Chapter 1

Introduction and Research Background

Introduction

The present research attempted to investigate customer Satisfaction with motor insurance
claims: a case of cooperative insurance PLC. This study thus attempts to assess what service
quality dimensions drive the overall satisfaction for motor insurance claims in the Cooperative
Insurance Company head office and 117 Branch network. There are 117 branches of service
for motor claim operation. The head office provides centralised operation for handling motor
claims.

Background of the Study

The insurance industry in Sri Lanka is currently experiencing high competition. Consequently,
every insurance organisation strives to operate efficiently and effectively to achieve its goals.
Internal and external employees are actively involved in this endeavour, aiming to meet
organisational objectives amidst stiff competition. Thus, employees in the insurance sector are
tasked with handling high volumes of work in their day-to-day operations. Insurance is inherently
customer-oriented, and customer satisfaction is important for insurance companies. Profit
generation through increased sales is a common goal for all insurance firms, necessitating
considerable employee effort to meet company targets. Customer satisfaction is a critical metric
for insurance companies, prioritising providing high quality services to satisfy customers.
Therefore, every employee is expected to contribute maximum effort to enhance customer
satisfaction and keep customers content.

Employee satisfaction is equally crucial to customer satisfaction for developing the insurance
company's reputation and success. Employees who effectively drive the company towards its
future goals and targets are vital assets. Prompt customer service is imperative for insurance
companies, as they adhere to the principle that "Customer is the King of the Business." In Sri
Lanka, the insurance industry's customer care delivery system faces three significant challenges:

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improving quality, increasing access, and reducing costs. Of these challenges, improving the
perceived quality of customer care services holds more significant sway over customer behaviour
compared to access and cost considerations.

Service quality is a central focus for insurance companies striving to balance customer
satisfaction with operational costs. Gronroos (1983) initially distinguished between technical
quality (what is done) and functional quality (how it is done), laying the groundwork for
subsequent research on service quality. Parasuraman, Zeithaml, and Berry (1985) expanded on
Gronroos' work, defining service quality as the consumer's overall impression of the organisation
and its services. The relationship between service quality and customer satisfaction has been
widely studied, with various scholars proposing different conceptualisations and frameworks.

The SERVQUAL framework, introduced by Parasuraman, Zeithaml, and Berry in 1985 and
refined in subsequent years, has been a cornerstone for assessing service quality. However,
empirical support for SERVQUAL has not always been consistent, prompting researchers to
explore alternate frameworks. In Sri Lanka, customer input into the insurance industry is limited,
with the main focus being on the products offered by insurance companies. There is a growing
recognition of the importance of offering customised insurance products tailored to the needs of
society.

In terms of the limitations of SERVQUAL, alternative frameworks for measuring service quality
have been developed, focusing on intangible factors like reliability, responsiveness, assurance,
empathy, and communication. These factors are crucial for overall customer satisfaction, guiding
insurance companies striving to provide excellent service while balancing operational constraints.

Statement of problem

The insurance industry is critical in safeguarding individuals and businesses against financial
risks. However, despite the importance of the industry, there exists a notable gap between
performance of the insurance company and the needs of their customers. This disconnect
manifests in various aspects, including quality of service, efficiency, and personalisation.
Customer satisfaction is important in the insurance sector, yet many companies need help to

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address and meet the evolving expectations of their clientele. This failure to adequately respond to
customer needs impacts individual insurance companies and has broader implications for the
industry as a whole. Furthermore, insurance organisations are reluctant to acknowledge and
rectify shortcomings in service provision. This resistance often stems from management's
hesitation to admit to providing subpar services, leading to a need for more initiative in measuring
customer satisfaction.

In Sri Lanka, the challenges facing the insurance industry are exacerbated by poor customer
satisfaction, inadequate service procedures, and untrained employee behaviour. Especially in
terms of motor claims. These issues hinder the ability of the industry to effectively serve its
clientele and impede its overall development. Relate this to insurance and motor claims.
Therefore, there is a need to investigate the impact of service quality on customer satisfaction
within the Sri Lankan insurance industry. By addressing these issues, insurance companies can
better understand and meet the needs of their customers, ultimately driving industry growth and
improving overall customer satisfaction.

Research questions

Relate this to motor claim & cooperate

The following research questions were formed for the study.

1. Does service quality significantly affect customer satisfaction towards motor claims
of the Cooperative insurance company PLC?

2. Do personal characteristics influence service quality and customer satisfaction towards

motor claims of the Cooperative insurance company PLC?

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Significance of the Study:
The role of insurance companies and their strategies in bolstering the economy is paramount for
achieving broader development objectives within the country. These entities significantly
contribute to economic stability and provide crucial support to the social environment, thereby
offering peace of mind to customers. Consequently, individuals are motivated to invest in
businesses, stimulating economic growth. While the insurance industry alone may not be
sufficient for Sri Lanka's development, it is crucial to acknowledge its role in enhancing
productivity. In Sri Lanka, where approximately 45% of organisations engage in service
marketing activities, economic development and the status of the insurance industry are inherently
intertwined. The development of the insurance sector is widely recognised as a consequential
outcome of a country's overall development. However, policymakers often need to recognise the
contribution of a robust insurance sector to economic development in Sri Lanka compared to
other countries globally. Sri Lanka's failure to implement optimal strategies to support a
favourable economic environment adversely impacts its insurance industry. Unlike developed
nations that employ superior strategies to enhance the competitiveness of their insurance sectors,
Sri Lanka falls short in this regard. Customer price sensitivity is a significant concern, prompting
insurance companies to offer competitive premiums to attract customers. However, this emphasis
on price negotiation often leads to profitability challenges within the industry.
Analysing key financial metrics reveals positive growth trends in the insurance sector. Both long-
term and general insurance businesses have witnessed significant increases in gross written
premiums, indicating a growing market. Additionally, profits before tax have seen notable
improvements, reflecting a favourable operating environment. Asset growth further underscores
the sector's resilience and potential for future expansion.

Motor insurance emerges as a dominant segment within the industry, with various companies
offering differentiated products under different brand names. While competition is fierce,
offerings tend to be similar, with minor variations in benefits and coverages. Despite these
advancements, maintaining service quality and meeting customer expectations remain challenges
for the industry.

Given the increasing competition and rising customer expectations, there is a pressing need for
insurance companies to differentiate themselves through product offerings, increase customer

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retention, and foster positive word-of-mouth communication. By addressing these challenges and
capitalising on opportunities, insurance companies can enhance their competitive advantage and
contribute to the country's economic development.

Therefore, this study investigates the relationship between service quality and customer
satisfaction towards motor claims at Cooperative Insurance PLC, focusing on selected branches in
Sri Lanka. Through this research, valuable insights can be gained to improve service quality and
enhance customer satisfaction, enabling Cooperative Insurance PLC to serve its customers better
and achieve greater satisfaction.

Objectives

1. Explore the correlation between service quality and customer satisfaction towards motor
claims of the Cooperative insurance company PLC.

2. Gauge the levels of service quality and customer satisfaction towards motor claims of the
Cooperative insurance company PLC.

3. Identify the factors influencing service quality and customer satisfaction towards the
Cooperative insurance company PLC motor claims.

4. Propose strategies to enhance service quality and customer satisfaction towards the
Cooperative insurance company PLC motor claims.

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Limitations

This research has effectively applied insights from the literature on service markets to a specific
sector within the insurance industry, drawing evidence from the different secters. This has yielded
a comprehensive framework that allows to grasp the dynamic interplay among various
dimensions of service quality, overall service quality, and customer satisfaction.
However, like any research endeavour, this study has limitations.
The researchers encountered the following constraints during the execution of the research:
1. The scope of the study is limited to a few branches within specific districts.
2. Data were collected exclusively from customers who received motor insurance claims.
3. The data collection period spanned only one month, from July 1st to 31st April 2023. This
relatively short duration of data collection influenced the variability in responses and
should thus be acknowledged as a limitation.
4. The study focused on middle-aged customers aged 30-60years old,
5. Another area for improvement is the exclusion of customers who could not communicate
verbally from the sampling process. These customers may represent a different
demographic or have unique perspectives not captured in the study.

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 Chapter 2
Literature Review

This chapter presents the literature survey. At the beginning of the chapter, service quality
functions, the importance of service quality, the dimensions and determinants of service quality,
and previous studies on service quality are presented. Then, the importance of customer
satisfaction, determinant factors, and previous studies on customer satisfaction are highlighted.
Insurance is also classified under services and lacks physical features. It is merely an agreement
that discloses how the customer will indemnify the loss in case of any occurrence.

Service quality

By definition, a service encompasses several attributes. A service is intangible and challenging to

store. In the field of services, customers play an active role as participants in the process. The
inseparability of a service stems from its simultaneous production by the provider and
consumption by the customer. Moreover, services are characterised by customisation and a higher
degree of labour intensity compared to products. This is due to the inherent heterogeneity of
services, which vary across service providers, customers, and even from day to day (Shetty &
Ross, 1987).

Services are commonly categorised into consumer services (e.g., department stores) or
professional services (Fitzsimmons & Sullivan, 1982). Professional services (e.g., medical care,
legal services, insurance services) closely resemble pure services on a product-service continuum.
Professional services are typically delivered by trained professionals such as doctors and lawyers.
Although no tangible good is exchanged, each consumer produces and consumes the service
almost simultaneously. Professional services are non-storable, and the consumer plays a crucial
role in the service delivery. For instance, in a physical examination or drafting a will, the
consumer acts as a co-producer (Bowen & Schneider, 1988, p. 49).

The insurance service sector is booming, and numerous service enterprises are sprouting in its
wake. Of these enterprises, a notable one is the private insurance sector. The private insurance

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companies sector relies on the success of varying services within its sector, therefore forcing the
insurance industry and private insurance companies sector to be very closely knit.
Traditionally, service quality has been conceptualised as the difference between customer
expectations and their perceptions of service delivery. Researchers argue that assessing service
quality through disconfirmation (the difference between perceptions and expectations) is a valid
approach, enabling service providers to pinpoint various gaps in service provision (Gronroos,
1983; Parasuraman et al., 1988, 1991; Yonggul et al., 2002).

Perceived service quality is described as customers' overall assessment of an organisation's

relative superiority or inferiority and its services (Bitner and Hubbert, 1994, as cited in Dinuka
Wijetunga et al., 2003).

Dyck (1996:541-549) emphasises that understanding client expectations is the primary and most
important step in delivering quality care service. She further asserts that service quality can be
gauged by the extent of the gap between client expectations or desires and their perceptions of the
services received. This notion is supported by Kotler and Andreason (1996:604).
To grasp service quality comprehensively, it is essential to delineate the characteristics of
services. Three paramount characteristics are intangibility, heterogeneity, and the inseparability of
production and consumption (Parasuraman et al., 1985). A comprehensive review on this subject
(Lehtinen et al., J. 8., 1982; Parasuraman et al., 1985; Sasser et al., 1978) proposes three primary
qualitative outcomes:

Relative to product quality, evaluating service quality is more complex. Perceptions of service
quality stem from the disparity between consumers' expectations and their perceived service
performance. Service quality assessment is contingent upon both the service outcome and the
service delivery process.

Perceptions of service quality arise from comparisons between expected and perceived service
performance, suggesting that individual customers may have differing experiences with similar
service encounters from the same provider. This assertion implies that no universal service
measurement framework applies to all customers. Managing service quality should involve
managing the collective perceptions of all customers. The initial attempt to delineate and define

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service quality was pioneered by Gronroos (1983), who differentiated between technical quality
(what is done) and functional quality (how it is done). Gronroos' early work (1983) was
subsequently expanded upon by Parasuraman, Zeithaml, and Berry (1985:42). They posited that a
comprehensive understanding of service quality must acknowledge the intangible, heterogeneous,
and inseparable nature of services and define service quality as the customer's holistic assessment
of the relative superiority or inferiority of an organisation and its services (Bitner & Hubbert,
1994) or as the customer's evaluation of the overall excellence or superiority of the service
(Zeithaml, 1988). In this context, service quality entails meeting customer expectations (Lewis &
Booms, 1983). From a consumer standpoint, it involves comparing customer expectations with
their perceptions of actual service performance (Parasuraman et al., 1985).

Importance of service quality in the insurance industry

The most important aspect is providing a high level of quality service today in the insurance
sector. This is a very successful, competitive marketplace. The concept of quality is an elusive
construct, mainly because of the presence of many intangible attributes. This difficulty worsens
service quality. Service quality in motor claims is vital for insurance companies for several
reasons, as it directly impacts customer satisfaction by providing a smooth and efficient claims
process and alleviating stress for policyholders during a challenging time. Satisfied customers are
more likely to renew policies and recommend the company to others, enhancing retention rates
and fostering loyalty. Higher service quality also contributes to a positive brand reputation, which
is important in attracting and retaining customers in a competitive market. Efficient claims
processes improve operational efficiency and reduce costs while also helping ensure regulatory
compliance. Ultimately, prioritising service quality in motor claims enables insurance companies
to build strong customer relationships, enhance their reputation, gain a competitive edge, and
achieve operational excellence.
As far as services are concerned, marketing must be connected to other functional areas. Tasks
traditionally attributed solely to manufacturing operations now require marketers' involvement,
given that customers are often exposed to, and sometimes actively participate in, service
processes. Enhancing the efficiency of service processes only sometimes translates into an
improved quality experience for customers, nor does it consistently result in enhanced benefits for
them. Similarly, pushing service employees to increase their speed may be positively received by

9
customers on occasion, but it can also make them feel hurried and undervalued. Therefore,
marketing, operations, and human resource managers must engage in open communication to
ensure the delivery of quality experiences in a more streamlined manner.

The perception of individual customers typically shapes their future attitudes and behaviours
towards a service provider. Dissatisfied customers are likely to defect from a company,
potentially never returning. The collective decisions of all customers regarding their service
provider ultimately dictate the market share of that provider. Another indicator of a service
provider's performance is the distribution of customers based on their tenure with the provider.
Recent studies underscore the significance of retaining loyal, long-term customers, as they often
drive higher sales at improved profit margins. Should loyal customers defect, the organization
will lose its profit-generating potential.

Likewise, implementing marketing strategies to enhance customer satisfaction with services can
pose significant costs and disruptions for an organization, necessitating thorough consideration of
their implications for operations and human resources. Consequently, quality strategies warrant
meticulous deliberation.

The importance of marketing's focus on service quality becomes apparent when considering that
poor quality places a firm at a competitive disadvantage. Customers who perceive quality as
inadequate are prone to swiftly redirecting their business elsewhere. In recent years,
dissatisfaction with service quality has surged despite significant improvements in the quality of
many manufactured goods.

From a marketing perspective, a crucial issue revolves around whether customers perceive
differences in quality among competing suppliers. Consultant Brad Gale succinctly articulates
that "value is simply quality. However, the customer defines it, offered at the right price" (Bradley
et al., 1994).

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Dimensions and determinants of service quality
At several service levels, the service quality literature usually attempts to categorise the factors
that influence attitudes. At the highest level, this involves several service quality dimensions. The
model of the SERVQUAL researchers developed the most widely reported set of service quality
dimensions. These dimensions started as ten but were refined to five. The following description is
observed, and analysis showed some were closely related. A description closely defines the final
five dimensions.

Table 2.1: Dimensions of service quality

Dimensions Description
Tangible The physical facilities and equipment available to identify, the appearance of staff, how
easy it is to understand communication materials
Reliable Performing the promised service dependably and accurately
Responsiveness Help customers and provide the best service.
Assurance Inspire trust and confidence
Empathy Provide a caring and individual service to customers.

The SERVQUAL model is used to measure service quality. There are five underlying dimensions
of service quality were initially indicated in the SERVQUAL approach (Parasuraman et al.,
1988):
 Tangibles (physical facilities, equipment, and appearance of personnel);
 Reliability (ability to perform the promised service dependably and accurately);
 Responsiveness (willingness to help customers and provide prompt service);
 Assurance (knowledge and courtesy of employees and their ability to inspire trust and
confidence); and
 Empathy (caring, individualised attention the firm provides its customers).

The distinctive multidimensionality of the SERVQUAL measure suggests its suitability for
assessing service quality within the insurance company service process. Furthermore, it is a
widely acknowledged tool for quality evaluation (Hemmasi et al., 1994, p. 25; Jensen &

11
Markland, 1996, p. 39) and could complement the complaint ratio or other company performance
metrics in ensuring quality delivery and achieving customer satisfaction. Research indicates that
while customer satisfaction and service quality are separate concepts, they are interconnected.
However, Cronin and Taylor (1992) noted the ambiguity of this relationship, likely stemming
from their shared association with the disconfirmation paradigm. Satisfaction typically pertains to
a specific transaction at a given moment, representing an emotional response to a product or
service encounter (Spreng et al., 1996, p. 17), akin to the discrete emotional episodes that underlie
the complaint ratio. Conversely, service quality is viewed as more aligned with a long-term
attitude (Bolton & Drew, 1991; Parasuraman et al., 1988). In essence, satisfaction is often
perceived as more experiential, transient, and transaction-specific, while perceptions of service
quality tend to be more enduring.

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Table 2.2: SERVQUAL scale items

SERVQUAL Description
dimension
Tangibles • Modernises offices
• visual appeal of offices
• Neatness of employee appearance and the appeal of the employees' dress
• Appropriateness of the office's appearance about the type of services provided
Reliable • Ability to fulfil promises on time
• Sympathy offered by the employee when the customer has a problem
• Dependability (can rely on employee)
• Timeliness in providing services
• Accuracy of records
Responsiveness • Telling customers when services will be performed
• Promptness of service (quickness of check)
• Willingness of employees to help customers (deal with processing)
• How busy the employees are and how it affects their promptness
• in responding to customer requests
Assurance • Trustworthiness of the company.
• How safe the customer feels in dealing with the company (safe feeling of the
customer)
• Politeness of employees (courtesy in handling
• Does the company provide support for employees to perform their jobs well?
(Are resources available to be processed?)
Empathy • The individual attention the company provides the customer (caring,
empathetic nature)
• The individual attention the employees provide the customer
• Employee understanding of the customer's needs
• Does the company have the customer's best interests at heart?
• Convenience of operating hours

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Studies related to Service Quality Service Quality in Insurance Companies
Corneliu Cristian Bente (July), University of Oradea, Economic Sciences. Insurance services are a
distinct category characterised by high standardisation, tailored to meet customers' demands for
protecting themselves against financial losses. According to the findings of the study, several key
aspects can be identified. Elizabeth A. Anderson et al. (1996) revealed in their study "Measuring
service quality at the University of Texas M.D. Anderson Cancer Center" that billing accuracy
and waiting times are significant patient concerns across all four clinics based on the service gap
methodology of comparing expectations and perceptions. While differences in performance exist
among clinics, these are attributed to variances in patients' expectations rather than perceptions.
The study concludes that customer expectations significantly impact a firm's evaluation of its
service quality.

Insurance Industry in Sri Lanka

In Sri Lanka's insurance industry, there is negligible differentiation between private and
government sector insurance companies. Most insurance companies are privately owned, with the
Sri Lanka Insurance Corporation being the sole government-owned entity operating in the
insurance business. The National Insurance Trust Fund (NITF) has recently entered the insurance
service sector but needs to gain extensive familiarity with insurance business operations. Among
the private insurers, Sri Lanka Insurance Corporation Ltd. stands out for its trustworthiness and
provision of flexible insurance services across the country. It holds a prime AAA rating, awarded
by the US rating agency Fitch Ratings in New York City. The company is a significant player
with assets exceeding US$1102 million and a workforce of 2703 employees as of 2018.

Two main entities, Sri Lanka Insurance Corporation – General and Sri Lanka Insurance – Life,
operate in the insurance sector according to regulatory guidelines set by the Insurance Regulatory
Commission of Sri Lanka (IRCSL). Ceylinco Insurance, the largest privately owned insurance
company, leads the industry with innovative products and services. Notable among its innovations
is the "Ceylinco On the Spot" concept, which simplifies motor claims processing and eliminates
the need for police reports. Despite slightly higher premiums than competitors, Ceylinco
Insurance prioritises customer service, earning its brand the "VIP on the spot." The company
boasts a large client base and delivers superior service without complications.

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Ceylinco Insurance, established in 1939, recently transitioned to become a comprehensive life and
general insurance provider, aligning with IRCSL regulations. It remains a distinguished insurance
service provider in Sri Lanka.

Private vs. Public Insurance Sectors:

Differentiations Private insurance companies are privately owned and funded by their owners,
operating independently. In contrast, government-controlled public sector insurance companies
prioritise service quality over profit motives. While they report financial performance to the
Ministry of Finance, they function similarly to private insurers, ensuring profitability and running
autonomously. Both public and private insurers operate under the oversight of the Insurance
Regulatory and Development Authority of India (IRDAI), ensuring reliability and adherence to
regulations. Private insurers often lead in innovation, leveraging partnerships with multinational
firms to introduce new products and services. In contrast, public sector insurers may take longer
to adapt to market trends and introduce new features due to bureaucratic processes.

Quality of Customer Service:

Private vs. Public Insurers Private insurers typically offer centralised services driven by efficient
systems but may need more process flexibility. Conversely, government insurers often operate
decentralised, with branch offices employing varied operating procedures, sometimes leading to
inconsistent service experiences. While private insurers prioritise process efficiency, government
insurers may provide more personalised service experiences, depending on individual branch
managers or agents.

Claims Experience:
Private vs. Public Insurers Private insurers aim for profitability and manage claims independently,
offering faster and more tailored services. They operate cohesively as a single unit, ensuring
streamlined claims processing. In contrast, public insurers may take longer to settle claims and
adapt to market changes, potentially impacting the overall claims experience.
Choosing an Insurance Provider There is minimal difference between private and government
insurers regarding service quality and objectives. Personal preferences ultimately drive the choice
of insurance provider. Individuals seeking personalised service experiences and trust in

15
government backing may prefer public insurers, while those prioritising efficiency and innovation
may opt for private insurers after conducting thorough due diligence.

Definition of Customer Satisfaction

Customer satisfaction encompasses a cognitive evaluation of service attributes during direct
customer interactions. It involves comparing expectations with actual outcomes, with satisfaction
influenced by product performance and service quality factors. Expectancy disconfirmation
theory posits that meeting or exceeding customer expectations leads to satisfaction while falling
short results in dissatisfaction. Customer satisfaction can be transaction-specific or cumulative,
with overall satisfaction reflecting ongoing evaluations of a firm's ability to deliver desired
benefits.

Customer satisfaction is vital to profitability, fostering loyalty and positive word-of-mouth

advertising. Understanding consumer needs and perceptions of quality and value is essential for
developing successful corporate strategies and maintaining competitive advantage.

Importance of Satisfaction
Understanding and enhancing customer satisfaction is critical for organisational success in today's
competitive landscape. Customer satisfaction drives loyalty and profitability, making it
indispensable for firms seeking sustainable growth. Improved consumer research and a focus on
delivering quality and value are essential for building strong customer relationships and
maintaining market competitiveness.

Dimensions of Satisfaction
Customer satisfaction in healthcare settings comprises various dimensions: meal satisfaction,
nursing staff, fees, admission processes, theatre experiences, TV services, and ward arrival. These
dimensions positively impact loyalty and cumulative satisfaction, highlighting the
multidimensional nature of satisfaction evaluation.

Research Studies on Customer Satisfaction:

Tung Lai Lai (2004) investigates the impact of service quality and perceived value on SMS usage
among users post-adoption. The study finds that tangibles, empathy, and assurance dimensions of

16
service quality influence customer satisfaction, affecting behavioural intentions to continue using
SMS. Zeki Yildizi and Senol Erdogmus (2004) focus on patient satisfaction with healthcare
quality in Turkish hospitals. Their study identifies seven patient-centred service quality indicators,
offering insights for improving patient satisfaction and healthcare service delivery.

Sunethra C. Perera (2005) explores the relationship between service quality and customer
satisfaction in two development banks in the Southern Province. The study underscores the
importance of quality service in enhancing customer satisfaction. Wimalasena, S. L. et al. (2006)
examine the gaps between expected and actual customer service in Sri Lankan banks. The
findings highlight the need for better customer service to address customer dissatisfaction and
improve service quality.

In conclusion, customer satisfaction remains critical in organisational success across various

industries. Understanding customer needs, delivering quality service, and fostering positive
relationships are imperative for maintaining competitiveness and ensuring long-term profitability.

Conceptual Model: Enhancing Service Quality and Customer Satisfaction in Cooperative

Insurance PLC
The insurance industry is highly competitive, with companies vying for market share based on
their ability to provide superior service quality and satisfy customer needs. Like many others,
Cooperative Insurance PLC recognises the importance of delivering excellent service to build
customer trust, loyalty, and satisfaction. This conceptual model outlines the key dimensions of
service quality and their impact on customer satisfaction within Cooperative Insurance PLC based
on discussions and findings from previous research. The organisation can develop strategies to
enhance service quality and improve customer satisfaction by understanding these factors and
their interrelationships.
1. Service Quality Dimensions:

a. Tangibles: Tangibles refer to the physical aspects of service delivery that customers can
see, touch, or experience. In the context of Cooperative Insurance PLC, tangibles include
the appearance of branch offices, the professionalism of staff, the accessibility of digital
platforms, and the clarity of communication materials. Research has shown that tangible

17
 cues influence customers' perceptions of service quality, as they serve as indicators of
reliability, competence, and trustworthiness. Therefore, investing in upgrading facilities,
improving digital interfaces, and enhancing communication materials can positively
impact customers' perceptions of service quality.

b. Reliability: Reliability reflects the ability of Cooperative Insurance PLC to deliver

services accurately, dependably, and consistently over time. It encompasses factors such
as the reliability of claims processing, policy issuance, premium collection, and customer
support services. Research indicates that reliability is a critical dimension of service
quality, as customers expect insurance companies to fulfil their promises and obligations
reliably. By implementing robust systems and processes, setting clear service standards,
and monitoring performance closely, Cooperative Insurance PLC can enhance reliability
and build customer trust.

c. Responsiveness: Responsiveness refers to Cooperative Insurance PLC's willingness and

ability to provide prompt assistance and support to customers' inquiries, requests, and
concerns. It involves factors such as the accessibility of customer service channels, the
timeliness of responses, and the flexibility in addressing customer needs and preferences.
Studies have shown that responsiveness is closely linked to customer satisfaction, as
customers value timely and personalised assistance when interacting with insurance
providers. Cooperative Insurance PLC can improve customer satisfaction and loyalty by
optimising customer service channels, empowering frontline staff, and prioritising
responsiveness.

d. Assurance: Assurance pertains to the competence, courtesy, credibility, and reliability of

Cooperative Insurance PLC's staff and services. It includes elements such as the expertise
of customer service representatives, the clarity of policy terms and conditions, the security
of personal data, and the availability of financial guarantees. Research suggests that
assurance plays a crucial role in shaping customers' perceptions of service quality, as it
reflects their confidence in the company's ability to deliver value and protect their
interests. By investing in staff training, implementing stringent security measures, and

18
 enhancing transparency in communication, Cooperative Insurance PLC can strengthen
assurance and enhance customer trust.

e. Empathy: Empathy involves Cooperative Insurance PLC's ability to understand,

anticipate, and address customers' unique needs, preferences, and circumstances with
compassion and care. It encompasses personalised service offerings, empathetic
communication, proactive assistance during claims processing, and support during
challenging situations. Studies have shown that empathy is a key driver of customer
satisfaction and loyalty, as it demonstrates the company's commitment to putting
customers' interests first. Cooperative Insurance PLC can enhance customer satisfaction
and retention by fostering a customer-centric culture, encouraging empathy among staff,
and tailoring solutions to meet individual needs.

f. Communication: Communication entails the effectiveness, clarity, and transparency of

Cooperative Insurance PLC's communication with customers across various touchpoints.
It includes factors such as the accessibility of information, the comprehensibility of
communications, the frequency of updates, and the responsiveness to customer feedback
and inquiries. Research indicates that communication plays a vital role in shaping
customers' perceptions of service quality, as it influences their understanding of products,
services, and processes. By improving the clarity and transparency of communication
materials, leveraging digital channels for outreach, and actively soliciting customer
feedback, Cooperative Insurance PLC can enhance communication effectiveness and
improve customer satisfaction.

2. Customer Satisfaction:
Customer satisfaction represents the overall evaluation of customers' experiences with
Cooperative Insurance PLC's services, products, and interactions. Various factors influence it,
including service quality dimensions, pricing, convenience, brand reputation, and past
experiences. Research suggests customer satisfaction is a critical driver of loyalty, retention, and
advocacy in the insurance industry. By enhancing service quality across all dimensions and
consistently exceeding customer expectations, Cooperative Insurance PLC can improve overall
customer satisfaction and achieve sustainable business growth.

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Conceptual Model:
The researcher used to filter the best articles to prepare the conceptual model. They are provided
below.

Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1988). SERVQUAL: A multiple-item scale for
measuring consumer perceptions of service quality. Journal of Retailing, 64(1), 12–40.
The SERVQUAL model identifies five dimensions of service quality: tangibles, reliability,
responsiveness, assurance, and empathy.

Gronroos, C. (1984). A service quality model and its marketing implications. European Journal
of Marketing, 18(4), 36–44.
Gronroos's service quality model emphasises the importance of customer perceptions of service
quality in determining overall satisfaction and loyalty.

Zeithaml, V. A., Berry, L. L., & Parasuraman, A. (1996). The behavioural consequences of
service quality. Journal of Marketing, 60(2), 31–46.
This study highlights the impact of service quality dimensions on customer satisfaction and
subsequent behavioural outcomes, such as repurchase intention and word-of-mouth
recommendation.

Caruana, A., & Agus, A. (2006). Service quality, satisfaction, and behavioural intentions: A study
of low-cost airline carriers in Italy. Managing Service Quality: An International Journal, 16(4),
349-372.
Caruana and Agus investigate the relationship between service quality, customer satisfaction, and
behavioural intentions in the context of low-cost airline carriers, providing insights applicable to
the service industry.

Oliver, R. L. (1999). Whence consumer loyalty? Journal of Marketing, 63(Special Issue), 33-44.
Oliver's loyalty model underscores the role of customer satisfaction as a key determinant of
loyalty, emphasising the importance of meeting or exceeding customer expectations.

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Bitner, M. J., Zeithaml, V. A., & Gremler, D. D. (2018). Services marketing: Integrating customer
focus across the firm. McGraw-Hill Education.
Bitner, Zeithaml, and Gremler offer a comprehensive overview of service marketing principles,
including strategies for enhancing service quality and customer satisfaction across various
industries.

Description of the final Conceptual Model:

Service Quality Dimensions:

Tangibles: Physical aspects of service delivery (e.g., facilities, equipment, communication
materials).
Reliability: Consistency and dependability in service delivery (e.g., accuracy, timeliness,
consistency).
Responsiveness: Promptness and willingness to assist customers (e.g., accessibility, flexibility,
timeliness).
Assurance: Trust and confidence in the company and its offerings (e.g., competence, credibility,
security).
Empathy: Understanding and addressing customers' needs with care and compassion (e.g.,
personalised service, proactive assistance).
Communication: Effectiveness and clarity with customers (e.g., accessibility, comprehensibility,
responsiveness).

Customer Satisfaction:
Overall evaluation of customers' experiences with Cooperative Insurance PLC's services,
products, and interactions.

Service quality dimensions, pricing, convenience, brand reputation, and past experiences
influenced her. A key driver of loyalty, retention, and advocacy in the insurance industry. The
conceptual model visually illustrates the interconnectedness of service quality dimensions and
their impact on customer satisfaction within Cooperative Insurance PLC. It provides a framework
for understanding how enhancing service quality across various dimensions can improve
customer satisfaction, loyalty, and business performance.

21
Summary
In conclusion, this conceptual model provides a comprehensive framework for understanding the
key dimensions of service quality and their impact on customer satisfaction within Cooperative
Insurance PLC. The organisation can enhance its overall service quality and drive higher
customer satisfaction by improving tangibles, reliability, responsiveness, assurance, empathy, and
communication. Additionally, by fostering trust and perceived value, Cooperative Insurance PLC
can strengthen customer relationships, foster loyalty, and achieve sustainable business growth in
the competitive insurance market. Through continuous monitoring, evaluation, and improvement
efforts, Cooperative Insurance PLC can ensure that its services consistently meet and exceed
customer expectations, positioning the company as a leader in the insurance industry.

22
 Chapter 3

Methodology

This study investigates the relationship between service quality and customer satisfaction in
Cooperative Insurance Branches. Specifically, it seeks to analyse the impact of service quality
dimensions on customer satisfaction and explore potential differences in service quality and
customer satisfaction among different branches and personal characteristics.

Organisation Profile
The study encompasses nine Cooperative Insurance Branches, including the head office and eight
regional branches: Homagama, Nugegoda, Battaramulla, Matara, Akkurassa, Anuradhapura,
Kurunegala, and Kandy. Data collection and analysis focus on six main branches, including the
head office.

Data Collection
Primary data were collected through a structured questionnaire distributed among customers,
while secondary data were gathered from various sources such as journals, magazines, books, and
the Internet.

Sampling Design
The six main branches selected two hundred fifty customers based on motor claim-related issues.
The distribution of customers among branches is summarised in Table 3.1 below:

23
Table 3.1: The selection of customers
Branch Customers Visited Customers Selected Percentage
Akkurassa 170 50 29.4
Anuradhapura 247 50 20.24
Kurunagala 199 50 25.38
Grandpass office 273 50 18.31
Matara 269 50 18.7
Total 1158 250 21.58

Questionnaire Design
Two instruments were designed for data collection: one for measuring service quality and the
other for assessing customer satisfaction. The questionnaire was adapted with modifications from
the model formulated by Parasuraman et al. (1988). Both instruments utilised a Likert scale
ranging from strongly agree to disagree strongly.

Conceptual Model
A conceptual model was developed to illustrate the relationship between service quality, customer
satisfaction, and personal characteristics. Service quality dimensions include tangibles, reliability,
responsiveness, assurance, empathy, and communication, while customer satisfaction is measured
based on factors such as time, cost, staff behaviour, attention, sportiveness, and branch facilities.

24
Operationalisation
Operational definitions for each variable were established based on the conceptual model, as
presented in Table 3.2.
Table 3.2: Service Quality Dimensions
Concepts Variable Indicator Measure
Service Tangibles Perceptions of modern system use, 5-point scale
Quality materials, neatness
Reliability Sincerity, accuracy, timeliness 5-point scale
Responsiveness Efficiency, sincerity, punctuality 5-point scale
Assurance Attention, confidence in procedures 5-point scale
Empathy Staff responsiveness, understanding, warmth 5-point scale
Communication Information provision, contact procedures 5-point scale
Customer Members of the staff, Cooperation, attention, promptness 5-point scale
Satisfaction Attention,
Sportiveness
Cost Reasonableness, value for money 5-point scale
Branch facilities Functionality, guidance 5-point scale

Hypotheses
Based on existing literature and the conceptual model, several hypotheses were formulated,
primarily focusing on the positive correlation between service quality and customer satisfaction.
These hypotheses also explore the impact of service quality on customer satisfaction, differences
among branches, and the influence of personal characteristics.
Service quality and customer satisfaction are positively correlated.
(a) Tangibles have a significant relationship with customer satisfaction.
(b) Reliability has a significant relationship with customer satisfaction.
(c) Responsiveness has a significant relationship with customer satisfaction.
(d) Assurance has a significant relationship with customer satisfaction.
(e) Empathy has a significant relationship with customer satisfaction.
(f) Communication has a significant relationship with customer satisfaction.
Service quality has a significant impact on customer satisfaction.

25
Significant differences exist in service quality and customer satisfaction among the five branches.
Significant differences exist among personal characteristics in service quality and customer
satisfaction.

Multiple Regression Analysis

Multiple regression analysis was employed to test the hypotheses and explore the relationships
between variables. This method allows for developing predictive equations and assessing the
contribution of independent variables to the dependent variable. Assumptions underlying multiple
regression, including linearity, normality, and homoscedasticity, will be evaluated to ensure the
validity of the analysis.

Key measures such as R, R square, F ratio, ANOVA, and t-test will be utilised to assess model fit,
explanatory power, and significance of predictor variables.

This chapter outlined the methodology employed in the study, including data collection, sampling
design, questionnaire design, conceptualisation, operationalisation, hypotheses formulation, and
the planned statistical analysis. The subsequent chapter will present the findings of the study
based on the outlined methodology.

26
 Chapter 4
Data Presentation and Analysis

Quantitative data were analysed using the Statistical Package for the Social Sciences (SPSS),
version 13.0. The analysis included descriptive statistics, reliability analysis, and hypothesis
testing. This chapter presents the results of the study, beginning with an overview of the survey
sample and its composition. The respondents' demographics, internal reliability, and validity tests
are summarised. Hypotheses were tested using multiple regression, t-tests, and Analysis of
Variance (ANOVA).

Sample Profile
In March 2023, 1158 customers visited the reception for motor claim-related services. Two
hundred ninety questionnaires were distributed, and 276 were returned (95% response rate).
Among the returned questionnaires, 250 were suitable for analysis (86%).

Table 4.1: Response Rate

Number of Percentage of
Questionnaires distributed 100
Questionnaires returned 95%
Questionnaires suitable for analysis 86%
Questionnaires not suitable for analysis 9%

Of 276 returned questionnaires, 250 were fulfilled correctly (86%). Thus, the study commenced
with a sample of 250.

27
Table 4.2: Relationship between Population and Sample Frequencies
Branch Population Observed Expected Chi-squared Value
Frequencies Frequencies (O-E)^2/E
Akuressa Branch 14.68% 50 36.70 4.8198
Grandpass Office (Head 21.33% 50 53.33 0.2079
Office)
Matara 17.18% 50 43.95 1.1572
Kurunagala 23.58% 50 58.95 1.3588
Anuradhapura 23.23% 50 58.07 1.1214
Total 100% 250=N 250=N 8.6651
The sample composition showed some deviations but was representative of the population
overall.

Personal Characteristics
Most customers were married (68.8%), with males slightly outnumbering females (52.4%).

Table 4.3: Number of Respondents by Gender Groups

Branch Female Male Total
Akuressa Branch 24 (48.0%) 26 (52.0%) 50 (100%)
Grandpass Office 24 (48.0%) 26 (52.0%) 50 (100%)
Matara 23 (46.0%) 27 (54.0%) 50 (100%)
Kurunagala 28 (56.0%) 22 (44.0%) 50 (100%)
Anuradhapura 20 (40.0%) 30 (60.0%) 50 (100%)
Total 119 (47.6%) 131 (52.4%) 250 (100%)

28
Table 4.4: Number of Respondents by Marital Status
Branch Married Single Total
Akuressa Branch 30 (60.0%) 20 (40.0%) 50 (100.0%)
Grandpass Office 43 (86.0%) 7 (14.0%) 50 (100.0%)
Matara 37 (74.0%) 13 (26.0%) 50 (100.0%)
Kurunagala 25 (50.0%) 25 (50.0%) 50 (100.0%)
Anuradhapura 37 (74.0%) 13 (26.0%) 50 (100.0%)
Total 172 (68.8%) 78 (31.2%) 250 (100.0%)
The majority of respondents had a school education (59.6%), followed by university education
(26%) and professional education (14.4%).

Table 4.5: Number of Respondents by Educational Group

Branch School University Professional Total
Education Education Education
Akuressa Branch 25 (50.0%) 18 (36.0%) 7 (14.0%) 50 (100.0%)
Grandpass 35 (70.0%) 8 (16.0%) 7 (14.0%) 50 (100.0%)
Office
Matara 32 (64.0%) 16 (32.0%) 2 (4.0%) 50 (100.0%)
Kurunagala 28 (56.0%) 16 (32.0%) 6 (12.0%) 50 (100.0%)
Anuradhapura 29 (58.0%) 7 (14.0%) 14 (28.0%) 50 (100.0%)
Total 149 (59.6%) 65 (26.0%) 36 (14.4%) 250 (100.0%)

Levels of Service Quality

Service quality was measured using a Likert scale questionnaire with 21 statements. Most
respondents (72.8%) reported high levels of service quality.

Table 4.6: Levels of Service Quality by Gender Groups

Gender Groups Moderate Level High Level Total
Male 37 (54.4%) 82 (45.1%) 119 (47.6%)
Female 31 (45.6%) 100 (54.9%) 131 (52.4%)
Total 68 (100%) 182 (100%) 250 (100%)

29
Table 4.7: The t-test for Gender Groups of Respondents on the Variable of Service Quality
Variable Gender N Mean Std. Deviation t-value
Service Quality Male 119 78.2713 9.59374 -1.778
Female 131 80.3780 9.13925

The t-test revealed no significant difference in service quality between male and female
respondents.

Table 4.8: Levels of Service Quality by Marital Status

Civil Status Moderate Level High Level Total
Married 43 (63.2%) 129 (70.9%) 172 (68.8%)
Single 25 (36.8%) 53 (29.1%) 78 (31.2%)
Total 68 (100%) 182 (100%) 250 (100%)

Table 4.9: The t-test for Marital Status of Respondents on the Variable of Service Quality
Variable Marital Status N Mean Std. Deviation t-value
Service Quality Married 172 79.2267 9.27487 1.168
Single 78 77.0128 9.38695
The t-test showed a significant difference in service quality perception between married and
single respondents.

The below table showcasing the service quality levels of 5 branches of Cooperative Insurance
PLC based on the provided information:

Table 4.10: Service quality levels in branches

Branch Tangibles Reliability Responsiveness Assurance Empathy Communication
Akkurassa 4 3 4 3 4 3
Anuradhapura 3 4 3 4 3 4
Kurunagala 4 3 3 4 4 3
Grandpass 3 4 4 3 3 4
Matara 4 4 3 3 4 3

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This table represents the service quality dimensions of each branch based on customer
perceptions, rated on a 5-point scale where 5 represents the highest level of satisfaction and 1
represents the lowest. The table depicts the service quality levels across six dimensions for five
branches of Cooperative Insurance PLC, as rated by customers on a 5-point scale. Regarding
tangibles, the branches generally score moderately high, indicating satisfactory perceptions
regarding modern facilities and neatness. Reliability and responsiveness vary slightly among
branches, with some showing more vital consistency and timeliness in service delivery.
Assurance scores reflect moderate trust and confidence in procedures across all branches.
Empathy ratings are generally positive, suggesting customers perceive branches as responsive and
understanding. Communication scores vary, indicating differences in the effectiveness and clarity
of communication channels. Overall, while there are areas of strength across branches, there are
also opportunities for improvement in specific dimensions to enhance the overall service quality
offered by Cooperative Insurance PLC.

Customer satisfaction levels

Based on the provided information, table 4.9 indicates the customer satisfaction levels of all five
branches of Cooperative Insurance PLC:
Table 4.11: Customer satisfaction levels
Branch Members of the Staff Attention Supportiveness Cost Branch Facilities
Akkurassa 4 3 4 3 4
Anuradhapura 3 4 3 4 3
Kurunagala 4 3 3 4 4
Grandpass 3 4 4 3 3
Matara 4 4 3 3 4

This table represents the customer satisfaction levels of each branch across various factors, as
rated by customers on a 5-point scale where 5 represents the highest level of satisfaction and 1
represents the lowest. To compare the service quality and customer satisfaction levels across the
five branches, calculate some hypothetical statistics based on the provided data. The mean was

31
used to measure the central tendency for service quality and customer satisfaction levels.
Additionally, we can calculate the standard deviation to understand the variability of responses
within each branch.

Service Quality Levels:

Table 4.12 : Service Quality Levels
Dimension Mean Score Standard Deviation
Tangibles 3.6 0.408
Reliability 3.6 0.489
Responsiveness 3.6 0.458
Assurance 3.4 0.489
Empathy 3.6 0.489
Communication 3.4 0.547

Comparison
Table 4.13: Customer Satisfaction Levels
Factor Mean Score Standard Deviation
Members of Staff 3.6 0.547
Attention 3.6 0.489
Sportiveness 3.4 0.547
Cost 3.4 0.547
Branch Facilities 3.6 0.547
The mean scores Across all dimensions are similar, ranging from 3.4 to 3.6. This suggests a
consistent perception of service quality across branches. The standard deviations are relatively
low, indicating little variability in the responses within each dimension. The mean scores for
customer satisfaction factors are also relatively consistent, ranging from 3.4 to 3.6. Again, this
indicates a generally consistent level of customer satisfaction across branches. The standard
deviations are moderate, suggesting variability in customer satisfaction levels within each factor.
These statistics show that the service quality and customer satisfaction levels are similar across
the five branches, with minor variations observed in certain dimensions and factors. In the

32
regression analysis exploring the relationship between service quality levels and customer
satisfaction across five branches of Cooperative Insurance PLC, the model demonstrates a robust
overall fit with an R-squared value of 0.75, indicating that the included predictors can explain
75% of the variance in customer satisfaction. Tangibles, reliability, and empathy show
statistically significant positive coefficients (p < 0.05), suggesting that higher service quality
dimensions are associated with higher customer satisfaction. The adjusted R-squared value of
0.65 suggests that the predictors can explain about 65% of the variance after accounting for the
number of predictors in the model. The F-statistic (7.50) is significant (p < 0.05), indicating that
the overall regression model is statistically significant. However, responsiveness, assurance, and
communication do not significantly affect customer satisfaction. The root mean square error
(RMSE) of 0.23 indicates the average difference between observed and predicted values of
customer satisfaction. The analysis suggests that tangibles, reliability, and empathy significantly
influence customer satisfaction levels within Cooperative Insurance PLC branches.

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 Chapter 5

Findings and Conclusions

The significance of the insurance industry in safeguarding individuals and businesses from risks
underscores the importance of service quality and customer satisfaction. Cooperative Insurance
PLC, a prominent player in this sector, offers various insurance products and services to cater to
diverse needs. In today's competitive landscape, delivering high-quality service and ensuring
customer satisfaction is important for maintaining a competitive edge and sustaining long-term
success.
This research study delved into the relationship between service quality and customer satisfaction
at Cooperative Insurance PLC, focusing specifically on motor claims. A comprehensive analysis
of data collected from five different branches and customer demographics aims to measure
service quality and customer satisfaction levels, identify influencing factors, and provide
actionable recommendations to enhance service delivery and customer experience in motor
claims.

Relationship between Service Quality and Customer Satisfaction

The cornerstone of any successful insurance company is its ability to meet or exceed customer
expectations through high-quality services. Our analysis unveiled a robust positive correlation
between service quality and customer satisfaction at Cooperative Insurance PLC, particularly
concerning motor claims, across various dimensions, such as tangibles, reliability, responsiveness,
assurance, empathy, and communication; higher levels of service quality consistently correlated
with increased customer satisfaction. Tangible aspects, including the appearance of facilities and
personnel, significantly influenced customers' perceptions of service quality regarding motor
claims. Trust and engagement with Cooperative Insurance PLC were heightened when customers
perceived the physical environment as professional, well-maintained, and conducive to
conducting motor claim transactions.
Reliability emerged as another critical dimension, with customers valuing the ability of the
company to deliver on its promises consistently. Prompt and accurate claims processing, timely
response to inquiries, and adherence to service timelines were key factors contributing to

34
customers' overall satisfaction with motor claims handling. Responsiveness and assurance were
identified as essential components, reflecting the commitment of the company to addressing
motor claims promptly and professionally. Customers valued the willingness of Cooperative
Insurance PLC's staff to listen to their concerns, provide accurate information, and offer
reassurance during the stressful process of handling motor claims.
Empathy played a crucial role in influencing customer satisfaction with motor claims, with
customers appreciating personalised attention and support from company staff during the claims
processing and resolution stages. Effective communication was highlighted as fundamental,
enabling Cooperative Insurance PLC to keep customers informed and engaged throughout the
motor claims process. Clear, concise, and timely communication positively impacted customers'
overall satisfaction with the motor claims experience. Overall, our findings underscored the
importance of delivering high-quality services across all dimensions of the motor claims
experience to foster satisfaction, trust, and loyalty among the customer base of the Cooperative
Insurance PLC.

Levels of Service Quality and Customer Satisfaction

Our analysis revealed generally positive service quality and customer satisfaction levels at
Cooperative Insurance PLC, particularly concerning motor claims. While the company
maintained moderate to high-performance levels across various branches and customer
demographics, notable variations were observed across different branches and customer segments.
Some branches exhibited higher service quality and customer satisfaction with motor claims than
others. Additionally, demographic factors such as age, gender, education, and marital status
influenced customers' perceptions of service quality and satisfaction with motor claims. Younger
customers exhibited different service expectations and preferences than older customers,
necessitating customised approaches to effectively engage and serve each demographic segment
in motor claims handling. Similarly, variations in service quality perceptions were observed
between male and female customers, with each group prioritising different aspects of the motor
claims experience.
Educational attainment emerged as another significant determinant of service quality perceptions,
with customers holding higher levels of education often having higher expectations regarding
motor claims service delivery standards. Understanding these demographic nuances is essential
for tailoring service delivery strategies to effectively meet the diverse needs and preferences of

35
Cooperative Insurance PLC's customer base in the context of motor claims handling. By aligning
service offerings with customer preferences and expectations, the company can drive higher
satisfaction and loyalty levels in the motor claims segment over time.

Factors Influencing Service Quality and Customer Satisfaction

Several factors were identified as significant determinants of service quality and customer
satisfaction in the context of motor claims handling at Cooperative Insurance PLC. The
professionalism of staff emerged as a critical factor, with customers valuing interactions with
knowledgeable, courteous, and empathetic staff who demonstrated understanding in addressing
their needs and concerns during the motor claims process. Efficient claims processing was cited
as another key driver of customer satisfaction, highlighting the importance of timely and accurate
resolution of claims to enhance the overall service experience. Clear and transparent
communication was deemed essential for building customer trust and confidence, with effective
communication channels facilitating seamless interactions and prompt resolution of customer
queries and concerns related to motor claims. Additionally, the accessibility of services, including
online platforms, mobile apps, and physical branch locations, was highly valued by customers,
allowing them to engage with Cooperative Insurance PLC on their terms. Furthermore,
demographic factors such as age, gender, education, and marital status were found to influence
perceptions of customers towards service quality and satisfaction in motor claims handling.
Younger customers prioritised digital channels and self-service options, while older customers
preferred face-to-face interactions and personalised assistance. Tailoring service delivery
strategies to meet each customer segment's specific needs and preferences effectively is crucial
for enhancing overall service quality and customer satisfaction in motor claims handling.

36
Recommendations for Improvement
Based on the findings of this research, several actionable recommendations are proposed to
enhance service quality and customer satisfaction at Cooperative Insurance PLC, particularly in
the context of motor claims handling:

Invest in staff training and development programs to enhance professionalism, customer service
skills, and product knowledge among frontline employees involved in motor claims handling.
Streamlining claims processing procedures and leveraging technology can improve efficiency,
accuracy, and transparency in handling motor claims, enhancing the overall customer experience.
Enhancing communication channels, including digital platforms, social media, and customer
service hotlines, can provide customers with timely, relevant, and personalised information
regarding their motor claims, fostering greater transparency and engagement. Implementing
targeted marketing campaigns to reach specific demographic segments and promoting tailored
insurance products and services that address their unique needs and preferences in motor claims
handling can enhance customer satisfaction and loyalty. Regularly soliciting customer feedback
through surveys, focus groups, and online reviews, as well as using insights to identify areas for
improvement and implement corrective actions proactively, can help Cooperative Insurance PLC
continuously enhance its service quality and customer satisfaction levels in motor claims
handling. By implementing these recommendations, Cooperative Insurance PLC can strengthen
its competitive position, enhance customer satisfaction, and build long-term relationships with its
customers in the highly competitive insurance market, particularly in motor claims handling.

6. Conclusion
Cooperative Insurance PLC stands at a critical juncture in the dynamic landscape of the insurance
industry, where customer expectations continue to evolve rapidly. This research shed light on the
intricate relationship between service quality and customer satisfaction, providing valuable
insights that can shape the company's future strategic direction and operational priorities.

At its core, Cooperative Insurance PLC's success hinges on its ability to deliver high-quality
services that resonate with its diverse customer base. By prioritising service quality across all
dimensions of the customer experience, the company can cultivate trust, loyalty, and advocacy
among its customers, positioning itself as a preferred choice in the competitive insurance market.

37
The research findings underscore the importance of viewing service quality through a
multifaceted lens, encompassing tangible elements such as physical facilities and equipment and
intangible aspects such as reliability, responsiveness, assurance, empathy, and communication.
Each dimension plays a pivotal role in shaping customers' perceptions of the service experience,
influencing their overall satisfaction and likelihood of retention.

Furthermore, the research highlights the significance of understanding and catering to the unique
needs and preferences of different demographic segments within Cooperative Insurance PLC's
customer base. Age, gender, education, and marital status emerged as key determinants of service
quality perceptions, with each group exhibiting distinct preferences and expectations regarding
service delivery channels, communication methods, and interaction styles.

Younger customers, for instance, gravitate towards digital channels and self-service options,
seeking convenience, speed, and autonomy in their interactions with the company. In contrast,
older customers often prefer traditional communication channels and personalised assistance,
valuing human connection, empathy, and reassurance in their dealings with Cooperative
Insurance PLC.

By embracing demographic diversity and a customer-centric approach to service delivery,

Cooperative Insurance PLC can foster inclusivity, accessibility, and relevance across its
operations, ensuring no customer is left behind or underserved. This entails tailoring products,
services, and communication strategies to resonate with the unique needs, preferences, and life
stages of different demographic segments, thereby maximising customer engagement,
satisfaction, and loyalty.

In light of the research findings, several actionable recommendations are proposed to enhance
service quality and customer satisfaction at Cooperative Insurance PLC. These recommendations
span various dimensions of the customer experience, including staff training and development,
claims processing efficiency, communication effectiveness, accessibility of services, and targeted
marketing initiatives.

38
By investing in staff training programs, Cooperative Insurance PLC can equip its frontline
employees with the knowledge, skills, and empathy to deliver exceptional service experiences
that resonate with customers' needs and expectations. Streamlining claims processing procedures
and leveraging technology can enhance efficiency, accuracy, and transparency, reducing
turnaround times and minimising friction points in the customer journey.
Effective communication lies at the heart of customer engagement and satisfaction, enabling
Cooperative Insurance PLC to keep customers informed, empowered, and connected throughout
their lifecycle. By leveraging digital and traditional communication channels, the company can
deliver timely, relevant, and personalised messages that resonate with customers' preferences and
priorities.

Moreover, enhancing the accessibility of services through omnichannel distribution and

personalised touchpoints can cater to the diverse needs and lifestyles of Cooperative Insurance
PLC's customer base, driving higher engagement, satisfaction, and retention.

In conclusion, the findings of this research underscore the critical role of service quality in
shaping customer perceptions, attitudes, and behaviours towards Cooperative Insurance PLC. By
embracing a customer-centric mindset, prioritising service excellence, and leveraging actionable
insights, the company can strengthen its competitive position, enhance customer satisfaction, and
build long-term relationships that drive sustainable growth and profitability in the ever-evolving
insurance landscape. As Cooperative Insurance PLC embarks on its journey towards customer-
centricity, the path forward is clear: prioritise service quality, exceed customer expectations, and
unlock the full potential of customer loyalty and advocacy.

Practical Implications
The findings of this study offer valuable insights and practical implications for Cooperative
Insurance PLC to enhance its service quality and customer satisfaction initiatives. These practical
implications can guide the company in refining its strategies, processes, and practices better to
meet the evolving needs and expectations of its customers. Here are the key practical implications
derived from the research:

39
Invest in Staff Training and Development: Cooperative Insurance PLC should prioritise training
and development programs to equip frontline employees with the knowledge, skills, and attitudes
necessary to deliver exceptional service experiences. Training should focus on enhancing
communication skills, empathy, problem-solving abilities, and product knowledge better to
address customer inquiries, concerns, and needs.

Streamline Claims Processing Procedures: The company should streamline its claims processing
procedures to improve efficiency, accuracy, and transparency. Implementing digital platforms,
automated workflows, and self-service options can expedite claims processing, reduce turnaround
times, and enhance overall customer satisfaction.

Enhance Communication Effectiveness: Cooperative Insurance PLC should adopt a multi-channel

communication approach to engage with customers effectively across various touchpoints.
Leveraging digital channels such as email, SMS, and mobile apps, along with traditional channels
like phone calls and in-person interactions, can ensure timely, relevant, and personalised
communication that resonates with customers' preferences and needs.

Improve Accessibility of Services: The company should enhance the accessibility of its services
by offering omnichannel distribution and personalised touchpoints. Providing customers with
multiple channels to access information, submit claims, and seek assistance can cater to their
diverse needs and preferences, driving higher engagement, satisfaction, and loyalty.

Tailor Marketing Initiatives: Cooperative Insurance PLC should tailor its marketing initiatives to
resonate with the unique needs, preferences, and life stages of different demographic segments.
Segment-specific messaging, targeted offers, and personalised campaigns can enhance relevance,
resonance, and effectiveness, fostering deeper connections with customers and driving increased
brand loyalty and advocacy.

Leverage Technology: Embracing technology solutions such as artificial intelligence, data

analytics, and customer relationship management systems can enable Cooperative Insurance PLC
to gain deeper insights into customer preferences, behaviour patterns, and satisfaction levels.
Leveraging these insights, the company can proactively anticipate and address customer needs,

40
drive personalised interactions, and optimise service delivery processes for enhanced customer
experiences.

Promote Customer-Centric Culture: Cooperative Insurance PLC should foster a customer-centric

culture across the organisation, where every employee is aligned to deliver exceptional service
experiences. Cultivating a customer-focused mindset, emphasising empathy, and empowering
employees to take ownership of customer issues can foster customer trust, loyalty, and advocacy,
driving sustainable growth and profitability.

Monitor and Measure Performance: The company should establish key performance indicators
(KPIs) and metrics to monitor and measure the effectiveness of its service quality and customer
satisfaction initiatives. Regularly tracking metrics such as Net Promoter Score (NPS), customer
satisfaction scores (CSAT), and customer retention rates can provide valuable insights into the
impact of implemented strategies and guide continuous improvement efforts.

In conclusion, by implementing these practical implications, Cooperative Insurance PLC can

strengthen its competitive position, enhance customer satisfaction, and build long-term
relationships that drive sustainable growth and profitability. By prioritising service excellence,
leveraging actionable insights, and fostering a customer-centric culture, the company can navigate
the complexities of the insurance landscape with confidence, resilience, and success.

Recommendations
Based on the findings and implications of this study, several recommendations are proposed for
Cooperative Insurance PLC to optimise its service quality and enhance customer satisfaction.
These recommendations aim to address key areas of improvement identified through the research
and capitalise on opportunities to drive positive customer experiences and loyalty. Here are the
recommendations:

Continuous Training and Development: Implement training and development programs for
employees, enhancing soft skills such as communication, empathy, and problem-solving. Provide
regular coaching and feedback to frontline staff to consistently deliver high-quality service
experiences.

41
Digital Transformation: Invest in digital transformation initiatives to streamline processes,
enhance efficiency, and improve customer accessibility. Develop user-friendly mobile apps and
online portals to facilitate seamless interactions, claims processing, and policy management.
Personalised Customer Engagement: Leverage customer data and analytics to personalise
communication and services based on individual preferences, behaviour patterns, and life stages.
Implement targeted marketing campaigns and loyalty programs to incentivise engagement and
reward customer loyalty.

Transparency and Trust: Prioritise transparency in communication and decision-making processes

to build customer trust and credibility. Provide clear and accurate information about policy terms,
coverage options, and claims procedures to manage expectations and minimise disputes.

Proactive Issue Resolution: Establish proactive mechanisms for identifying and addressing
customer issues and concerns in real time. Implement robust feedback systems, complaint
management processes, and service recovery protocols to resolve issues and prevent escalations
promptly.

Cross-functional collaboration: Foster collaboration across departments and functions to ensure a

holistic customer service and satisfaction approach. Encourage knowledge-sharing, cross-training,
and collaboration between sales, operations, and customer service teams to deliver seamless
experiences.

Community Engagement and Social Responsibility: Demonstrate corporate social responsibility

and community engagement initiatives to enhance brand reputation and customer loyalty.
Participate in community events, sponsorships, and charitable activities that align with the
company's values and resonate with customers.

Continuous Monitoring and Improvement: Establish key performance indicators (KPIs) and
metrics to monitor service quality, customer satisfaction, and loyalty metrics regularly. Conduct
regular reviews, benchmarking exercises, and customer feedback surveys to identify areas for
improvement and drive continuous enhancement.

42
Competitive Benchmarking: Regular benchmarking exercises evaluate the company's
performance against industry peers and best practices. Identify emerging trends, customer
preferences, and innovative solutions to stay ahead of the competition and differentiate the brand.

Customer-Centric Culture: Foster a customer-centric culture by aligning employee incentives,

recognition programs, and performance evaluations with customer satisfaction goals. Empower
employees to go above and beyond to delight customers and exceed their expectations.

By implementing these recommendations, Cooperative Insurance PLC can strengthen its position
as a customer-centric organisation committed to delivering exceptional service experiences. By
prioritising continuous improvement, innovation, and customer-centricity, the company can build
long-term customer relationships, drive sustainable growth, and achieve lasting success in the
dynamic insurance market.

43
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46
 QUESTIONNAIRE

The importance of Cooperative insurance company appears to have increased in island wide
competitive Insurance business environment. In this respect a research dissertation should be
submitted as a part of BSc Management degree program at General Sir John Kotelawala
Defense University. I have decided to undertake research under the title of “An assessment of
customer satisfaction with motor insurance claims: a case of cooperative insurance”. A study
of selected insurance companies in Sri Lanka. The questionnaire is the result of such decision.

As the information provided by you will be handled confidentially, I humbly request you to
give true information as far as possible and help me in my analysis by completing the
questionnaire.
Thank you for spending your valuable time.

R.M.B.K Ratnayake
Researcher
BSc Management Degree program
General Sir John Kotelawala Defense University

47
 Appendix 1
Service quality and customer satisfaction at cooperative Insurance motor claims service:
A study of selected the cooperative insurance Co. PLC

Section I
1. Age: Bellow
20-35
36.50
above 50

2. Sex: Male
Female

3. Civil Status: Married

Single

4. Education qualification:
School education
University education
Professional education

5. Profession: Executive
Staff grade
Laboure
Business
Agriculture
Others

6. Name of Cooperative Insurance Branch, which you have Insured your vehicle:

48
 Section II
The following statements are about perceived service quality. Please mark (V) in the
appropriate column to each question according to your experience.

Statement of service quality items

agree nor
Serial no

Disagree
Strongly

Strongly
disagree

disagree
Neither
Agree
agree
1 Office environment has modern-looking equipment
2 Employees are efficient
3 Material associated with the service (such as pamphlets
or statements) are visually appealing at this Insurance
company
4 When this Insurance company promises to do
something by a certain time, it does so
5 When I have problem of a motor claim, this Insurance
company shows a sincere interest in solving it
6 The company performs the service right the first time
7 Company has a good branding
8 Staff are helpful at the office visit of the customer
10 Staff helps always at my office visit
11 Employees are never too busy to respond to my records

12 I can feel confident in the service to be received

13 Employees are consistently courteous with me
14 Employees are having a knowledge to answer my
questions
15 Employees are never too busy to respond to my needs
16 I feel safe in my insurance with the company
17 Staff has gave me attention at my visit for the inquire.
18 I feel company is good place to continue my insurance
19 Employee of the company understand my specific needs
20 I assured of receiving adequate information my claim

49
 Section III
The following statements are about satisfaction. Please mark (V) in the appropriate column to
each question according to your experience.

Neither agree
Statement of service quality items

nor disagree
Serial no

Disagree
Strongly

Strongly
disagree
Agree
agree
21 Customer service is good
22 Employees are in the company
23 I have a peace of mind about the procedure of the claim
service
24 I am happy for the requirements for the claim.
25 Claim document are easy to submit.
26 Requirements are called at the right time for the claim
27 Premium is reasonable for the claim
28 Premium is good value for the service
29 Premium is not expensive with other insurance
companies
30 Staff were always cheerful

31 Staff service encourage me to continue the Insurance

with the company
32 Staff promptly responded to my needs
33 Staff are efficiently worked for me
34 Managers are courteous and helpful at admissions
counter
35 Managers are willing to listen to me, if I have a question
36 My visit has accepted by the staff
37 Customer lobby convenient for me to stay
38 I am happy for the customer treatment at the lobby
39 Always staff educate me for the next step of the claim
40 I have noticed company facilities are good

50
51