The Insurance industry is beginning to assert , butitselfisfaced in Gh with the problem of quality service provision. There is the general perception that insurance companies especially life insurance providers are only interested in the money (that is premium ) that clients pay and are reluctant to fulfil their obligations when it comes to payment of claims. This negative perception has affected the image of the insurance industry.

However, there has not been any scientific research to either confirm or reject this assertion. It is against this backdrop that this study assessed the impact of quality service delivery on customer retention of SicLife Insurance; to determine the extent to which Quality service delivery impact on the operations of SicLife.

A survey was conducted using the servqual survey instrument on quality dimensions among customers and staff of Sic life. The study covered 150 customers and 30 members of staff of SicLife Insurance Company Ltd. Both primary and secondary data were used. Issues relating to turn-around time, Staff participation in decision making, management response to staff concerns, training needs for frontline staff, customers satisfaction and retention levels as well as why customers surrender their policies were investigated from the perspectives of the staff and customers SicLife.

It was discovered that customers were satisfied with the services received from Sic life on four dimensions of quality but the levels vary. This according to the survey has led to the high customer retention of 99.7%.The study revealed a weak correlation between customers expectation and perception of service quality as depicted by the Paired Samples Correlation in the Hypothesis. The study also revealed that, SicLife is doing well on four dimensions of quality, except the reliability dimension. The quality gap in the reliability

dimension is attributed to the frequent  break in the network and   technical software

„Cebas‟ as well as frequentsleadingpowertocustomersoutages dissatisfaction. Non delivery of policy documents by some of the Sales representatives and

issue on mis-representation of the policy terms and benefits given to customers by some of the Sales representatives were identified as a major problem which causes customers to surrender their policies. The study recommended that management of SicLife as a matter of urgency upgrade or improved its IT software or if possible find a much improved

version of the „„Cebas‟‟ softwareItis furtherto avert suggested that the technicians or the experts who management the software, should be

decentralized to the branch for quick restoration of the system for smooth operation and service delivery.



1.1  Background and Contribution of Life Insurance in Ghana

Insurance was introduced in the country in the 20th century to manage risk. Some of the early companies were Royal Exchange Assurance Company, Northern Assurance Company Limited, New India Assurance Company Limited and Gresham Fire and Accident Assurance Society Limited (NIC, 2006).

Life insurance, which is normally a contract between an insurance company and an individual or an organization, provides protection against untimely death of an individual or group of people in an organization. The Life Offices Association (LOA) was born as a wing of the Ghana Insurers‟ Association (GI effort to undertake a nationwide education on the benefits of life insurance to the public

with the view of creating awareness of the need of having life insurance policy.

For  a  very  long  time  in  the  history  of  the  Insurance  Industry  in  Ghana,  the  word

„„insurance‟‟to most people has been synonymous with motor insurance, because insurance generally had been popularized by an Act of ParliamentThirdPartyAct of“ 1958”makes third party motor insurance compulsory for all vehicles plying the roads within the boundaries of Ghana. This has been strictly enforced by the Police over the years. Life Insurance, the branch of insurance that deals with lives and its exigencies, is not a very popular class of insurance on the Ghanaian insurance market some years back until when the new Insurance Act 724 in 2006 which replaced the old Insurance Law, of 1989 P.N.D.C law 227 seemed to had strengthened the operation of life insurance in the country. This is to encourage investors to put in the necessary resources needed to grow

the life sector and effectively play its expected role   in   the   nation‟sNIC   d

Newsletter July-Sept,2006).

Benefits that accrued from life insurance industry to the nation, organizations and individuals include the use of life insurance policies as collateral security for bank loans overdrafts, and mortgage as well as provision for retirement.(N.I.C News Letter July-Sept, 2006). Besides, the services rendered by the industry, add to the national income and makes indirect contribution by supporting the activities of the manufacturing sector, increase output and employment opportunities. CII Business & Economics Course Book, (2003).The long-time nature of life insurance industry is also an effective tool for the mobilization of funds. It is conducive for capital mobilization and serves as an alternative to provident fund and superannuation, as well as potential substitute for public pension schemes.(N.I.C News Letter July-Sept, 2006)

  • Problem Statement of the Study

Customers nowadays are becoming more sophisticated with higher expectations and zero tolerance for poor service from providers such as Insurance firms. In this era of competitive insurance market, it is very essential for players in the industry to deliver quality service to customers, as organizational survival depends on its customers. The general perception of poor service quality delivery by insurance firms is gaining momentum amongst the insuring public as evident by complaints filed at the National Insurance Commission office, Kumasi see Appendix 2i and 2ii. This negative perception has to be corrected scientifically. The sector according to insurance analyst and market watchers is the fastest-growing in the service industry and has been rated as the second largest premium income earner in the sub-region after Nigeria. Business & Financial Times, August, (2009); yet the perception of poor service delivery persist.

To the best of the,thereresearcher‟shasnotbeenenoughscientificknowledgeresearchin the area of loyalty and its impact on quality service delivery in the insurance industry. It is however, necessary to apply scientific research to assess the quality of service delivery in the industry with particular reference to SicLife insurance; to either confirm or reject this negative perception of poor service quality. Again management of organizations such as insurance firms sometimes do not consider service quality as a topmost priority and pre-requisite for sustenance and growth of firms. Others too have not developed the concept of quality culture or philosophy which is seen as the extent to which quality in organization is valued. Sureshchandar et al (2002)

The proliferation of insurance companies in Ghana recently has also resulted in the scramble for business with its resultant poor service quality. This has resulted in what is call premium undercutting whereby firms charge premium below the acceptable rate fixed by the National Insurance Commission. Elliot, Business & Financial Times January, Pg 30 (2010).

It is in the light of these numerous problems, that this study is being conducted to find out what problems affect the operation of SicLife in delivering quality service to its customers.

  • Significance of the Study

The key to customer retention is good customer service delivery and customer satisfaction. Regardless of which ever industry one is part of, quality customer care is of utmost importance; as customers are the prime reason for firms existence especially insurance firms. The study will help SicLife and the insurance companies build competitive edge inorder to expand and increase its customers base; by offering customers greater value, and providing benefits that justify higher prices. Business & Financial Times,( Nov, 2009).

Besides, it is very prudent for Sic Life to offer quality service to its customers in order to survive and contribute towards the development of the nation. Being the only insurance company own by the state and a leader in the industry with 30.4% market share (B&FT.Nov,2009) it cannot afford to deliver poor services to customers. This will help SicLife insurance and other insurance companies benefit from the findings of the study to improve on their service delivery so as to enhance their corporate image.

The insurance sector is a major investor on the Ghana Stock Exchange Market and as such should not compromise with the quality of service delivery. The former insurance law PNDCL 227 required that 75% of Non- Life investments to be held in government bills and 25% in other securities approved by the National Insurance Commission. For Life businesses, they were required to keep 50% of their investment in government bills and other 50% in securities approved by the NIC.(NIC Newsletter January-June 2007). The premium for investment can only be generated when quality service is provided.

Retention of customers is very vital to every business setup, and the insurance industry is no exception. Some experts believe that customer retention has a more powerful effect on profit than market share. Increasing customer retention rates can have a profound impact

on        a   firm‟sHoffmanprofitability&Bateson(2001).Increasing. customer retention rates

can          have   a   profound   impactForinstance 5 on%increase infirm‟sretention   prof

rate can translate into 85% higher profits for a branch of a bank, 50% higher profits for an insurance broker and 30% higher profits for an auto-service chain Hoffman & Bateson (2001).

Customers can be retained when they are satisfied with the quality of services received. Hence, the need for this study to serve as a clarion call for SicLife and the insurance industry in general to give much impetus to quality customer care in their operations. The

study will create awareness in quality customer service delivery of Si current level of performance and the insurance industry in general. And also serve as a

reference document for students studying customer service management, hence the need to conduct a scientific research into the issue of quality service delivery and its impact on customer retention in the insurance industry taking SicLife as a case study.

1.4  Goal and Objectives of the Study

The goal of the study is to assess the impact of quality customer care on customer retention in the insurance industry with SicLife as a case study from 2006-2009.To realize this goal, the following specific objectives were undertaken.

  1. To examine the level of clients satisfaction or dissatisfaction with SicLife service delivery.
  1. To examine the trend in the market share, retention rate, premium income, profitability and Claims incurred for the period under review.
  1. To assess quality measures implemented by SicLife.
  1. To make appropriate recommendations based on the outcome of the study for improvement in

Service delivery at SicLife.

1.5  Research Questions

The study sought to answer the following questions to achieve the goal and objectives of the research.

1. What causes customer dissatisfaction and satisfaction with SicLife products?

  1. What are the effects of quality service on the operations of insurance firms such as SicLife?
  1. What are the quality standards implemented by SicLife?
  1. How can SicLife use quality management to retain its customers?

1.6  Methodology

The survey method  was used to obtain relevant   information required for the  study.

Primary data was obtained through a combination of self-administered questionnaire and Interviews with respondents as well as Staff. A sample size of 150 customers, and 30 staff were selected for the study. The managers of SicLife Kumasi as well as the area manager of NIC were also interviewed for additional information for the study. Secondary information was obtained from annual reports of SicLife Insurance Company, N.I.C regional office (Kumasi), Newspaper

Publications, the Internet and relevant books. The sampling procedure used involved both random and convenience sampling techniques.

1.7  Hypothesis

It is of convenient to structure a research problem in terms of hypothesis to be tested.

Hypothesis is a proposition that attempt to explain a set of fact in a unified way. It
generally forms  the  basis  of  experiment  designed  to  establish  it  plausibility.

( hypothesis-(Retrieved on 15 January 2010). The following hypotheses were formulated to deal with the research problems.

H1. Quality service has a positive effect on customer satisfaction (Null Hypothesis)

H0.Quality service has no positive effect on customer satisfaction( Alternative Hypothesis) H1.There is a direct relationship between customer expectation and perception of service quality (Null Hypothesis). H0. There is no direct relationship between customer expectation and perception of service quality(Alternative Hypothesis)

1.8  Scope of the Study

SicLife Company was chosen for this study because it is the only insurance company own by the state and it is also the leading insurance firm in the industry having the largest market share of 30.4% (Business & Financial Times August,2009). The study covered the period from 2006 to 2009. The Kumasi branch was chosen for the study because it is the second largest branch of SicLife. Again the northern sector head office of the NIC is located in Kumasi.

1.9  Limitations of the Study

The researcher was constrained by time and financial resources and could not therefore apply other methods of data collection aside interview and questionnaires. Most of the staff and senior managers at SicLife were most of the time busy attending to customers which delayed information from them.

1.10  Organization of the Study

The study has five chapters. Chapter one deals with the introduction of the study area. This comprises the background of the study, problem statement, and significance. The goal and objectives, research questions methodology, hypothesis, scope, limitations and organization of the study. Chapter two captures the review of relevant literature to the study. The third chapter of the study presents details of the methodology used in the study and the profile of Sic life Insurance Company. Chapter four contains data presentation, analysis and discussion whilst the final chapter deals with the summary of major findings, recommendations and conclusion.