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A STUDY ON CUSTOMER SATISFACTION TOWARDS HEALTH INSURANCE IN

ERODE DISTRICT
INTRODUCTION
Insurance is the backbone of a countrys risk management system. Risk is an inherent part of our
lives. The insurance providers offer a variety of products to businesses and individuals in order
to provide protection from risk and to ensure financial security. Insurance is an important
component in the financial intermediation chain of a country and is a source of long-term capital
for infrastructure and long-term projects. Through their participation in financial markets, they
also provide support in stabilizing the markets by evening out any fluctuations. Human beings
always sought security. This quest for security was an important motivating force in the earliest
formation of families, clans, tribes and other groups. Indeed, groups have been the primary
source of both emotional and physical security, since the beginning of mankind. The insurance
providers helped their less fortunate members in the time of crisis. Humans today continue their
quest to achieve security and reduce uncertainties and for this they rely on groups for financial
stability. The group may be our employers, the government or an insurance company, but the
concept is same. In some ways, however we today are more vulnerable than ancestors. The
physical and economic security formerly provided by the tribes or extended family is
diminishing with industrialization. Our income-dependent, wealth acquiring life style renders us
and our family more vulnerable to environmental and societal changes over which we have no
control. More formalized means are required for mitigating the adverse consequences of
unemployment, loss of health, death, old age, lawsuits and destruction of our property. Although
individuals cannot predict or completely prevent such occurrences, they can provide for their
financial losses. The function of insurance is to safeguard against such misfortune through
contribution of many who pay for the losses of the unfortunate few. This is the essence of
insurance - the sharing of losses and, in the process, the substitution of certain, small loss
called the premium for an uncertain, large loss (Black and Skipper, 2003).
NEED OF THE STUDY
The growth of health insurance in India will require: a better understanding of the perceptions of
healthcare providers and the stakeholders; answers to question linked to relationship between
hospitalization cost paid by the insurer, components of hospitalization cost (room rent,
consultation charges, surgeon charges, investigations and medicine) and risk covered by the
insurers; the study of industry competiveness and trends to identify existing gaps; analysis of the
advent of liberalization lead to the imminent entry of global players in the insurance sector that
the Indian companies began to feel the winds of change and started gearing up to meet the
challenge.

THE STATEMENT OF THE PROBLEM


In the present study has been made an attempt to measure satisfaction level of customers related
to the various products of companies Health insurance. The following issues are found to be
relevant:-
To what extent the demographic characteristics of customers influence the Health insurance
market in Erode district?
How far have the factors influenced the level of satisfaction about Health insurance market in
Erode district?
What influence did the satisfaction of the customers have on the functioning of the Health
insurance market in Erode district?
How do the promotional measures of the Health insurance companies attract the customers to
take insurance policy?
To what extent the does the gap between customer expectations and perception towards various
aspects of the health insurance companies affect the satisfaction level of customers?
The study was undertaken to understand the various factors in terms of decision variables
which influence the consumers preferences and in understanding the criticality of these factors
in choosing health insurance companies products in Erode district.
OBJECTIVES OF THE STUDY
1.To exhibit demographic profile of Health Insurance policyholders in Erode district.
2.To analyse the buying motives that influence the customers to purchase Health insurance
policy.
3.To measure the level of satisfaction among the customers towards Health Insurance policy.
4.To find out the problems faced by the customers in Health Insurance.
5.To offer suggestions based on the findings of the study.

RESEARCH METHODOLOGY
Research methodology enlightens the methods to be followed in research works starting from
investigation to the presentation of research report. It includes research design, the area of the
study, population of the study, sampling design, sources of data, collection of data, analysis of
data and limitations.
Research Design
Since the present study has made an attempt to explain the demographic profile of the health
insurance policy holders, and to study the perception and attitude of customers towards health
insurance policy, it is descriptive in nature.
Sample Size
The total number of health insurance policy holders is not available. There are ninety two
villages/cities in Erode district. The researcher covered all ninety two villages for collecting the
sample respondents. The sample size is 650 respondents from the Erode district.
Sampling Method
Purposive sampling was used to select the sample respondents, as random sampling could not be
used due to non-availability of population details.
The applied sampling procedure in the present study is purposive sampling. The distribution of
samples is shown in Table
NUMBER OF SAMPLES SELECTED FOR THE STUDY
Number of policy holders in
Health Insurance Health Insurance companies
Sl.No. company Branches in Total
Urban Areas Rural Areas
1 Public Sector Health 348 107 455
Insurance companies
2 Private Sector Health 121 74 195
Insurance companies
Total 469 181 650
Figures in parentheses are the responded customers.

FRAMEWORK OF ANALYSIS
The tools used for analysing the data collected were:
Descriptive Analysis
Analysis of Variance (ANOVA)
Correlation Coefficient
T-test
Factor Analysis
Multiple Regression Analysis

LIMITATION OF THE STUDY


The study is subjected to the following limitations.
1.The scope of the study is confined to Erode district only. The result cannot be generalised to
the total health insurance industry in India.
2.Purposive sampling was used to select the sample respondents, as random sampling could not
be used due to non-availability of population details.
3.The descriptive variables related to so many aspects of customer attitudes and perception had
been measured with the help of five point scale.
REVIEW OF LITERATURE
BeenishShameem and Sameer Gupta (2012) conducted a study which was designed to
evaluate the marketing strategies in life insurance service sector and assess how these strategies
boost sales and marketability of a product which ultimately lead to customer satisfaction.
Valentin, E. C., Degnan, and R. D., &Ntaganira, J., (2012) justify the need for special focus
required to Indian Health Insurance. The major stimulators in availing health insurance are tax
rebate, security (both financial and health), risk coverage, health leverage, out of pocket
expenditure, neutralizing rising healthcare cost.

GROWTH AND DEVELOPMENT OF HEALTH INSURANCE


HISTORY AND GLOBAL PERSPECTIVE
Under the General Agreement on Trade in Services (GATS) of the World Trade Organization
(WTO) sector classification scheme, health insurance falls under the financial services sector.
Financial services are divided into two sectors: 1) insurance and 2) banking and other financial
services. Within insurance, there are four sub-sectors: a) life, accident and health insurance, b)
non-life insurance, c) reinsurance and retrocession, and, d) services auxiliary to insurance,
including broking and agency services. Despite the appearance of the term "health insurance"
under the first category, many country commitments affecting health insurance services are in
fact covered by the second category (non-life insurance).
FIGURE
MARKET SHARE (HEALTH INSURANCE) - PRIVATE PLAYERS (2009 -2011)
Source: Insurance Information Bureau, IRDA.
ANALYSIS OF CONSUMERS SATISFACTION TOWARDS HEALTH INSURANCE
LOCATION WISE AND AGE WISE CLASSIFICATIONS
The table given below show that below table shows that location wise and age wise classification
of the respondents. Totally 650 respondents are taken for the present study. Location and age
wise classification is most important for understanding respondents' demographic details.
Location is classified into urban and rural, age of the respondent's categories into four like below
30 years, 31-40 years, 41-50 years and above 50 years.
TABLE
LOCATION WISE AND AGE WISE CLASSIFICATIONS
Location Frequency Percentage
Urban 469 72.2
Rural 181 27.8
Total 650 100.0
Age Frequency Percentage
Below 30 years 312 48.0
31-40 years 209 32.2
41-50 years 111 17.1
Above 50 years 18 2.8
Total 650 100.0
Source: Primary data
Inference
It is found from the above table that, 72.2% respondents are from urban area and 27.8%
respondents from rural area. 48% respondents belong to 30 years old, 32.2% respondents belong
to 31-40 years, 17.1% respondents belong to 41-50 years old and 2.8% respondents belong to
above 50 years.
It is concluded that 72.2% of the respondents from urban and most 48% of them were 30 years
old. This is because the rural people are not educated and also not much aware of the health
insurance policies.
TABLE
OPINION ABOUT REASON FOR SWITCH OVER
Switch Over Rank Mean SD Skewness Kurtosis
Poor follow up 3 3.93 0.93 -0.67 -0.05
Poor servicing 10 3.53 1.15 -0.62 -0.20
Poor claim settlement 11 3.52 1.24 -0.39 -1.02
Delay 7 3.68 1.25 -0.62 -0.80
Deductions 8 3.64 1.09 -0.61 -0.17
Unnecessary queries 6 3.75 1.12 -0.43 -1.05
Too much of documentation 12 3.50 1.09 -0.40 -0.40
Not satisfied with agent 1 4.13 0.87 -0.80 0.01
Better scheme 5 3.83 1.02 -0.46 -0.85
Attractive premium 13 3.40 1.17 -0.25 -0.88
Competitive premium 2 3.99 0.95 -0.93 0.77
Transparency 6 3.75 1.07 -0.36 -1.04
Better benefits 9 3.63 1.12 -0.26 -1.21
Source: Primary data
Inference
The table 4.14 shows that Not satisfaction with the agents is the top ranked switch over cost
with the mean value of 4.13, competitive premium is the second top ranked switch over cost
with the mean value of 3.99, poor follow up is the third ranked switch over cost with the mean
value of 3.93, better schemes is the fourth ranked switch over cost with the mean value of
3.83, transparency and unnecessary queries are the fifth ranked switch over cost with the
mean value of 3.75, delay and deductions are the sixth and seventh ranked switch over cost
with the mean value of 3.68 and 3.64. Better benefits and poor servicing are the eighth and
ninth ranked switch over cost value of with mean value of 3.63 and 3.53. Poor claim
settlement, Poor claim settlement and attractive premiums are the last ranked switch over
cost with the mean value of of 3.52, 3.50 and 3.40.
TABLE
OPINION ABOUT CUSTOMER SATISFACTION
Customer satisfaction Rank Mean SD Skewness Kurtosis
Claim processing 1 3.51 1.23 -0.45 -0.83
Customer service 5 3.32 1.27 -0.25 -1.07
Value of the money 8 3.29 1.30 -0.29 -1.07
Financial strength 2 3.41 1.32 -0.40 -1.04
Image of the company 3 3.39 1.27 -0.27 -1.05
Trustworthy and honesty of agents 5 3.32 1.32 -0.29 -1.06
Problem solving 7 3.30 1.29 -0.25 -1.07
Attractive Premium 9 3.28 1.28 -0.20 -1.07
Different variety of plans 10 3.21 1.23 -0.17 -0.97
Better benefits 7 3.30 1.32 -0.31 -1.08
Source: Primary data
Inference
Table 4.15 shows that claim processing is the top ranked customer satisfaction factor with the
mean value of 3.51, financial strength of the insurance company is the second ranked customer
satisfaction factor with the mean value of 3.41. Image of the health insurance company is the
third ranked customer satisfaction factor with the mean value of 3.39, customer service and
trustworthy and honesty of the insurance agents are the fifth ranked customer satisfaction
factor with the mean value of 3.32. Problem solving by the health insurance company, better
benefits offered by the health insurance company is the seventh ranked customer satisfaction
factor with the mean value of 3.30. Value of the money is the eighth ranked customer
satisfaction factor with the mean value of 3.29, attractive premium is the ninth ranked
customer satisfaction factor with the mean value of 3.28 and different variety of plans and
better schemes are the last ranked customer satisfaction factor with the mean value of 3.21.
It is concluded that the most of the respondents satisfaction was depending on claim processing
and customer services. The customer satisfaction in health insurance depends upon the procedure
of claim processing followed by the health insurance companies and also the quality of services
offered to the customers.
FIGURE
OPINION ABOUT CUSTOMER SATISFACTION

3.51

3.41
3.39
3.32 3.32
3.29 3.30 3.30
3.28
3.21

TABLE
LOCATION OF RESPONDENTS AND SOURCE OF AWARENESS FOR
HEALTH INSURANCE COMPANIES
t-test for Equality of Means
Independent Samples Test
t df Sig. (2-tailed)
Advertisement -1.210 648 0.227
Friends and relatives -0.928 648 0.354
TV -0.733 648 0.464
Employer -0.901 648 0.368
Brochures & pamphlets 1.006 648 0.315
Insurance agent -0.791 648 0.429
Hospital -2.687 648 0.007**
Educational institution -1.237 648 0.216
NGO -0.266 648 0.791
Note: ** significance at 5 %
Inference
Table 4.16 shows that p value is greater than 0.05 for all the sources of awareness variables
except hospital. Hence null hypothesis accepted. It is concluded that there is no difference
between locations of the respondents with respect to advertisement, friends and family, TV,
employer, brochures and pamphlets, insurance agents, educational institutions and NGO. Since p
value is less than 0.05 for hospitals, it is concluded that there is a difference between locations of
the respondents with respect to hospitals as the source of awareness for health insurance
companies.
The t-test result, show that the customer knows the importance of health insurance through the
hospital. The hospital is the important source of awareness about health insurance companies and
their policies for the customers. The location of the respondents with respect to hospitals has no
variation due to the source of awareness for health insurance companies.

TABLE
AGES OF THE RESPONDENTS AND SOURCE OF AWARENESS FOR
HEALTH INSURANCE COMPANIES
Sum of Mean
ANOVA df F Sig.
Squares Square
Between Groups 10.98 3 3.66 1.86 0.13
Advertisement Within Groups 1269.92 646 1.97
Total 1280.90 649
Between Groups 3.45 3 1.15 0.68 0.56
Friends and
Within Groups 1090.46 646 1.69
relatives
Total 1093.91 649
Between Groups 3.51 3 1.17 0.76 0.52
TV Within Groups 997.45 646 1.54
Total 1000.96 649
Between Groups 4.81 3 1.60 0.99 0.40
Employer
Within Groups 1051.08 646 1.63
Total 1055.88 649
Between Groups 1.72 3 0.57 0.33 0.80
Broachers &
Within Groups 1124.41 646 1.74
pamphlets
Total 1126.12 649
Between Groups 15.79 3 5.26 3.25 0.02**
Insurance agent Within Groups 1046.25 646 1.62
Total 1062.04 649
Between Groups 3.26 3 1.09 0.69 0.56
Hospital Within Groups 1020.58 646 1.58
Total 1023.85 649
Between Groups 2.14 3 0.71 0.49 0.69
Educational
Within Groups 945.30 646 1.46
institution
Total 947.44 649
Between Groups 2.21 3 0.74 0.49 0.69
NGO Within Groups 973.90 646 1.51
Total 976.11 649
Note: ** significance at 5 %

FINDINGS, SUGGESTIONS AND CONCLUSION

Demographic profile
Location and age 72.2% of the respondents are from urban area and only 27.8% respondents
are from rural area. 48.0% belong to below 30 years old, 32.2% respondents belong to 31-40
years.
Gender and Qualification - 56.6% of the respondents are male and 43.4% respondents are
females. In the sample 54.6% of the respondents have UG level educational qualification.
Occupation - 30.9% of the respondents are government employees, only14.5% respondents are
doing agricultural work.
Marital status and Family type - 91.7% of the respondents are married and only 8.3%
respondents are unmarried.52.0% of the respondents belong to nuclear family.
Number of dependents - 47.1% of the respondents have 1-2 members in their family.
Monthly Income and insurance type- 36.5% of the respondents are getting Rs.20001-30000
and 31.7% respondents are getting Rs.30001-50000 as a monthly income. 59.2% of the
respondents are using health insurance policy for group.
Sum insured under the health insurance policy 32.5% of the respondents insured sum of
Rs.300000-400000 and 26.8% respondents insured sum of Rs.400000-500000 under the health
insurance policy.
Number of years availing health insurance - 43.4 of the respondents are availing health
insurance policy for one year, 25.2% respondents availing health insurance policy for two to
three years.
Renewal status of health insurance policy - 62.9% of the respondents discontinue renewal their
health insurance policy and 24.6% respondents renewal of their health insurance policy.
Nature of Health Insurance Company - 44.5% of the respondents are having the policy in
private insurance companies, 33.8% of the respondents nature of government based insurance
companies and 21.7% respondents using stand-alone insurance companies.

Descriptive Analysis
Hospital play a major role in creating awareness about the health insurance companies (3.38);
and insurance agent is the second ranked source that created awareness about the health
insurance company (3.36); employers of the respondents are the third ranked source of
awareness about the health insurance companies (3.33); educational institutions are the fourth
ranked sources (3.32); advertisements about the health insurance companies are the fifth source
(3.30), friends and relatives are the sixth ranked source (3.28); NGOs are the seventh ranked
source of creating awareness about health insurance companies (3.24); televisions, broachers &
pamphlets are the last ranked source of awareness factors for health insurance companies.
To meet out medical expenses is the first ranked purchase intention factor with the mean value
of 3.50, family history and fear of disease is the third ranked factor, tax exemption,
protection, for foreign travel / trip and employer are the sixth ranked purchase intention
factors with the mean value of 3.37, avoid risk and due to age are the ninth ranked purchase
intention facets with the mean value of 3.33, agent and prone to for disease is the eleventh
ranked purchase intention factor with the mean value of 3.32, student is the next ranked factor
with mean value of 3.31, medical expenses are high, and fear due to past experience are the
last ranked purchase intention factors with the mean value of 3.302, 3.30 and 3.25.
The respondents have Not satisfaction with the agents is the top ranked switch over cost with
the mean value of 4.13, competition premium is the second top ranked switch over cost with
the mean value of 3.99, poor follow up is the third ranked switch over cost with the mean
value of 3.93, better schemes is the fourth ranked switch over cost with the mean value of
3.83, transparency and unnecessary queries are the fifth ranked switch over cost with the mean
value of 3.75, delay and deductions are the sixth and seventh ranked switch over cost with the
mean value of 3.68 and 3.64. Better benefits and poor servicing are the eighth and ninth ranked
switch over cost with the mean value of with mean value of 3.63 and 3.53.
Poor claim settlement, and attractive premiums are the last ranked switch over cost with the
mean value of 3.52, 3.50 and 3.40.
The claim processing is the top ranked customer satisfaction factor with the mean value of
3.51, financial strength of the insurance company is the second ranked customer satisfaction
factor with the mean value of 3.41. Image of the health insurance company is the third ranked
customer satisfaction factor with the mean value of 3.39, customer service and trustworthy
and honesty of the insurance agents are the fifth ranked customer satisfaction factor with the
mean value of 3.32.
Problem solving by the health insurance company, better benefits offered by the health insurance
company is the seventh ranked customer satisfaction factor with the mean value of 3.30. Value
of the money is the eighth ranked customer satisfaction factor with the mean value of 3.29,
attractive premium is the ninth ranked customer satisfaction factor with the mean value of 3.28
and different variety of plans and better schemes are the last ranked customer satisfaction
factor with the mean value of 3.21.

T-Test
The study concluded that there is no difference between locations of the respondents with respect
to advertisement, friends and family, TV, employer, brochures and pamphlets, insurance agents,
educational institutions and NGO. There is a difference between locations of the respondents
with respect to hospitals as the source of awareness for health insurance companies. There is a
difference between ages of the respondents with respect to insurance agents. Remaining
variables dont have difference between ages of the respondents with respect to different source
of awareness for health insurance companies. The study concluded that there is no difference
between gender of the respondents with respect to advertisement, friends and family, TV,
employer, brochures and pamphlets, insurance agents, educational institutions, hospitals and
NGO.
There is no difference between family type of the respondents with respect to advertisement,
friends and family, TV, employer, broachers and pamphlets, insurance agents, educational
institutions, hospitals and NGO. It is concluded that there is no difference between number of
dependents of the respondents with respect to advertisement, friends and family, TV, employer,
broachers and pamphlets, insurance agents, educational institutions, hospitals and NGO.
It concludes that there is difference between marital status of the respondents with respect to
Agents and employees who instill confidence in customers by proper behavior, willingness to
help customers and the readiness to respond to customers request and giving caring and
individual attention to customers keeping the customers best interests at heart.
It concludes that there is difference between number of dependents of the respondents with
respect to proving prompt service to customers, attractive and informative media theme layout
and language of the advertisement and agents and employees who have proper knowledge and
competence to answer customers specific queries and requests, agents and employees who
understand the specific needs of their customers and apprising the customers of the nature and
schedule of service available in the organization.

ANOVA
It is inferred that there is no difference between qualification of the respondents with respect to
advertisement, friends and family, TV, employer, broachers and pamphlets, insurance agents,
educational institutions, hospitals and NGO. The study concludes that there is a difference
between occupation of the respondents with respect to advertisement about insurance company
and policy. Remaining variables dont have difference between ages of the respondents with
respect to different source of awareness for health insurance companies.
SUGGESTIONS
Restructuring the health insurance organizations to increase productivity
Framing new Insurance products for general public
Quality of Services should be provided in non network hospitals
Following uniformity in mediclaim policies
Providing awareness to general public
Providing Education to Both Agents and insurers
Improving Technical Efficiency applicable forever
Taking Remedies to overcome barriers
Enhancing the scope of Productivity
Providing Periodic Updating in the health insurance policies

CONCLUSION
Health Insurance companies in Erode district must concentrate on overcoming these setbacks and
improve their standard in order to attract and retain the customers. Since Health insurance in
Erode district is misunderstood as health insurance by a majority of the population, there is a
need to create awareness and educate the people about the importance of Health insurance and
the various benefits that they can avail. In spite of the few loopholes in the proper management
of the health insurance sector, the number of people getting health insurance cover is increasing.
To sum up, there is a very good scope for improvement and the sector will be fruitful in the
Erode district in the near future.

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