Service quality and customer loyalty in the Insurance Industry in Kenya

Abstract

The insurance industry in Kenya has been steadily growing in the last few decades with many insurers understanding the importance of the customer and the need for competitive advantage. In today‘s competitive and fast paced environment, customer loyalty has often been cited as a significant factor. Customer loyalty is beneficial to a company‘s performance. Delivery of quality services leads to customer satisfaction enabling customer loyalty. This paper focused on determining the service quality levels in Kenya‘s insurance industry using the SERVQUAL model and its dimensions of empathy, responsiveness, assurance, reliability and tangibility. This research analyses the consequence of delivering quality services on the satisfaction of customers and their loyalty in the insurance industry in Kenya. To accomplish this data was collected from 150 respondents selected through stratified random sampling. There was 100% response rate. Data collected was evaluated using mean, standard deviation, correlation analysis using Kendall tau-b‘s model, regression analysis and mediation analysis. The results showed a significant and positive relationship between service quality, satisfaction and loyalty. The study also established that quality levels in the insurance industry are adequate but not excellent. This study found out that service quality creates a ripple effect on satisfaction and loyalty thereby significantly influencing the competitiveness of a company. The study therefore recommends that insures need to enhance on all dimensions of service quality to increase the quality of service delivered. It also recommends that insurers focus on the quality of services and gratification of customers so as to build and sustain loyalty so as to increase performance and maintain a competitive edge.