THE EFFECT OF CLAIM SETTLEMENT SERVICE QUALITY ON REPURCHASE INTENTION: AN EMPIRICAL STUDY OF INSURANCE COMPANIES IN ETHIOPIA

Abstract

The rising sophistication of the world economic system in today’s industrial age has increased the importance of insurance in the process of manufacturing and profit-making dealings. Claims settlement is the monetary compensation that is paid to the policyholder in the event of a loss (Parsons, 2005). Insurers have been criticized for their cloudiness and twisted marketing methods for the fact that they would do anything possible not to pay claims. If a firm does not effectively handle its claims service, it can tarnish its image hence affect the repurchase intention of the customers or forced them to switch over to other competitors. Thus the aim of this study was to evaluate the effect of claim settlement quality on repurchase intention in the case of insurance companies in Ethiopia. Convenience sampling method was applied to select 286 sample respondents from 17 insurance companies in Addis Ababa, Ethiopia. Data were collected through self-administered questionnaires distributed to each respondent. The results of the findings revealed that majority of the respondents have positive perception towards the functional quality (mean 3.79), company image (Grand mean 3.70) and repurchase intention (mean 3.78) but indifferent on technical qualities (mean 3.49). It implies that the insurance service providers had limitation in their claim settlement processes to instill confidence on their customers. Moreover, all the independent variables had positive and significant effect on repurchase intention as well. The beta values confirmed that technical quality dimension had relatively more effect followed by functional quality and company image. The overall findings offer strong empirical support for the intuitive notion that improving service quality can increase favorable behavioral intentions and decrease unfavorable intentions.