to be the most important dimensions of ecrm services quality in life insurance sector in India. Research Limitations/Implications: The study is totally based on the sample opinion and published data on life insurance companies in India. The analysis is based on the general answers given by the respondents and the information collected; however, the knowledge of the respondents about ecrm may differ. The quality of ecrm services and overall satisfaction needs to be measured on a large dataset. This study is based on small number of population, therefore, outcomes of the study may not be generalised. Practical Implication: There is a positive significant influence of ecrm services offered by selected life insurance companies of India on the overall customer satisfaction. Security is consistently the most important determinant of service quality. Originality/Value: ecrm technologies are playing a significant role for enhancing the customer satisfaction and better service quality. The study indicated that ecrm services have significant influence on overall customer satisfaction Key Words: Electronic Customer Relationship Management, Quality of Service, Customer Satisfaction, Life Insurance Companies Paper Type: Research Paper

2 2 Introduction Marketing in the new millennium, lays trust on the customer needs so much so that customer-driven marketing has become synonymous with marketing. The emphasis, today, is on understanding and fulfilling consumer needs to an extent as it strikes a balance between customer value-delivered and company profitability. Satisfaction of customer s needs provides the rationale for an enterprise s existence. Markets, worldwide, have become highly competitive and companies are desperately looking for ways and means to differentiate their offerings from their competitors (Kotler, 2001). CRM is emerging as the core marketing activity for service firms operating in fiercely competitive environment (Shainesh et. al., 2001). To keep customers in today s competitive environment, insurance companies are increasing the depth of relationship through implementation of CRM programmes. The concept of CRM, when seen in the context of ebusiness, it translates into ecrm (Mittal and Kumra, 2001). The ecrm technologies supported by ICT revaluation permits insurance companies to establish and maintain individualised customer experience through online help, purchase referrals, quicker turn-around on customer problems and quicker feedback about customer suggestions, concerns and questions. The ecrm technologies also allowed customers to design insurance policies by adding futures according to their choice (Berinato, 2002). The idea behind developing a customer focused strategy is not to mold the customer to the company s goal but to listen to the customer and try to create opportunities beneficial for both (Rigby, 2002). The ecrm approach focuses on the long term relationship with the customers by providing the customer benefits and values from the customer s point of view rather than based on what the company wants to sell. The use of ecrm technologies by Indian life insurance companies had been growing steadily from the previous few years and was now seen as the way forward for any business wishing to thrive in the efuture (Vij and Roy, 2009). Insurance Sector in India India s economic development made it a most lucrative insurance market in the world. Before the year 1999, there was monopoly of state run Life Insurance Corporation of India (LIC) transacting life business. Today, there are number of private life insurance companies. The competitions from these companies were threatening to the existence of LIC. Since the liberalisation of the industry, the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India (Kumar and Priyan, 2012). As at end September 2013, there were 52 insurance companies operating in India; of which 24 were in the life insurance business and 27 were in non-life insurance business. In addition, General Insurance Corporation of India (GIC) is the sole national reinsurer. The life insurance industry recorded a premium income of Rs. 2,87,202 crore during as against Rs. 2,87,072 crore in the previous financial year, registering a growth of 0.05%. While private sector insurers posted 7.38% decline in the premium income. Out of the 52 companies in operations, 8 were in public sector and 2 were specialised insurers.

3 3 Table 1 Registered Insurers in India (as on 30 th September, 2013) Sr. Type of Business Public Sector Private Sector Total 1 Life Insurance Non- Life Insurance Reinsurance Total (Source: IRDA Annual Report p.19) As per World Insurance Report 2012 published by reinsurance major Swiss Re, the economic environment and financial markets in 2012 were challenging for insurers. Growth of global real gross domestic product (GDP) slowed to 2.5% in 2012 from 3% in 2011, below the average over the previous 10 years. Economic growth in advanced economies slowed to 1.2% from 1.5% in 2011, largely due to the onset of the recession in Western Europe. Emerging markets held up better, but their growth slowed down due to their dependence on exports to advanced markets. Globally, the share of life insurance business in total premium was 56.8%. However, the share of life insurance business was very high at 80.2% while the share of non-life insurance business was at 19.8%. In life insurance business, India was ranked 10 th among the 88 countries, for which data were published by Swiss Re. Review of Literature Berry (1983) formally introduced the term CRM into the literature, but several ideas of relationship marketing had emerged much before. He stated that relationship marketing is about attracting, maintaining and enhancing customer relationships. Alder (1966) observed the symbiotic relationships between firms while Varadrajan (1986) examined other manifestations of symbiotic relationships in marketing. Recent developments in information technology had given the internet a new role to facilitate the link between ecrm and customer satisfaction, customer retention and customer loyalty. In this way, it could be used as a business channel and so lead to the development of more opportunities (Avlonitis and Karayanni, 2000; Geyskens and Dekimpe, 2002). The knowledge obtained via a CRM system is a valuable intellectual asset for a company to develop or improve products and services in order to meet or even exceed customers expectations (Su et al. 2006). ECRM is a combination of software, hardware, processes, applications and managerial tools in order to establish a constructive relationship with customers (Sophonthummapharn, 2009). The factors like brand popularity, innovative product delivery, quick and honest response, building relationships financial security are proved to be the responsible and essential factors by delivering financial security and innovative products to the target customers and building the honest relationship (Dash and Mishra, 2012). With regard to gap analysis of customers expectations and perceptions, the dimension of responsiveness accounted for highest gap score following by reliability and tangibility which depicts that insurance employees are less responsive to customers needs. So, it is clear from current study that the customers are less satisfied by the services provided by insurance companies (Gulati, et. al. 2012). Brand popularity and financial security are two most responsible factors for insurers, by which they can create satisfaction among customers. For private and public sectors

4 4 Insurance Companies, all the factors are proved to be the responsible factors. There are few common practices of ecrm in India are as Customization, Aliening with Business Objectives, Evaluation and Integration of Business Process, Dissemination of ecrm knowledge to all stake holders, Sales Force Automation (SFA), Intelligent use of Data and technology and retaining the existing customers by high level of services to customers (Gulati, 2012). Objectives The objectives of the present study are- 1. To examine the quality of ecrm services offered by life insurance companies in India 2. To analyse the level of influence of ecrm on overall customer satisfaction. Hypothesis H0 : There is no positive significant impact of ecrm services on overall customer satisfaction. Research Methodology Sample: This study was exploratory cum descriptive in nature. Policyholders of five life insurance companies were considered as sample. The primary data were obtained from 100 policy holders of the selected life insurance companies of India. These policy holders were selected from Western India i.e. Pune and Mumbai. In this study, the researcher approached only those policy holders who had no previous experience related to ecrm services offered by life insurance companies. The samples were selected from the following life insurance companies. Table 2: Selection of Players in Life Insurance Business and Sample Size Sr. Name of the Insurance Date of Foreign Sample Sector Company Registration Partner Size 1 Life Insurance Corporation of India Public 01/09/ Max New York Private 15/11/2000 New York Life, USA 10 3 Bajaj Allianz Life Private 03/08/2001 Allianz, Germany 10 4 Reliance Private 03/01/ IDBI Federal Private 19/12/2007 Ageas, Europe 10 Total Sample 100 (Source: Compiled from Annual Reports of IRDA) Techniques: The usable response received rate was 85%. The responses from the respondents were coded and tabulated in SPSS. For the data analysis simple and advanced statistical tools were used. The test was conducted at 95 per cent confidence level (or 5 per cent level of significance). A seven point Likert scale (1 strongly disagree to 7 strongly agree) was used and content of questionnaire includes respondents profile, service quality and overall satisfaction.

5 5 Demographic Profile: The sample of policyholders from Pune and Mumbai consisted of 76 per cent males and 24 per cent females. The policy holders were also classified into four groups on the basis of their age. 24 per cent policy holders belong to <25 years, 46 per cent belong to years and 29 per cent belong to >45 years. In addition, the respondents were also grouped according to the nature of jobs. 55 per cent of the surveyed policy holders belong to service class, 23 per cent were businessmen, 18 per cent were retired and 4 per cent were housewives. 56 per cent policy holders were under graduate while 44 per cent were post graduates. Results and Discussion On the basis of security, convenience, easy to use, reliability, responsiveness, competence and product portfolio the study concluded that all the service quality dimensions of ecrm services were found to have positive gap, implying the policy holder s expectations regarding the ecrm services in life insurance sector of India were met by the selected life insurance companies of India. It is revealed that security was allocated maximum weight by the respondents, closely followed by convenience and easy to use. Reliability ranked fourth closely followed by responsiveness. Competence and product portfolio was ranked lower in ecrm services quality dimensions. Meaning thereby, the policy holders were ready to compromise on reliability, responsiveness of employees of life insurance companies, competence and different types of policies offered by the life insurance companies of India. The inherent intangibility of ecrm insurance services led the respondents to look for the surrogate parameters of quality in security, convenience and easy to use, which they rightly ranked higher than other quality dimensions. The study also disclosed that respondents rated the quality of ecrm services provided by LIC were above than their expectations and higher than the score of other life insurance companies. The result of company wise average importance weight clearly described that security dimension of ecrm service quality was accorded the best perceived dimension amongst all the selected life insurance companies except LIC. The result of the above analysis indicated that the attributes of security, convenience and easy to use had been identified by the respondents to be the most important dimensions of ecrm services quality in life insurance sector in India. Table 3: Level of Influence Sr. Name of Insurance Company Mean Std. Std. Min. Max. Dev. Error 1 Life Insurance Corporation of India Max New York Bajaj Allianz Life Reliance IDBI Federal Total (Source: Calculated Values) It is observed from the above table that the overall mean value of all selected life insurance companies was The mean value of Life Insurance Corporation of India (LIC) was 3.13, Max New York was 3.90, Birla Sun Life was 4.01, Reliance was 3.93 and

6 6 IDBI Federal was It is clear from the table that policy holders of Birla Sun Life were having high mean score hence were overall more satisfied with the services offered. Table 4: Overall Satisfaction Sr. Name of Insurance Company Mean Std. Std. Min. Max. Dev. Error 1 Life Insurance Corporation of India Max New York Bajaj Allianz Life Reliance IDBI Federal Total (Source: Calculated Values) In the case of overall satisfaction empirically revealed that after experiencing ecrm services, the overall mean value of selected life insurance companies regarding overall satisfaction had increased from 3.41 to 4.86 (Table 4). The mean value of LIC had increased from 3.13 to Max New York from 3.90 to 4.61, Bajaj Allianz Life from 4.01 to 4.94, Reliance from 3.93 to 5.00 and IDBI Federal had increased from 3.50 to It is clearly revealed that now the policy holders of Reliance (by replacing Bajaj Allianz Life 4.94) had a high mean score 5.00 and hence were more satisfied overall, after experiencing ecrm services. A significant relationship among the overall satisfaction and insurance companies was observed by one way ANOVA. Null hypothesis (H0) there is no positive significant impact of ecrm services on overall customer satisfaction has been rejected. It was clear from the above data analysis that ecrm services had significant influence on overall customer satisfaction. In the present study, policy holders perception regarding overall satisfaction was tested twice i.e. once before using ecrm and the other after using ecrm services. It is strongly confirmed that there was a positive significant influence of ecrm services offered by selected life insurance companies of India on the overall customer satisfaction. Conclusion It is concluded that ecrm technologies played a significant role for enhanced customer satisfaction and better service quality. The employees positive frame of mind and respect for their customers would delight the customers and assist the service providers in customer value creation in life insurance sector of India. Further Research There is much scope for further research in this area. A similar research can also be undertaken to study the quality of ecrm in all private life insurance companies established in India to bring out the results which can be used to generalize the findings applicable to a larger population. Similarly, there is chance to do the comparative study of public and private life insurance companies of India. A study of wider Asia could offer new research directions by comparing and contrasting ecrm services offered by life insurance companies and overall customer satisfaction.

7 References Berinato, S. (2002). Heart of Helath Care Change. CIO Magazine, 15 June, pp Dash Biswamohan and Mishra Bidhubhusan (2012). E-CRM Practices and Customer Satisfaction in Insurance Sector, Research Journal of Management Sciences, Vol. 1(1), August, pp. 2-6 Kamal Gulati (2012) e-crm Practices of Insurance Companies in India, Golden Research Thoughts, Vol. 2(5), pp.1-6 Kamal Gulati, Arvind Kumar and V. Ravi (2012). E-CRM and Customer Satisfaction in Indian Insurance Industry, Asian Journal of Business and Economics, Vol. 2(2.3) Quarter III, pp.1-13 Kotler, Philip (2001). Marketing Management-The Millennium Edition, Prentice Hall Ltd., India Kumar M. Selva and J. Vimal Priyan (2012). A Comparative Study of Public and Private Life Insurance Companies in India, The Indian Journal of Commerce, Vol. 65(1), January-March, pp Mittal R. K. and Kumra Rajeev (2001). ecrm in Indian Banks, Business Review, New Delhi Vol. 2 pp Rigby D. K., Riechheld F. F. and Schefter P. (2002). Avoid the Four Perils of CRM, Harvard Business Review, 80 (2) pp Shainesh G. and Mohan, Ramneesh (2001). Status of Customer Relationship management in India: A Survey of Service Firms. In Sheth Jagdish N., Parvatiyar, Atul, Shainesh G., (eds.), Customer Relationship Management: Emerging Concepts, Tools and Applications, Tata McGraw Hill Co. Ltd., New Delhi. Vij Sanket and H. J. Ghosh Roy (2009). Perceived Level of ecrm Services and Customer Satisfaction in Life Insurance Sector of India, The Indian Journal of Commerce, Vol. 62(2), April-June, pp Annual Reports of Insurance Regulatory and Development Authority, India (IRDA) Su. C. T., Chen Y. H. and Sha D. Y. (2006). Linking Innovative Product Development with Customer Knowledge: A Datamining Approach, Technovation, Vol. 26(7), pp Sophonthummapharn K. (2009). The Adoption of Techno-relationship Innovations: A Frameowrk for Electronic Relationship management, Marketing Intelligence and Planning, Vol. 27(3), pp