Ashu Admas

SCHOOL OF POSTGRADUATE STUDIES
ACCOUNTING AND FINANCE PROGRAM
EFFECTS OF SERVICE QUALITY ON CUSTOMER

SATISFACTION IN ABAY INSURANCE SHARE
COMPANY IN ADDIS ABABA CITY ADMINISTRATION
Master’s thesis Submitted to Admas University of the School of

Postgraduate Studies of Accounting and Finance Department
in Partial Fulfillment of the Requirements for the Master of
Accounting and Finance (MAF)
BY:-ASELEF GASHU WONDIM
I.DNO. PGMGA/2070/22
ADVISOR: GIDAY ENAPH (PHD)
JUNE, 2024
ADDIS ABABA, ETHIOPIA

Declaration
This is to declare that the thesis/dissertation entitled “Effects and Prospects of Customer
Handling in the Insurance Industry in Ethiopia (A Case Study of Abay Insurance Share
Company)”, submitted in partial fulfillment of the requirements for the degree of Master
of Accounting and Finance, is a record of original work carried out by me and has never
been submitted to any other institution to get any other degree or certificates. The
assistance and help I received during the course of this investigation have been duly
acknowledged.
Name of the candidate ------------------------ Date-------------------- Signature---------
i
Approval Forms

Approval of Thesis for Defense
I hereby certify that I have supervised, read, and evaluated this thesis titled “Effects of
Service Quality on Customer Satisfaction in Abay Insurance Share Company in Addis
Ababa City Administration” by prepared under my guidance. I recommend the thesis be
submitted for oral defense.
_____________________ ________________ _____________
Supervisor’s name Signature Date
_____________________ ________________ _____________
Name of Department Head Signature Date
ii
Acknowledgments
I thank you for very much to my lord who always for his support and saved me from
miserable life and to finish this the thesis. Played an essential role in the completion of
this research proposal and Your blessings have been instrumental in shaping my path and
sustaining my determination.
I am immensely indebted to my advisor Dr. Gidye whose invaluable guidance and

unwavering support have been instrumental in shaping this thesis. So I am grateful for
the opportunity to learn from you.
I would also like to extend my appreciation to my friends for their continuous

encouragement and motivation.
Eventually, I thank you my family for your unwavering belief in me and encouragement.
I am deeply grateful for your constant support and love.
Table of Contents
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Declaration..................................................................................................................................i
Approval Forms........................................................................................................................iii
Acknowledgments.....................................................................................................................iv
Table of Contents.......................................................................................................................v
List of Tables...........................................................................................................................viii
List of Figures............................................................................................................................x
List of Acronyms.......................................................................................................................xi
Abstract....................................................................................................................................xii
CHAPTER ONE........................................................................................................................1
1. INTRODUCTION..................................................................................................................1
1.1Background and Justification of the Study.......................................................................1
1.2Background of Abay Insurance Share Company..............................................................4
1.3Problem Statement............................................................................................................5
1.4 Research Questions..........................................................................................................7
1.5 Objective of the Study......................................................................................................7
1.5.1 General Objective......................................................................................................7
1.5.2 Specific Objective.....................................................................................................8
1.6 Significance of the Study.................................................................................................8
1.7 Scope of the Research......................................................................................................8
1.8 Limitations.......................................................................................................................9
1.9. Definition of Terms.........................................................................................................9
1.10 Organization of the Project Report...............................................................................10
CHAPTER TWO......................................................................................................................11
2.LITERATURE REVIEW......................................................................................................11
2.1 Theoretical Review.........................................................................................................11
2.2 Insurance Industry Services...........................................................................................12
2.3 The Service-Profit Chain................................................................................................12
2.4 Customer Value Management (CVM)............................................................................13
2.5 Employee Empowerment...............................................................................................13
2.6 Customer Handling........................................................................................................14
2.7 Customer Satisfaction....................................................................................................15
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2.8 Customer Service Standards...........................................................................................17
2.9 Resolving Conflict..........................................................................................................17
2.10 Total Quality Management (TQM)..............................................................................17
CHAPTER THREE..................................................................................................................19
3. RESEARCH DESIGN AND METHODOLOGY................................................................19
3.1Introduction.....................................................................................................................19
3.2 Population and Sampling...............................................................................................19
3.3 Research Design and Data Collection............................................................................20
3.4 Variable and Measurement.............................................................................................20
3.5 Methods of Data Analysis..............................................................................................21
3.6 Ethical Considerations....................................................................................................21
CHAPTER FOUR....................................................................................................................22
4. RESULTS AND DISCUSSION...........................................................................................22
4.1 Data Analysis and Interpretation....................................................................................22
4.2 General Information about the Respondents..................................................................22
4.3 Analysis and presentation of Respondents’ Responses for Questionnaires...................31
4.4 Analysis of Interview Responses....................................................................................49
4.5 The Ethiopian Insurance Industry..................................................................................52
4.5.1 Functions of the Supervisory Authority with regard to Insurance Business...........52
4.5.2 The General Status/information of the Ethiopian Insurance Industry.....................52
Source: Own computation based on data obtained from NBE & Eth. insurance
companies.........................................................................................................................53
4.5.3 Abay 's Market Share in the Insurance Industry vis-à-vis Competitors of
General Insurance (Non-life) in GWP.............................................................................54
4.5.4 Abay 's Market Share in the Insurance Industry vis-à-vis Competitors of Long-
term (Life) Insurance in GWP.........................................................................................56
4.5.5 Comparison of Abay ’s Asset with peer groups in the insurance industry in
General Insurance in terms of total assets from the year 1996 to 2013:.........................58
4.5.6 Comparison of Abay ’s Asset with the peer groups in the insurance industry in
Long-term Insurance in terms of total assets from the year 2001 to 2013:....................59
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4.5.7 Status of Employees’ Termination of Abay Insurance Share Company
Insurance Share CompanyCompany during the Fiscal Year 2013/14..............................61
4.5.8 Policy lapsed/Terminated Customers of Abay during 2013/14 Budget Year........62
4.5.9 Relationship between SERVQUAL Dimensions and Customer Satisfaction.........63
4.5.10 Frequency, Mean and Mean average of Customers’ perception on
SERVQUAL Dimensions.................................................................................................65
CHAPTER FIVE......................................................................................................................68
5.SUMMARY, CONCLUSION, RECOMMENDATION, &RECOMMENDATION............68
5.1 Summary of Major Findings..........................................................................................68
5.2 Conclusions....................................................................................................................70
5.3Recommendations...........................................................................................................73
5.4 Suggestion for Future Researcher..................................................................................75
5.4.1 Samples from Many Firms......................................................................................75
5.4.2 Considering Larger Sample Size.............................................................................76
5.4.3 Using Alternative Sampling Methods.....................................................................76
References................................................................................................................................77
Annex.......................................................................................................................................78
Annex I.....................................................................................................................................78
Annex I.....................................................................................................................................79
Annex II....................................................................................................................................83
Annex III..................................................................................................................................84
Annex III..................................................................................................................................85
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List of Tables
Table 4.1. Selected Service Sites/Branches.......................................................................22

Table 4.2. Front-line employees’ responses to questionnaires with regard to their
biography & over all activities of the company with emphasis to customers:........23
biography & over all activities of the company with emphasis to customers
(cont’d):...................................................................................................................24
Table 4.4. Abay Insurance Share Company Insurance Share Company Company
Customers’ (the sample) Biography........................................................................28
Table 4.5. Customers’ responses with regard to the Tangibility of the Company.............31
Table 4.6. Customers’ responses with regard to the Reliability of the Company..............33
Table 4.7.Customers’ responses with regard to the Responsiveness of the Company.......35
Table 4.8. Customers’ responses with regard to the Assurance of the Company..............37
Table 4.9. Customers’ responses with regard to the Empathy of the Company................39
Table 4.10. Customers’ responses with regard to the Underwriting service of the
Company.................................................................................................................41
Table 4.11.Customers’ responses with regard to the Claims service of the Company......43
Table 4.12. Customers’ responses with regard to the Complaint handling of the Company
.................................................................................................................................45
Table 4.13. Customers’ response with regard to overall Service quality and Satisfaction 47
Table 4.14. The General Status of Ethiopian Insurance Industry......................................53
Table 4.15. Abay 's Market Share (in %age) in the Insurance Industry vis-à-vis
Competitors of General Insurance (Non-life) in GWP for the Period 2021/22-
2022/22 (five years)................................................................................................55
Table 4.16. Abay 's Market Share in the Insurance Industry vis-à-vis Competitors of
Long-term................................................................................................................57
Table 4.17. Ethiopian Insurance Industry Balance Sheet – General (None-Life) Insurance
for the Year Ended June 30, 1996-2013..................................................................58
Table 4.18. Ethiopian Insurance Industry Balance Sheet – Long-term (Life) Insurance for
the............................................................................................................................60
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Table 4.19. Terminated Employees of Abay Insurance Share Company Insurance Share
CompanyCompany in 2013/’14..............................................................................61
Table 4.20. Status of A.A City Branch customers of Abay whose policy
lapsed/terminated during 2013/14 budget Year.......................................................63
Table 4.21. Relationship between Customer satisfaction and Service quality dimensions
.................................................................................................................................64
Table 4.22. Frequency, Mean and Mean average of Customers’ perception on
SERVQUAL Dimensions:.......................................................................................66
Table 4.23Frequency, Mean and Mean average of Customers’ perception on SERVQUAL
Dimensions (cont’d):...............................................................................................67
List of Figures
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Figure 2.1: Relationship with customers...........................................................................33
Figure 4.1:Abay ’s SERVQUAL Dimension Chart; Own Analysis, 2014.........................74
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List of Acronyms
ns. Answer
Qn. Question
NBE National Bank of Ethiopia
EIC Ethiopian Insurance Corporation
NICE National Insurance Company of Ethiopia S.C
UNIC United Insurance Share Company
HRMPAD Human Resource Management and Property Administration Dep’t
BOD Board of Directors
GWP Gross Written Premium
SERVQUAL Service Quality
Eth. Ethiopia
SPSS Statistical Package for the Social Sciences
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Abstract
The main aim of this thesis was to assess the effects and prospects of customer handling
in the insurance industry in Ethiopia, with a particular reference to Abay Insurance
Share Company as a case study. It tries to identify the level of customer satisfaction by
measuring customers' perception with regard to the quality of service delivered by the
insurance company, using the five service quality dimensions: Tangibles, Reliability,
Responsiveness, Assurance, and Empathy, plus three additional variables: Underwriting,
Claims Service, and Complaint Handling. The study is basically a survey that used both
quantitative and qualitative approaches. For the purpose of data collection, the
SERVQUAL model questionnaire was adopted, pre-tested, and personally administered to
the targeted population, following the appropriate ethical procedure. In total, 100
respondents were sampled from the total population of 15,936 customers of Abay
Insurance Share Company located in Addis Ababa City branches, using the sample size
determination table developed by Yamane (1967). Out of the distributed 100
questionnaires, 94 were returned, constituting a 94% response rate. Moreover, ten
frontline customer service employees from the ten selected branches, one from each, and
four managers from both the head office and branches were also sampled. All the
distributed questionnaires to the frontline employees and the interviews conducted with
the managers were returned, which constituted 100%.The findings of this study showed
that customers of Abay Insurance Share Company in Addis Ababa branches were
moderately satisfied with the service quality dimensions, which indicated that the
customers' expectations exceeded the actual performance of the insurer. Therefore, it is
recommended that Abay Insurance Share Company should give greater attention to
improving its customer handling service quality and satisfy its customers by meeting or
exceeding their expectations through assessing and improving the gaps in all the service
quality dimensions. This will result in a reputation of purchase, positive word of mouth,
and customer loyalty, which can help the company to stay competitive in the insurance
industry and increase its market share, profit, and financial position among its peer
groups.
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CHAPTER ONE
1. INTRODUCTION
1.1Background and Justification of the Study
The emergence of insurance business in Ethiopia was closely linked to expatriates &
foreign insurance companies operating in Ethiopia participated actively in the
establishment of the first domestic insurance company, i.e. Imperial Insurance Company
established in 1951.
The emergence of modern insurance in Ethiopia is traced back to the Bank of Abyssinia
which was established in 1905 as the first Ethiopian bank. The Bank had been acting as
an agent for a foreign insurance company to underwrite fire and marine policies.
Insurance companies provide two types of covers mainly; general insurance (non-life)
and long term insurance (life) covers. General insurance can be categorized into major
classes of business such as: motor, workmen’s compensation, liability, engineering, fire,
marine, aviation, accident and pecuniary. Similarly, long term insurance is categorized
into individual group endowment, medical, term life and accident riders (Govindarajan,
2019)
The service industry plays an increasingly important role in a country’s economy. In

today’s global competitive environment delivering quality service is considered an
essential strategy for success & survival. Most service giving organizations are under
pressure to deliver quality services to customers & improve efficiencies. In parallel
customer needs & expectations changing when it comes into utility services & the quality
of services. It is known that services unlike tangible products are produced & consumed
at the same time in the presence of customer and service producer(Vu, 2020). To be
successful in business today requires a commitment to excellence in customer service as
customer service is an integral part of doing business. Today’s customer service providers
must have adequate preparation to interact effectively with today’s customers
(Parasuraman, A; Berry, Leonard L; Zeithaml et al., 2021)
The average business company loses 10% - 30% of its customers each year because of
their dissatisfaction mainly in ‘service quality gaps’. The overall gap which results in a
dissatisfied-customer is the gap between expectations and experience. The root cause of
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dissatisfaction can be traced back to one of the five gaps, namely, promotional,
understanding, procedural, behavioral, and perception.(Ennew, 2022)
Insurers face pressures from every direction. Competition is surging. Innovative products
and services are needed to break from the pack, but lack the operational capabilities to
support them. Partners and customers want new communications channels and ‘’24/7’’
convenience, but integration concerns delay progress. Compliance has become unwieldy
in the wake of rapid regulatory change. Fraud is on the rise, and mitigating risk is more
important than ever. These operational pains are preventing insurers from addressing
customer service challenges that pose significant short- and long-term threats. Poor
service experiences, limited interaction channels and lack of transparency have eroded
trust. Industry evidence shows that when insurance companies understand and act on
customer needs, they are more profitable. Even in a tough economy, service can win out
over price. And as social networking proliferates, the value in strengthening customer
relationships will continue to increase. Insurers have the ability to effectively predict
customer behavior and lifetime value while improving retention and profitability.
In today’s business world, the key to be successful is customer value in the minds of
customers. Companies must create value for customers that attracts and retains existing
as well as potential customers, address the basis of competition, and deliver a profit to a
company through operational excellence in the primary business, personnel, quality, and
information systems etc. that constitute business.(Pedreño-santos, 2022)
Companies face the consequences of declining customer loyalty, deteriorating market

share, decaying profits, & the associated chaos that ensues. It is the very essence of doing
business.
To be successful, companies have to provide quality products and services at fair prices/
premiums, creating the impression of value and exciting customers about their products
and services in the process. These imperatives require that a company understand its
customers (perhaps better than they understand themselves) and manage its business as
effectively and efficiently as possible (Ramya, 2019)
Through high-quality services and effective operations, a company can deliver superior
and sustainable value to customers. And hence a good company that understands this
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will: Have a focus on customers and a clear understanding of their needs and
expectations; Offer a combination of product and service benefits and fair prices; and
Aggressively manage the business processes, information technologies, and staff that are
responsible for communicating, creating, and delivering customer value/service and
allowing profitability at the same time (Pedreño-santos, 2022)
Creating and retaining loyal customers through quality services must be a high priority
for companies, because these activities earn high returns. For example, a 5% increase in
customer retention can increase profitability between 25% and 50% (Govindarajan,
2019)
Companies can become market leaders by delivering superior customer value in one of
three ways: 1) increase product and service quality, 2) lower/optimum prices, or 3) do
both simultaneously. Customers must feel and perceive that they are receiving significant
pro duct and service quality for the money they spend. Quality service differentiates an
offering sufficiently enough so that it doesn’t become a commodity (avoid
commoditization) and strongly positions a company in a market place. Service is a
primary means for building customer value and earning higher profits as well.(Vu, 2020)
Companies that have dedicated base of customers are resistant to commoditization and
price wars, because their customers are less susceptible to the competitions’ entreaties.
Thus, faithful customers represent long-term revenue and profit streams as their spending
increases and accelerate over time. As loyal customers become more familiar with the
purchasing process, companies and their customers save considerable amounts of time
and money. Using IT – enabled approaches to sales, a company can build and cement
new relationships and contracts with customers. By listening to the voice of the customer
using electronic transactions, a company can learn how to more effectively serve its
customers. If a company doesn’t use IT to improve the buying process, it risks being at
the mercy of others who do.
The effect of a business process is so broad that companies should optimize their business
processes rather than optimize the performance of their business functions. Customers are
interested more in the business processes with which they interface and the outcomes of
those processes. Thus there is a need for true operational effectiveness. The three critical
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business dimensions/performance in which companies will affect customer value are: IT,
people, and business process. (Ennew, 2022)
In today’s Internet- and mobile-enabled world, customer expectations are being shaped
by daily transactions and interactions with companies across various industries. Insurance
companies must establish their own benchmarks for service delivery against those of
leading experience providers, not their peers.
1.2 Background of Abay Insurance Share Company
Abay Insurance S.C. is organized in a manner that would facilitate a superb service to its
esteemed customers. Next to the Board of directors, the upper internal structure goes to
the Chief Executive Officer under which functional and support departments and services
are situated.
The company follows a mixed approach of administration by which branches are

authorized to entertain all insurance policy contract administration. In order to further
enhance its claim service, the company has partially decentralized its claims service in
addition to the central specialized claims management department whose entire focus is
solely confined to entertain claims of clients. The company has an open communication
flow that is meant to create a flawless interchange of any idea, queries, and related
aspects that may emanate from internal and external sources. Abay Insurance S.C.
strongly believes that a competent and well equipped management is the necessary input
to excel in service. To this regard, all management team members have been passed
through serious of formal and informal trainings which aimed at capacity building which
can make theme capable to handle sophisticated and challenging atmosphere.
The officials are highly experienced in various aspects besides the potent knowledge in
insurance industry. The company always strives to exceed customer expectations in all
aspects by providing very friendly service while considering each and every of its clients
as a family. The following are the prevailing team members with the corresponding
designations. Since establishment, Abay Insurance S.C. has been working in line with the
corresponding laws and regulations of the nation. The company strives to be in line with
the applicable laws and in addition it gives a due emphasis to its corporate social
responsibility.
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There are no such pending legal issues to date that are worth mentioning. The majority of
legal cases we have had to date revolve around the exercise of the right of
subrogation .i.e., where third parties are liable for the risks that are covered by the
company. Nevertheless, the company has set aside an ample amount of legal reserves for
any unforeseen circumstance which may be raised. The company follows a very strong
and coordinated financial and risk management system and have been getting a
reasonable reward from investment. The total asset of the company has reached a value
of more than Birr 733.6 million as at June 30, 2019. The composition is considered as
highly recommended when compared to the requirements of the National Bank of
Ethiopia. The mix is as illustrated in the following table. Full details of the financial
performance can be acquired from the Annual Report. Bay Insurance S.C. has a qualified,
young, motivated and committed staff. The Company's Human Resource Policy is to
recruit young and dynamic personnel .The training and development activity is
considered as an investment to produce a flexible and multi-skilled human resource. On
the job coaching and intensive formal/informal training, local and abroad are the
company's routine staff development programs.
The number of employees of Abay Insurance S.C. has reached 217 as at March 2020 in
response to the company’s nationwide penetration and its commitment towards excellent
service. Out of the total employees, about 6% are second degree holders, 60.9% are first
degree holders, 21.2% are diploma holders, and the rest 11.9% are high school/certificate
completed.
Abay Insurance S.C. recognizes professionally skilled and well-motivated employees as

its vital organizational asset. Hence, the company exerted effort to recruit the best
qualified personnel for all of its posts. The average turnover ratio of the company is less
than 12.5% which is considered as acceptable considering the industry average.
1.3Problem Statement
Customer service is such a valuable concept that it seems it would be simple to provide.
However, this is not necessarily the case. Customer service providers must begin to
understand the customers they are serving.
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Customer satisfaction in insurance means the use of the policy product purchased for a
cost (premium), to the ultimate satisfaction of the buyer, when a claim is paid. The
product bought by the buyer/policyholder will give them the expected outcome, i.e.,
peace of mind during the product cycle when it is in use by the customer. The present-day
customer buys their ultimate satisfaction, not just the product. The customer is an active
seeker of value evidence (certificate, policy, prompt service/full value).The insurance
policy is an intangible promise to pay in the event of a covered occurrence, but it also
promises reliability, trust, assurance, competence, empathy, responsiveness, and
tangibility. Some of the challenges/barriers to excellent customer service are within the
control of customer service providers, such as poor communication skills, poor time
management, and attitude, lack of adequate training, inadequate staff, and so forth.
Creation of a customer service culture, which consists of the values, beliefs and norms
shared by a group of people, is indispensable. A part of the culture that the leadership of
an organization can inspire is the attitude of the employees.
The quality-of-service computation, market fluctuation and attitude, perception, and

expectation of the customer are some of the factors that pose problems in customer
handling. Customers whose complaints are satisfactorily resolved become more
company-loyal than customers who were never dissatisfied. Companies that encourage
disappointed customers to complain and also empower employees to remedy the situation
on the spot have been shown to achieve higher revenues and greater profits than
companies that do not have a systematic approach for addressing service failures.
Satisfying employees as well as customers will promote stronger customer loyalty, as
there is a positive employee attitude in excellent service companies. Companies can
provide value-added services or excellent customer service to differentiate themselves
from others. Customer expectations of service come from many sources, such as past
experiences, word of mouth, and advertising. If perceived service falls below the
expected service, customers are disappointed. If perceived service meets or exceeds their
expectations, they are apt to use the provider again. Successful companies add benefits to
their offering that not only satisfy customers but also surprise and delight them.
Delighting customers is a matter of exceeding their expectations. Some of the best
service companies create a responsive, customer-pleasing system by empowering their
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line employees to satisfactorily resolve customer issues. Designing a system that
empowers employees to do what they feel is right in making actions on service to satisfy
customers at the time without management approval, while being held accountable for
their actions. The key to any successful conflict resolution is the ability to hear a
customer, i.e., listening to the customer with full attention to understand what they are
really saying, taking the required time.
Besides listening to a complaint, ask the customer what their expectations are for an
"acceptable level of service," in order to be in a position to adequately solve the
complaint. Excellent customer service really does play a vital role in the marketing
approach of a company. It is no longer a departmental issue; it is the issue of a company.
The company can view complainers/customers who complain as potential referral
champions for long-term success. Turning complaints into positive experiences is a sure-
fire way of developing loyal customers who are guaranteed to spread the word of mouth.
1.4 Research Questions
The study will try to address the following questions
1) What are the major factors that determine service quality in the Ethiopian
insurance industry?
2) What are the effects of customer handling to insurance companies?
3) What are the possible causes for customers’ dissatisfaction?
4) Why particular emphasis is given in adequate underwriting and claim handling
process in insurance customer services?
1.5 Objective of the Study
The objective of this study is classified as general and specific objectives. The general
objective specifies the overall purpose of the study and based on this objective; the
specific questions will be included in order to satisfy the research questions.
1.5.1 General Objective
The general objective of this research is to identify and analyze the effects and prospects
of customer handling in insurance companies’ operational performance in Ethiopia. (A
Case Study at Abay Insurance Share Company Insurance Share Company)
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1.5.2 Specific Objective
With regards to the general objective, and to satisfy the research questions, the specific
objectives include:
 To examine views of insurance companies about customer service & handling

 To express the main challenges of customer handling.
 To assess the fairness of premium generation and timely service delivery of
insurers.
 To provide the views on the performance of customer handling in Abay Insurance
Share Company Insurance Share Company
 To provide possible solutions for improvement of quality/excellence service
delivery.
1.6 Significance of the Study
The output of the research will be expected to have the following benefits:
 Serves for insurance companies as inputs to understand the overall impact of

customer handling and better decision making for managers regarding customer
service quality.
 It may invite other researchers to further investigate how to improve customer
service and handling in the insurance sector.
 It may serve for policy makers as input for the preparation of Customer Handling
Policy.
 To the researcher as means of academic fulfillment for the requirement of MBA
degree.
1.7 Scope of the Research
The work of this research is limited to only the case study of impacts and prospects of
customer handling in insurance industry with particular emphasis and reference to Abay
Insurance Share Company. The population of the research paper is the Addis Ababa
branches’ customers. However, they represent similar services given in all other branches
of Abay Insurance Share Company in Ethiopia.
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1.8 Limitations
The research paper couldn’t cover the 26 active branches of Abay. Nevertheless, the study
is conducted only on 10 branches due to time and budget constraints.
1.9. Definition of Terms
SERVQUAL: A function of the gap between customers’ expectations of a service and

their perceptions of the actual service delivered by an organization.
Policy Holder: A person who owns an insurance policy/any other person who has legal
right to claim the benefits under that insurance policy
Value: The customers’ perception of the balance between the quality of products or
services that a firm provides and their price.
Quality: The totality of features and characteristics of a product and service which bear
on its ability to satisfy the stated or implied needs.
Service Quality: The expected and perceived quality of service offerings
Customer Satisfaction: The result of a product or services meeting or exceeding the

Buyers’ needs and expectations
Dissatisfaction: The un-pleasurable fulfillment response to a customer experience.
Front line personnel: Those employees who have the most contact with customers.
Customer: A person or organization receiving advice, a service, using the facilities

in a business relationship in the Insurance Service.
Complaint: A genuine expression of dissatisfaction/concern with the product/service

delivered by the Company that has failed to reach the standard stated, implied, or
expected.
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1.10 Organization of the Project Report
The research paper is organized in five sections. In the first section, the overall
performance of insurance industry in general is pointed out. This introductory section
contains background of insurance business in Ethiopia, problem statement, research
questions, objectives of the study, significance of the study, and scope of the research as
well as limitations. The second section of the research paper will deal with literature
review on operational performance in insurance with special emphasis on customer
service and handling in the insurance industry. The third section deals with the research
design and methodology. The fourth section will be on findings and discussion and
finally, in the fifth section; summary of findings, conclusion, recommendation and future
work direction will be dealt.
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CHAPTER TWO
2. LITERATURE REVIEW
2.1 Theoretical Review
The Literature Review is an essential part of the research study since it helps researchers
become familiar with the subject background under study. Others' ideas, approaches, and
methodologies can be obtained via the literature review. So the researcher will use
relevant review of literature materials for the study.
Therefore, a model designed to measure customers' perceptions of service quality,

SERVQUAL, which was developed in the 1980s by the three American academics
Parasuraman, Zeithaml, and Berry, is used as a methodology to measure consumers'
perception of quality in the insurance service business(Ouechtati, 2020).
Based on this, the quality dimensions in addition to some other dimensions will be used.
The dimensions are:
 Tangibles - the physical facilities, equipment, and appearance of personnel.

 Reliability – the ability to perform the promised service dependably and
accurately.
 Responsiveness - willingness to help customers and provide prompt service.
 Assurance – knowledge and courtesy of employees, their ability to inspire trust
and confidence.
 Empathy – caring, individualized attention that the firm provides its customers.
Parasuraman et al. also used their research as the basis for the service quality gap model.
They defined service quality as a function of the gap between customers' expectations of
a service and their perceptions of the actual service delivered by an organization. The
overall service quality gap which results in a dissatisfied customer can be formed by one
or more of several specific gaps. The root cause of dissatisfaction can be traced back to
one of the five gaps, namely, promotional, understanding, procedural, behavioral, and
perception(Nsiah et al., 2021).
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2.2 Insurance Industry Services
Insurers can either prosper by becoming more relevant, or continue along the same path
and see business slowly deteriorates as customers migrate to companies with more
innovative solutions and business models that better suit their needs. By focusing on
three major innovation strategies— i.e. 1) identify profitable target customers; 2) develop
new products and services for these target groups; and 3) create mediarich experiences to
serve customers—insurers can increase profitability by 15–20 % within five years,
according to estimates from the Cisco® Internet Business Solutions Group (IBSG).
Consumers expect better service than they are receiving from their insurers today. To
meet customers’ needs, insurers should create a collaboration architecture that offers
anytime, anywhere access through any device they wish to use.
The interaction between the customer and service provider is referred to as the service
encounter or the moment of truth in popular management jargon. The provider and the
customer create value together. An improvement in customer perceived quality will
increase customer satisfaction, loyalty, and profitability. I.e. Good internal Quality →
Satisfied employees→ Employees stay→ good external Quality→ Satisfied customers→
Customers stay→ High profitability(Ouechtati, 2020)
2.3 The Service-Profit Chain
Successful service companies focus their attention on both their customers and
employees. They understand the service-profit chain, which links service firm profits
with employee and customer satisfaction. This chain consists of five links according to
Internal service quality: Superior employee selection and training, a quality work
environment, and strong support for those dealing with customers. Satisfied & productive
service employees: Become more satisfied, loyal & hard working. Greater service value:
More effective & efficient customer value creation & service delivery. Satisfied and loyal
customer: Satisfied customers, who remain loyal, do repeat purchase, and refer other
customers. Healthy service profits and growth: Super service firm performance(Ennew,
2022).
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2.4 Customer Value Management (CVM)
It can help a business enterprise create and sustain differentiating value. I.e. it is a vehicle
to understand what the customers/clients want of the company and how to go about
aligning the business to deliver that product/service consistently. CVM has become a
leading approach to attract market share and customer loyalty by making the customers’
view an integral part of the business design. It is the means by which companies can
balance the demand for service, even create that demand, with an infrastructure that is
customer-centered, delivers increased productivity, and benefits the company’s bottom
line. CVM provides the basis to become customer centered and attain growth by enabling
an organization to be “Number 1 in the eyes of its customers.(Pedreño-santos, 2022)
2.5 Employee Empowerment
Providing superior customer value is the criterion that determines the nature of employee
involvement - in form of work teams, job enrichment, quality circles, task forces, and
labour management action teams. I.e. provide - training, suggestion scheme,
measurement and recognition, and excellence teams. Workers suggestions: workers are
often a source of continuous improvements. They can provide suggestions on how to
improve a process and eliminate waste/unnecessary work. Employees should be managed
for positive results. They develop a company’s plans and execute them and serve
customers. As result employees are an especially critical asset. Therefore a company
must empower & motivate them to embrace the skills and attitudes necessary to satisfy
and exceed customers’ needs and expectations (Kumar, 2008). Some of the best service
companies create a responsive, customer pleasing system by empowering their line
employees to satisfactorily resolve customer issues. Designing a system that empowers
employees to do what they feel is right in making actions on service to satisfy customers
at the time without management approval, while being held accountable for their
actions(Vu, 2020).
Staffs need to be able to access information which is a key resource that will allow them
to deliver a better standard of customer care. Management needs to allow staff the
necessary time which is a precious resource to deal with the customer as an individual.
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Customers can become very angry if they feel that a member of staff has not got the time
to deal with them properly.(Ennew, 2022)
2.6 Customer Handling
Proper complaint handling can be a marketing asset having the following bottom-line
benefits: maintenance of market share, low-cost market research data base, lower
warranty and service costs, improved employee productivity, and decreased government
involvement in corporate affairs(Pedreño-santos, 2022)
Complaints and Recovery: No organization can avoid complaints. Complaints often

escalate from minor problems into disasters because of a lack of perception from the
organization as to the apparent seriousness of the situation as viewed by the customer.
The three basic reasons why customers complain are: 1) Lower than expected quality, 2)
Lower than expected service, and 3) Higher than expected price. Complaints can, if
properly handled, turn a disaster into a triumph and should be handled to achieve a win-
win situation and a delighted customer. Organizations may be able to enhance the
relationship with customers by effectively dealing with a complaint with a complaint
procedure need to be simple enough for those with a genuine complaint to be able to
make their grievance known. When customers cease to be customers, it is better that they
leave saying positive things about the organization than telling their friends and relatives
about poor recovery.
Customer /Service recovery is a crucial issue in managing the relationship between

customers and the organization if things go wrong & ‘lifetime value of a customer’
approach is taken. It is an important element of the company’s service delivery that
ensures the customer who is dissatisfied or irritated is returned to a state of satisfaction as
soon as possible. It helps the company to recognize the problems and improve the service
it offers for all existing and new/potential customers. It is not only just about fixing
things that have gone wrong but should also focus on the critical service encounters that
customers are saying are important to them, and help the company to develop a long-term
customer service strategy(Parasuraman, A; Berry, Leonard L; Zeithaml et al., 2021)The
three key ingredients for designing a service strategy are: 1. Desired outcomes, 2.
Customer expectations, and 3. Process capability(Vu, 2020)
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2.7 Customer Satisfaction
Markets in which consumers don’t have much power tend to have low customer
satisfaction.
For companies in industries where customers don’t have a great deal of choice, where
good information is harder to come by, and where the costs associated with rejecting one
brand for another are high, customer satisfaction typically suffers(Ramya, 2019)
Customer satisfaction is an excellent market-based performance metric and barometer of

future revenue and profits. It is a forward-looking indicator of business success that
measures how well customers will respond to the company in the future. Thus it is a good
leading indicator of operating performance. Dissatisfied customers often don’t complain,
but they do walk and talk. Studies show that out of 100 dissatisfied customers, only 4%
will complain to a business. Of the 96 dissatisfied customers who don’t complain, 91 will
exit as customers. Many dissatisfied customers become “customer terrorists”; by telling
others about their dissatisfaction.(Jeyalakshmi & Meenakumari, 2016)In today’s
environment, customers have become kings and queens they have taken on new
importance as the focal point of business, as seen on the banner of corporate stockholder
reports and mission and vision statements. (Pedreño-santos, 2022)The concept of
customer value must be made operational to realize the benefits of a customer value
strategy. One way to make the concept operational is to devise methods to measure value
and use the information to make the better strategic and operational decisions.
Figure 2. 1Determination of customers delivered value:
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According to Kotler & Armstrong (1996) the customer satisfaction is the level of a person
felt state resulting from comparing a product’s perceived performance or outcome in
violation to his/her own expectations. So, customer satisfaction could be considered a
comparative behavior between inputs beforehand and post obtainments. Customer
satisfaction of insurance services can also be measured by timely service delivery and
reliability, claims handling and customer handling.
Reliability Service
Expectations
Assurance
Perceived Customer
Tangibles Service quality Satisfaction
Empathy
Service
Responsiveness Performance
Figure 2. 2Measuring Customer Satisfaction
Source: Niguel Hill & Jim Alexander, 2003
Service Quality: It is used to signify excellence of a service top quality. I.e. it is to meet
the customer requirements. Quality refers to conformance for specification. It is the
customer, not the company, who decides whether quality is right and fitness for proposed
business(Ennew, 2022)The major reason companies want relationships with customers is
to identify, acquire, satisfy, and retain profitable customers. The relationship is based on
a foundation of trust and commitment. The primary motivation for companies trying to
develop long-term relationships with customers is the profit motive.
Customer Customer Business

Satisfaction Loyalty Performance
Understand customer’s Behavioral loyalty Revenue growth

requirements Attitude loyalty share of
customers
Meet customer’s expectation Customer possession
Deliver customer value
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Figure 2.1: Relationship with customers
Source: Buttle F., 2009
2.8 Customer Service Standards
Conducting a service gap analysis: Asking internal and external customers to rate the
current level of service quality of the organization against a list of criteria such as:
timeliness, accuracy, flexibility, responsiveness, technical knowledge. The gap between
the service that is currently provided and that which customers need against each of the
criteria is the opportunity to improve service.
Setting standards for processes: E.g. issuing new policy documents within three working
days of having all necessary information; settling a claim within one working day of
having agreed a settlement amount.
Setting quality standards: For example: only 0.1% of documents issued to customers
should have to be sent back due to error.
Setting internal service standards: For instance: if claims need policy information this
should be provided within 24 hours.(Pedreño-santos, 2022)
2.9 Resolving Conflict
There must be a win-win tactic or resolution mindset with customers. I.e. focus on both
sets of needs, concerns, and feelings. Respect each other’s view. See the issue as a mutual
problem to be solved. Prepared to listen and compromise as effective listening improves
relationships between people. Not interested in winning at any cost. Opt for power with
rather than power over. The win-win approach creates partners not opponents. Key
skills for collaboration which prevent the escalation of the conflict and allow one to steer
the energy along a path that will increase understanding, trust, and co-operation are: 1.
Listen acceptably – find out what others see through their window on the world. 2. Talk
constructively – share what you see through your window on the world, and 3. Problem
solving – marry the views for mutual wins. (Ennew, 2022)
xxviii
2.10 Total Quality Management (TQM)
The total quality management (TQM) philosophy is customer-oriented. TQM

incorporates the concepts of product quality, process control, quality assurance, and
quality improvement. Pushing problem-solving and decision making down in the
organization allows people who do the work to measure and take corrective action in
order to deliver a product/service that meets the needs of the customer. The major
principle of TQM is to satisfy the customer. Customers want to get their money’s worth
from a product or service they purchase. TQM is considered a means to introduce
participative management. Some of the key principles of TQM are management
commitment, i.e. PDCA [plan (drive, direct), do (deploy, support, and participate), check
(review), act (recognize, communicate, and revise).(Parasuraman, A; Berry, Leonard L;
Zeithaml et al., 2021).
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CHAPTER THREE
3. RESEARCH DESIGN AND METHODOLOGY

3.1Introduction
This chapter presents the methodology that has been used for the research. It described
the research purpose, research approach, research strategy, sample selection, and data
collection. It also discussed data analysis and challenges and prospects of customer
handling of the research. In general this chapter provides the methodological frame work
to collect data from various sources, sampling, data collection instruments and approach
to data analysis for achieving the set objectives. Finally, ethical consideration maintaining
during data collection stage was provided.
In this research work, qualitative and quantitative analysis have been performed such as
analysis of research document, review of related literature in brief, questionnaire, and
interview conducted to know the impacts/challenges of customer handling as well as
future prospects. Abay Insurance S.C, as a case study, would be the focus area to obtain
major available information for this research paper with regard to customer handling and
retention, and those who terminate their policy and switch to other insurance companies.
Open and close ended questions have also been used to have full-fledged views of
customer handling in the company.
3.2 Population and Sampling
During the study Abay Insurance Share Company has 26 branches and one contact/liaison
office to handle the operational activities.
The target population of this study consists of customers of Abay Insurance Share
Company in Addis Ababa branches only, to make the study manageable because of cost
and time constraints, with appropriate sampling method. In regarding sample size, the
research considered a total population of 200 customers/insurance policy holders as a unit
analysis for the purpose of the study from 15,936 customers of ten branches of Abay
Insurance Share Company in Addis Ababa. From the total population size, a sample size
determined to be near to 100 using the sample size determination table developed by
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Yamane, 1967 (Annex IV) with precision level of ±10%. I.e. the sample size is 50% of
the total unit analysis, 200*50%= 100. Thus a sample of 100 respondent customers had
been selected and contacted using systematic random sampling from all customer
categories.
In addition, structured questionnaire was randomly distributed to 10 front line employees,

and interviews conducted with 2 operation managers and 2 branch managers. Based on
this, total number of 14 respondents from the company personnel had been selected in
order to get relevant information.
3.3 Research Design and Data Collection
The research used empirical study. I.e. the study used descriptive research method to
discover a fact finding about customers’ satisfaction towards the quality of
product/service delivery at insurers and the operational and implementation impact of
customer handling in Abay Insurance Share Company as a case study. The data source for
the study was both primary and secondary data. The primary data had been collected
based on questionnaires and which were distributed to the respondents in Abay Insurance
Share Company during the data collection phase. Interviews had been conducted through
the help of ‘’structured questionnaire’’
Secondary data were collected from the reports and other literatures review from past and
current research papers, internet/web site, and Abay Insurance Share Company document.
In addition, the secondary data will rely on books, journals, the company’s data base of
customers and NBE regarding the insurance industry data.
3.4 Variable and Measurement
To assess the impacts of customer handling as a case study at Abay Insurance Share
Company with regard to excellent customer service and satisfaction measurement,
SERVQUAL Model was used which has five dimensions on a five point Likert Scale
with the inclusion of three additional dimensions of being 1 highly dissatisfied to 5
highly satisfied continuum, using questionnaire.
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3.5 Methods of Data Analysis
The researcher used SERVQUAL model and various tables, figures, and percentages for
both primary and secondary data analysis in the discussion part of the paper. After data
analysis and interpretation, findings are summarized. Based on the major findings,
conclusion has been drawn and lastly, possible recommendation forwarded in order to
better satisfy the expectations of customers.
3.6 Ethical Considerations
In both questionnaires and interviews conducted, the respondents were given a chance
not to write their names and other identifications to make them feel free and properly
respond in answering the questionnaire and the interview conducted. Questionnaires
which are prepared for ‘customers’ in English language have been equally translated in to
Amharic language to make it more comfortable keeping their interest. Respondents were
assured of that their overall responses kept in confidentiality.
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CHAPTER FOUR
4. RESULTS AND DISCUSSION
4.1 Data Analysis and Interpretation
The data was collected from customers, employees, and management of Abay Insurance
Share Company S.C in Addis Ababa. Practically facts about service quality and its effect
on customer satisfaction and handling has been analyzed and interpreted.
4.2 General Information about the Respondents
Sample size of 100 customers was determined, collected and investigated. Besides, 4
managers were interviewed with the structured interview questions and 10 front-line
employees responded with the structured questionnaire in total 14 were contacted. Out of
the 100 questionnaires distributed to the customers 94 (94%) were filled and collected
back, and of the company staffs’ questionnaires and interviews all 14 (100%) were fully
responded.
Table 4.1. Selected Service Sites/Branches
S.N Name of Branch Questionnaires % Returned

Distributed Returned
1. Kirkos 10 10 100%
2. Tewodros 10 9 90%
3. Addisketema 10 9 90%
4. Beklobet 10 10 100%
5. Gerji 10 9 90%
6. Kality 10 9 90%
7. Bole 10 9 90%
8. Life 10 10 100%
9. Abakoran 10 10 100%
10. Megenagna 10 9 90%
Total 100 94 94%
Source: Own Analysis, 2014
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A total of 100 questionnaires were distributed to ten of Abay Insurance Share Company
branches, out of which 94 were returned while six questionnaires were returned unfilled
from six branches, one each. Full responses i.e. 10 from Kirkos, Beklobet, Life, and
Abakoran, 9 responses from Tewodros, Addisketema, Gerji, Kality, Bole and Megenagna
were obtained from the 94 Company Customers.
Therefore, with regard to customers, 94 questionnaires served as data sources for analysis
to present the findings and draw conclusions and recommendations.

biography & over all activities of the company with emphasis to customers:
S.N Item No of %age Approximate

Respondent
1. Sex:
Male 6 60%
Female 4 40%
Total 10 100%
2. Age (Year):
18-30 3 30%
31-45 6 60%
46-60 1 10%
Above 60 0 0
Total 10 100%
3. Education Level:
High school Complete 0 0
Diploma 0 0
Degree 9 90%
Master 1 10%
Total 10 100%
4. Work Unit:
Underwriting 9 90%
Claims 1 10%
0
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Engineering 0 0
Other 0
Total 10 100%
5. How long have you been serving in the
insurance company?
Less than 1 year 2 20%
1-3 years 1 10%
3-5 years 0 0
Above 5 years 7 70%
Total 10 100%

biography & over all activities of the company with emphasis to customers (cont’d):
S.N Item No of %age Approximate

Respondent
6. Are you happy with your job?
Yes 7 70%
No 3 30%
If no, what are the possible reasons? *Refer below #6
Total 10 100%
7. How is your interaction/communication with
customers?
Very good 7 70%
Good 3 30%
Neutral 0 0
Poor 0 0
Very poor 0 0
Total 10 100%
8. Have you ever taken any training in relation
to customer service delivery/complaint
handling? 70%
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Yes 7 30%
No 3 *Refer below #8
If the answer for the Qn. is No, what do you
suggest is the reason?
Total 10 100%
9. How do you rate your capacity/knowledge
regarding the standard of your service
delivery? 5 50%
Very good 4 40%
Good 1 10%
Neutral 0 0
Poor 0 0
Very poor
Total 10 100%
10. Does the Company give a chance to
employees to participate in decision making
with regard to service delivery?
Yes 8 80%
No 2 20%
If the answer for the Qn. is “No’, what do you
think the reason? *Refer below #10
Total 10 100%
11. Do you have any suggestion or comment to
make with regard to excellent service *Refer below #11
provision?
Source: Questionnaire Analysis, 2014
As indicated above in item S.N 1 of Table 4.2, sex-wise grouping of front-line employees
is overwhelmed by males who covered 60% of the total 10 respondents. Females
xxxvi
accounted for only 40%. This figure shows that females are less represented as compared
to males in the sample.
In item S.N 2 of Table 4.2, 60% of the respondents of company staffs lied within the age
groups of 31- 45 years, 30% within the age groups of 18-30 years, and 10% within the
age groups of 46-60 years. There was none within the age group above 60. Hence more
than 90% of the company staffs are found between the age group of 18-45 years which is
active member of the society.
In item S.N 3 of Table 4.2, with regard to educational qualification, 90% of the personnel
respondents have got First degree. 10% got Master’s degree, and none with Diploma
and/or High School. Therefore it is possible to suggest that almost all personnel have
good academic back ground to serve the company’s customers promptly.
As shown above in Item No 4 of Table 4.2, with regard to assignment of work, 90% of
the respondents were assigned in Underwriting and all the remaining 14.29% were in
Claims.
With regard to length of service year in the insurance company, in Item No 5 of Table 4.2,
70% of the respondents have served the company above 5 years. The rest 20% & 10% of
respondents have served the company for less than 1 year & 1-3 years respectively. This
indicates that the larger portion of internal customers (employees) registered relatively
long time existence with the forthcoming of few new employees in recruitment.
In consideration of employees’ happiness with their job, Item No 6 of table 4.2, 70% of
the respondents agreed that they are happy; the remaining 30% responded that they are
not happy. The possible suggested reasons for unhappiness were: work load, routine
nature of the work, no promotional growth, and salary is not satisfactory and needs a long
journey to reach the top or middle level management to get optimum salary and benefit
package.
Regarding front-line employees’ interaction/communication with customers, S.N 7 of

Table 4.2, 70% of the respondents agreed that there is very good communication in
between, the rest 30% responded that the interaction with customers is good. Neither
responded the interaction is neutral, poor nor very poor. From this it may be possible to
xxxvii
conclude that there is optimum interaction between the employees and customers of the
Company.
As shown in Table 4.2, S.N 8, in connection to taking training in relation to customer

service delivery or complaint handling, 70% of the respondents confirmed that they have
taken while the rest 30% have not. The reason is suggested that because of being new
employee, reluctant of the Company for attaining such issues.
In terms of rating own capacity/knowledge regarding the standard of service delivery to

customers, S.N 9 of Table 4.2, 50% of the respondents rated that they have very good
capacity to serve customers promptly. 40% of the respondents rated that they have good
capacity to serve. The rest 10% rated that they are neutral. Neither of the respondents
rated them to have poor nor very poor knowledge.
Analyzing the chance given to employees to participate in decision making with regard to
service delivery, S.N 10 of Table 4.2, 80% of the respondents confirmed that they have
given a chance to decide, while the rest 20% did not agree and witnessed that they
haven’t given the chance to make decision. The reason suggested is ‘I don’t know’, I
don’t remember enough number of decisions passed.
Regarding any suggestion or comment to make with regard to excellent service provision,
S.N 11 of Table 4.2, the front-line employees commented as follows:
Customer service and customer handling training should be given early and sustainably.
There must be variety of trainings for different classes of businesses to properly handle
customers. Services should be effective and efficient. There must be satisfactory salary to
the employees in order to manipulate their knowledge and initiation. There must be
indispensable flexibility for win-win dealing and mutual benefit. Avail appropriate
number of employees who possess the required skill and knowledge to serve customers
with utmost efficiency.
Table 4.4. Abay Insurance Share Company Customers’ (the sample) Biography
S.N Item No of Percentage
Respondent Approximate
xxxviii
1. Gender:
Male 64 68.09%
Female 30 31.91%
Total 94 100%
2. Age:
18-30 29 30.85%
31-45 48 51.06%
46-60 17 18.09%
Above 60 0 00.00%
Total 94 100%
3. Occupation:
Doing own business 41 43.62%
Private organization employed 37 39.36%
Government employee 5 5.32% 8.51%
NGO’s employee 8 3.19%
Others 3
Total 94 100%
4. How long are you a customer of the Company?
More than 10 years 20 21.28%
6-10 years 21 22.34%
1-5 years 45 47.87%
Less than 1 year 8 8.51%
Total 94 100%
5. What type of insurance cover do you have in the
company/branch? (Select more than one, if there is
any) Motor 68 72.34%
Marine 32 34.04%
Fire and lightening 16 17.02%
Life insurance 17 18.09%
Others 6 6.38%
Total 94 100%
6. How frequent do you come to the Branch /Company to
get service in a month?
1 time 46 48.94%
1-3 times 27 28.72%
4-6 times 12 12.77%
7-10 times 6 6.38%
More than 10 times 3 3.19%
Total 94 100%
The above Table 4.3, S.N 1 reveals the biographic information of the respondents. As can
be seen the biographic variable, gender division of the respondents, the majority of the
xxxix
respondents were males, i.e. 68.09% (64) representing the greater part of the sample
group, while 31.91 % (30) of the respondents (which is near half of males) were females.
As indicated in item 2 of Table 4.3, age-wise distribution of the respondents of the

company branches is overwhelmed within the age group of 31- 45 which covered 51.09%
of the total 94 respondents. Within the age group of 18- 30 respondents covered 30.85%,
and all the rest within the age group of 46- 60 lied 18.09%. Within the age group above
60 years is none. Therefore it can be said that more than 81.94% of customers are active
members of the society within age group of 18-45. This will help the company extend
long existing relationship with these customers by providing proper service delivery.
In item 3 of Table 4.3 above, with regard to occupation of the sample respondents,
43.62% of them were doing their own business, 39.36% of them were private
organization employed, and 8.51% of them were NGO employed. The rest 8.51% in total
were government employed and other works. This has shown that more of the company
customers are self-employed and doing own businesses which is a good potential for the
company to give further insurance cover to the extended insurable activities.
In item 4 of table 4.3, regarding duration (time) of existence of customers in the

company, 47.87% of the respondents existed within the range of 1- 5 years, 22.34% of
the respondents existed within the range of 6- 10 years. 21.28% of the respondents
existed above 10 years of age and the rest 8.51% of the respondents existed less of 1 year
age. Based on the data analysis, more of the company customers (56.38%) are new
entrants existed with the range of 0-5 years. 43.62% of the customers have existed six
and above years of age in the company. Therefore as there is a tendency of outgoing long
existed customers the company should revisit and examine its way of handling customers
to have better retention power.
As indicated in table 4.3 item 5, with regard to the type of insurance coverage in the
Company/Branch, 72.34% (68) of the respondents have motor insurance cover, which is
the greatest of all. 34.04 % (32) of them have marine insurance. 18.09% (17) and 17.02%
(16) of them have life and fire & lightening insurance cover respectively. The rest 6.38%
(6) of them have other type of insurance cover. As it is shown, the dominant class of
business for insurance cover is motor (vehicles) and is also a source of problematic area
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for complaint as described by the respondents of Operational & Branch Managers during
the interview session. Therefore the company should properly handle every class of
business to be insured with a particular attention and emphasis for motor insurance.
As displayed in Table 4.3, item 6 above, with regard to the frequency of visits
respondents make to the Branch /Company to get service per month: majority of the
respondents i.e.
48.94% (46) of them come to the Branch /Company to get service once per month.
28.72% (27) of the respondents visit 1- 3 times. 12.77% (12), 6.38% (6), and 3.19% (3)
of the respondents come to get the service 4-6 times, 7-10 times, and more than 10 times
respectively. The company must take care for customers not to waste their time, money,
energy and peace of mind by coming now and then to the branch without their own
purpose and will. There should be immediate service delivery as required by customers.
4.3 Analysis and presentation of Respondents’ Responses for Questionnaires

Table 4.5. Customers’ responses with regard to the Tangibility of the Company
respondent Approximate
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1. The physical facilities of the service provider such as logo, agenda,
building, office furniture, etc will be appealing
1.Very Dissatisfied 4 4.26%

2.Dissatisfied 4 4.26%
3.Neutral 9 9.57%
4.Satisfied 46 48.94%
5.Very Satisfied 31 32.98%
Total 94 100%
2. The availability of modern technology and equipment such as
PREMIA, computer soft ware’s, etc
3.Neutral 8 8.51%
Total 94 100%
3. Neatness of employees and well-dressing, their approaches
3.Neutral 4 4.26%
Total 94 100%
4. The nature of working environment, availability of parking, security
checkup, etc

3.Neutral 21 22.34%
Total 94 100%
As depicted in item 1of the table 4.4 above, 48.94% (46) and 32.98% (31) of the
respondents satisfied and strongly satisfied respectively with the attractiveness of the
company’s physical facilities to furnish service. 9.57% (9), 4.26% (4), and 4.26% (4) of
xlii
the respondents were neutral (i.e. neither satisfied nor dissatisfied), dissatisfied and very
dissatisfied respectively. That means 81.92% (77) of the respondents were under the
category of satisfaction where as 18.08% (17) of them were under neutral and
dissatisfaction. Therefore, Abay should further improve the pleasing of physical facilities
in all branches as 18.08% of dissatisfaction level is not insignificant quantity.
As displayed in item 2 of the table 4.4, 45.74% and 35.11% of the respondents were very
satisfied and satisfied respectively with regard to the availability of modern technological
equipment in the company. 8.51% of the respondents were neutral; where as in lump sum
10.64% of the respondents were found dissatisfied and very dissatisfied. Similarly to be
more competitive and have an advantage, the Company should provide more advanced
technology and equipment such as upgrading of PREMIA software and the like to
substantially minimize the level of neutrality & dissatisfaction which is in total 19.15%.
As observed in item 3 of table 4.4 above, 51.06% and 38.30% of the respondents were
very satisfied and satisfied in respective order with the neatness of employees and their
well dressing at the time of service delivery. I.e., there is about 90% of satisfaction of
respondents with regard to approaches and neatness of employees. The company should
keep it up with further reduction of neutrality and dissatisfaction of respondents which is
about 10%.
As shown in item 4 of the table 4.4, with regard to the nature of working environment,
availability of parking, security checkup, etc 36.17% and 23.40% of the respondents were
satisfied and very satisfied while 22.34%, 10.64%, and 7.45% were found neutral,
dissatisfied, and very dissatisfied respectively. Here there is totally about 40% of
neutrality and dissatisfaction. Hence the company should fulfill the required parking for
vehicles, security checkup and good working environment such as well-furnished office.
Table 4.6. Customers’ responses with regard to the Reliability of the Company
5. The service provider respects its promises to fulfill customer
requirements
xliii
8.Neutral 12 12.77%
10. Very Satisfied 39 41.49%
Total 94 100%
6. The service provider performs service delivery in time
3.Neutral 12 12.77%
Total 94 100%
7. At time of the customer is in problem, the service provider shows due
interest in solving it

3.Neutral 12 12.77%
Total 94 100%
8. Service giver keeps the up-to-date records related to customer’s policy
accurately

3.Neutral 11 11.70%
Total 94 100%
9. The service provider is dependably serves customer
3.Neutral 7 7.45%
Total 94 100%
As can be seen from Table 4.5 above, with regard to Reliability service of the Company,
respondents rated in the following way:
In item no 5, with regard to respecting promises to fulfill customer requirements, 80.85%

of the respondents were very satisfied & satisfied. The other 12.77% and 6.38% of the
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respondents were neutral and dissatisfied/very dissatisfied respectively. Hence the
company should dwell regarding promise keeping in fulfilling customers’ needs and
minimizing the level of dissatisfaction and if possible avoid neutrality.
In item no 6, regarding in-time service delivery, in general 78.72% of the respondents, the
majority, were very satisfied and satisfied, 12.77% of them were neutral while the rest
5.32% and 3.19% of the respondents were dissatisfied and very dissatisfied respectively.
Here also as much as possible all customers should be equitably served in time. The total
of dissatisfaction and neutrality is 21.28% which is significant in quantity. Therefore the
company should give due attention in this issue in order to have all delighted customers
through proper time service delivery.
In item no 7, with regard to showing due interest in solving the problem at time the
customer is in problem, 78.73% of the respondents agreed that they are satisfied & very
satisfied, 12.77% are neutral and the remaining 8.51% are dissatisfied & very
dissatisfied. Similarly the company should focus on fair treatment of customers through
its employees with great interest to help at time of problem. Because, 12.77% neutrality
and 8.51% dissatisfaction is not insignificant in number, and there may be a probability
that those dissatisfied and neutral customers will switch to other nearby competing
companies and is difficult to trace back them again.
In item no 8, in consideration of keeping the up-to-date and accurate records related to

customer’s policy, 81.92% of the respondents agreed that they are very satisfied and
satisfied,
11.70% were neutral and the rest 6.38% of them were dissatisfied and very dissatisfied.
Here again the company should try to satisfy those customers who are not delighted with
inaccurate record keeping with regard to their policy document.
In item no 9, with regard to dependability of service provision to customers, 87.23% of

the respondents agreed that they are very satisfied and satisfied, 7.45% of respondents are
neutral and the remaining 5.32% of them were very dissatisfied and dissatisfied. The
xlv
company should still try to further improve to minimize the dissatisfaction level of those
unhappy customers in the service provision by providing customers’ needs to be first.
Table 4.7.Customers’ responses with regard to the Responsiveness of the Company

10. Employees tell customers exactly when services are performed

3.Neutral 7 7.45%
Total 94 100%
11. Employees give prompt service to customers
3.Neutral 8 8.51%
Total 94 100%
12. Employees are always interested to assist customers
3.Neutral 6 6.38%
5.Very Satisfied 47 50%
Total 94 100%
13. Employees are never too busy to respond to customers’ request
3.Neutral 15 15.96%
Total 94 100%
As shown from Table 4.6 above, with regard to employees’ Responsiveness to service
delivery of the Company, respondents rated as follows:
In item no 10, with regard to whether employees tell customers exactly when services are
performed, most of the respondents, i.e. 85.11%, were very satisfied and satisfied, 7.45%
were neutral, and the rest 7.45% were dissatisfied and very dissatisfied.
xlvi
In item no 11, considering prompt service delivery to customers, 85.10% of the
responding customers were very satisfied and satisfied, and the rest 14.90% of the
respondents were in the level of neutrality and dissatisfaction.
In item no 12, with regard to employees’ at all times interest to assist customers, 88.30%
of the respondents were very satisfied and satisfied. 11.70% of the respondents were in
the category of neutrality and dissatisfaction.
In item no 13, regarding Employees are never too busy to respond to customers’ request,
72.34% of the respondents were very satisfied and satisfied, the rest in total 27.66% of
the respondents were under the category of neutrality and dissatisfaction.
The above table shows that regarding Responsiveness in terms of employees’ tell
customers when service is performed, prompt service delivery, interest to assist
customers, and never be too busy to respond to customers’ request more positive results
have been achieved. On average more than 83% of the respondents are found at the level
of satisfaction on these services rendered to them. About 17% of the respondents are of
course found at the level of neutrality and dissatisfaction and this also needs more
attention to improve and please those dissatisfied ones. Besides, the company is on the
process to install its own system/policy namely- Customer Service and Complaint
Handling Policy to evaluate customer service activities and ultimate satisfaction of
customers.
Table 4.8. Customers’ responses with regard to the Assurance of the Company

14. The behavior of employees inspires confidence in customers

3.Neutral 11 11.70%
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Total 94 100%
15. Customers feel assured that service requests are duly followed up.
3.Neutral 9 9.57%
Total 94 100%
16. Front line personnel provide services in courteous and friendly manner
3.Neutral 5 5.32%
Total 94 100%
17. Front line employees have capacity/knowledge to answer customers’
questions
3.Neutral 8 8.51%
Total 94 100%
18. Service providers give customers individual attention
3.Neutral 15 15.96%
Total 94 100%
As depicted from above Table 4.7, considering Customers’ Responses with regard to the
Assurance of the Company, respondents rated as follows:
In item no 14, regarding the Behavior of employees which inspires confidence in

customers, 81.91% of respondents were very satisfied and satisfied. 11.70% of them were
neutral; whereas 6.39% of the respondents were at the level of very dissatisfaction and
dissatisfaction.
xlviii
In item no 15, with Customers’ feeling of assurance that service requests are duly
followed up, 82.98% of the respondents were found at a level of higher satisfaction and
only 7.45% of them found at a level of dissatisfaction while 9.57% of the respondents
were neutral.
In item no 16, with regard to Front line personnel’s service provision to customers in
courteous and friendly manner, 89.36% of the respondents were found at the level of
greater satisfaction and only 5.32% of them found at a level of greater dissatisfaction.
The rest 5.32% were neutral.
In item no 17, in consideration of Front line employees’ capacity/knowledge to answer

customers’ questions, 85.1% of the respondents were found at the level of better
satisfaction, 8.51% were at a level of neutral and the rest 6.38% of the respondents were
at the level of dissatisfaction.
In item no 18, in giving Customers individual attention in the provision of service,

74.47% of the respondents agreed that the company gives individual attention to its
customers. 15.96% of them were neutral, and the rest 9.58% of the respondents were in
general dissatisfied, arguing that the company doesn’t give individual attention to the
customers.
As it is depicted in the Table 4.7 above, Customers’ responses with regard to the
Assurance is good and positive. On the average the level of satisfaction of customers
with regard to assurance is nearer to 83% & the dissatisfaction and neutrality level
together account 17%. Hence the company should make an effort to improve further in
service follow up, knowledge/capacity of employees, and giving individual attention to
dissatisfied customers.
Table 4.9. Customers’ responses with regard to the Empathy of the Company

19. Service providers have operating hours convenient to all their

customers

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3.Neutral 7 7.45%
Total 94 100%
20. Employees providing quality services give personal attention to
customers
3.Neutral 12 12.77%
Total 94 100%
21. Service provider gives attention for customer’s best interest, heartily

3.Neutral 8 8.51%
Total 94 100%
22. Service provider understands the specific needs of its customers

3.Neutral 10 10.64%
Total 94 100%
Customers were asked to evaluate the Empathy dimension of the service quality. As it can
be seen in table 4.8 above:
With regard to convenience of operating hours to customers (S.N 19), 88.3% of the
responding customers was comfortable, while 4.25% of the respondents were not. The
rest 7.45% was neither comfortable nor discomfort able.
As far as giving personal attention to customers, by employees, with provision of quality

service (S.N 20) concerned, 80.84% of the respondents were found at a satisfactory level,
l
where as 6.39% of them in a level of dissatisfaction. The rest 12.77% were not either
satisfied or dissatisfied.
In the analysis of giving attention for customer’s best interest, heartily, by the Company
(S.N 21), 84.04% of the respondents were very happy and satisfied, but 7.45% of the
respondents were not happy rather were dissatisfied. The remaining 8.51% respondents
were neutral.
In considering the Company’s understanding of the specific needs of its customers (S.N
22), 82.98% of respondents were well satisfied, 6.39% of the respondents were much
dissatisfied. The rest 10.64% of the respondents were neither satisfied nor dissatisfied.
As per the analysis, the response of customers regarding Empathy in general is positive,
and the level of satisfaction on average is above 84% and the neutrality and
dissatisfaction is about 16%. Nevertheless, the company should make an endeavour to
improve more in the area of providing quality services, specific needs, and giving
attention for customers best interest in order to retain and make delight those neither
satisfied nor dissatisfied and dissatisfied customers.
Table 4.10. Customers’ responses with regard to the Underwriting service of the Company
23. Employees be committed to give clarification on insurance policy
benefits, rights and duties of concerned parties
3.Neutral 10 10.64%
Total 94 100%
li
24. Employees providing underwriting service have the necessary
technical and professional skill/competence
3.Neutral 7 7.45%
Total 94 100%
25. Service providers simplify insurance documents; such as policies,
proposals, endorsements, claims procedures, etc. to suite customers
3.Neutral 10 10.64%
Total 94 100%
26. Service providers build constant use of professionals; like agents,
surveyors, lawyers, etc to advice customers on insurance matters
3.Neutral 16 17.02%
Total 94 100%
27. Service providers prepare documents in the widely understood
languages to customers
3.Neutral 17 18.09%
Total 94 100%
As shown above in Table 4.9, Customers were asked to evaluate UNDERWRITING

SERVICE of the Company, and rated as follows:
Considering Commitment of employees to give clarification on insurance policy benefits,

rights and duties of concerned parties (S.N 23), 81.91% of respondents were at a level of
better satisfaction, where as 7.45% of the respondents were at a level of dissatisfaction.
The remaining 10.64% of respondents was neutral in choice.
lii
With regard to the possession of necessary technical and professional skill/competence of
employees providing underwriting service (S.N 24), 86.17% of the respondents were
(very) satisfied, while 6.39% of the respondents were found (very) dissatisfied. The rest
7.45% were neither satisfied nor dissatisfied.
In analyzing to what extent service providers/employees simplify insurance documents;

such as policies, proposals, endorsements, claims procedures, etc. to suite customers (S.N
25), 77.66% of respondents were found at optimum satisfaction level, where as 11.71%
of them was found much dissatisfied. 10.64% of the respondents were neutral.
In terms of making constant use of professionals, such as agents, surveyors, etc to advice
customers (S.N 26), 69.15% of the respondents were satisfied, 13.83% was dissatisfied
and the rest 17.02% was neutral.
In consideration of Documents preparation in the widely understood languages to

customers (S.N 27), 63.83% of the respondents are comfortable with the existing
language, 18.09% of them were not comfortable, and the rest 18.09% of the respondents
was neutral.
As per the analysis, the response of customers with regard to Underwriting Service is
positive in general, i.e. the level of satisfaction on average is above 75% and both the
neutrality and dissatisfaction is above 24%. Anyhow, the company should make a great
effort, as the number of neutral and dissatisfied customers is too many, to improve much
more in the areas of preparing documents in the widely understood languages to
customers, clarification on insurance policies, constant use of professionals; as agents,
surveyors, etc to advice customers on insurance matters, in simplifying insurance
documents to suite customers, and providing necessary technical and professional skill to
employees.
Table 4.11.Customers’ responses with regard to the Claims service of the Company
28. Employees provide adequate guide and service to customers in case of

claims
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3.Neutral 14 14.89%
Total 94 100%
29. Service providers are accessible to customers in time of claims via
telephone, in person, in writing, etc.
3.Neutral 12 12.77%
Total 94 100%
30. Employees providing claims service have adequate empowerment to
solve customer’s problem.
3.Neutral 13 13.83
Total 94 100%
31. Employees assigned in claims service are free of integrity/ ethical
problems
3.Neutral 7 7.45%
Total 94 100%
As displayed in Table 4.10 above, Customers were asked to evaluate CLAIMS SERVICE
of the Company, and reacted as follows:
Dealing with Adequate guide and service provision of employees to customers in the case
of claims (S.N 28), 75.53% of the responding customers were found satisfied, 9.57%
dissatisfied, and the other 14.89% was neutral.
liv
Regarding Accessibility to customers in time of claims via telephone, in person, in
writing, etc (S.N 29), 39.36% of the respondents were very satisfied, 41.49% were
satisfied, 12.77% were neutral and the rest 4.26% and 2.13% were very dissatisfied and
dissatisfied respectively.
In consideration of the adequacy of Empowerment of employees providing claims service

to solve customer’s problem (S.N 30), 35.11% of the respondents were found very
satisfied, 44.68% satisfied, 13.83% neutral and the rest in total 6.38% were found at a
level of dissatisfaction.
With regard to Employees assigned in claims service are free of integrity/ ethical
problems (S.N 31), 52.12% of the respondents were found very satisfied, 34.04%
satisfied, 7.45% neutral and the rest 4.26% and 2.13% were very dissatisfied and
dissatisfied respectively.
As displayed in Table 4.10 above, in general, the overall performance of Claims Service
is good. The satisfaction level of the respondents on the average is more than 80%. But
the size of neutral and dissatisfied customers on average is not so small, i.e.it is above
19%. Therefore, the company must dwell more in providing: adequate guide and service
to customers, adequate empowerment to employees, and improving accessibility to
customers in time of claims happening.
Table 4.12. Customers’ responses with regard to the Complaint handling of the
Company

32. Service providers installed complaint handling procedures in place to

the customers.
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3.Neutral 18 19.15%
Total 94 100%
33. Complaints handling procedure/system of service provider is time

effective.
3.Neutral 15 15.96%
Total 94 100%
34. Complaint handling procedure at service provider is simple and

straight forward.
3.Neutral 10 10.64%
Total 94 100%
As displayed above in Table 4.11, customers were asked to evaluate the complaint
handling of the company, and responded as follows:
In consideration of installing complaint handling procedures in place to the customers

(S.N 32), 37.23% of the respondents were found very satisfied, 29.79% satisfied, 19.15%
neutral and the rest 8.51% and 5.32% were dissatisfied and very dissatisfied respectively.
In analyzing time effectiveness of complaints handling procedure/system of service

provider (S.N 33), 35.11% of the respondents was found very satisfied, 39.36% satisfied,
lvi
15.96% neutral & the rest 7.45% and 2.13% were dissatisfied & very dissatisfied
respectively.
With regard to simplicity & straightforwardness of complaint handling procedure at

service provider (S.N 34), 41.49% of respondents found very satisfied, 37.23% satisfied,
10.64% neutral & the rest 6.38% and 4.26% were dissatisfied and very dissatisfied
respectively.
As per the general analysis shown above, with regard to Complaint handling Service, the
overall performance is moderate; i.e. the level of satisfaction on average is about 73%.
On the other hand, the total percentage of dissatisfied and neutral customers on the
average is 27%, which is very significant to deserve attention. Therefore, the company
should give top priority in installing appropriate complaint handling procedure in place,
with its time effectiveness and be simple and transparent as possible.
Table 4.13. Customers’ response with regard to overall Service quality and
Satisfaction

1. How do you evaluate the overall service quality provided
by the Company/branch?
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3.Neutral 3 3.19%
Total 94 100%
2. To what extent are efficient service delivery and quality
important for customer satisfaction in your view?
1. Extremely less important 0 0%

2. Less important 2 2.13%
3. Neutral 2 2.13%
4. Highly important 14 14.89%
5. Extremely highly important 76 80.85%
Total 94 100%
3. In general, how satisfied are you with the insurance service
provided by the company?
3.Neutral 2 2.13%
Total 94 100%
As depicted from above Table 4.12, Customers were asked to evaluate the overall Service
Quality and Satisfaction of the Company and responded as follows:
Regarding evaluation of the overall service quality provided by the Company/branch

(S.N 1), 51.06% of the respondents were found very satisfied, 35.11% satisfied, 3.19%
neutral and the rest 4.26% and 6.38% were dissatisfied and very dissatisfied respectively.
Analyzing the view of customers to the extent of importance of efficient service delivery
and quality for customer satisfaction (S.N 2), 80.85% of respondents agreed that it is
extremely highly important, 14.89% agreed it is highly important, 2.13% were neutral &
2.13% and none agreed it is less important and extremely less important respectively.
lviii
In views of satisfaction level with the insurance service provided by the company (S.N
3), 45.74% of the respondents were found very satisfied, 42.56% satisfied, and 2.13%
neutral. The rest 8.51% and 1.06% were dissatisfied and very dissatisfied respectively.
As described above, regarding the overall service quality, importance of efficient service
and satisfaction on average is rated about 90% which is positive. However, the total
percentage of neutral and dissatisfied customers is 10% which needs due consideration to
improve.
Even if the result based on SERVQUAL and other dimensions is satisfied, on the total
average, about 12% of the customers are at neutral position and this indicates that there is
high probability to shift to other insurance companies. Therefore the company may lose
its potential customers.
As depicted below in the pie chart (fig. 2.4), from all dimensions of service quality (the
five SERVQUAL and other three additional dimensions), the company is assumed to
exercise empathy widely (16%) and complaint handling least (9%). This implies that,
Abay Insurance Share Company Insurance Share Company’s Management and Share
Holders through their appointed BOD should further work on those dimensions
registering low rate such as: complaint handling, underwriting service, tangibles, etc in
order to enhance and build the competitive strength of the company.
lix
Figure 4.1:Abay ’s SERVQUAL Dimension Chart; Own Analysis, 2014
4.4 Analysis of Interview Responses
The responses from the interviewees of Abay Insurance Share Company Insurance Share
CompanyCompany’s Operational & Branch Managers are presented below. This
interview represents the summary of the result in which the majority has agreed.
Qn. 1. What is customer for you and how is your interaction?
Ans. Customer means anybody who comes to the Company/Branch for service.
Customer (client) is the backbone of the company as it is the very means of income, and
hence, the interaction/ relationship with customer is based on intimacy, trustworthiness,
& utmost good faith.
Qn. 2. In which areas of the “insurance products” is complaint more visible?
Ans. Motor Class of Business is the most visible and dominant part in terms of
customers’ complaint. Subsequently to motor is work men compensation due to the
consequential effect of motor accident. This is because more of the clients purchase
motor insurance and hence correspondingly claims will also be abundant. In addition to
this, a number of parties (stake holders) involved in the claims handling process such as
lx
garage, spare part companies, police organizations, and so on which will take substantial
amount of time and energy in order to fulfill the relevant documents. Therefore, the
interests of the parties involved in the policy and other third parties will make handling
claims of motor class of business somewhat more problematic. For instance ‘loss of use’
of the customer (policy holder) who is exposed to a particular risk because of a certain
accident of the insured object will make the complaint more due to a decline in the
financial position of the policy holder.
Qn. 3. How do you handle customer complaint in your work unit in the company?
Ans. Through fair treatment customers are tried to be properly handled. Especially
aggrieved/dissatisfied customers are given due consideration as the negative word of
mouth will have a devastating impact on the Company. A genuine discussion is
conducted with the complainant on the issue and way of convincing is reached in
between based on the policy document. If the complaint is not resolved, with all the
efforts made, it will be referred in step-wise to the next hierarchical body for better
remedy.
Qn. 4. What is the effort of your unit to improve the service quality of the company?
Ans. Through giving due respect and proper attention to customers, initiate or encourage
customers to have a say and listen to them carefully, to recruit competent and skillful
manpower to settle claims and respond to any query on time, to have re-insurance backup
for the settlement of heavy losses of customers’ property, clarification of terms, and
conditions, etc in the policy and add value for their satisfaction, try to win them through
service excellence and make them good advocators and have belongingness to the
company. Through developing existing manpower with required training to fill the gap
and provide required empowerment.
Qn. 5. Has it been established proper way of receiving customers’

suggestion/complaints? If no how would you entertain it?
Ans. No, it has not been established yet. It is on the process. I.e. Customer Service &
Complaint Management Policy is being prepared and will be realized in the very near
future. Therefore, currently customers’ suggestions and/or complaints will be handled
lxi
step by step as the case may be by front-line personnel, supervisor, manager and
executive office.
Qn. 6. Do you think that the service delivered to customers is satisfactory and
customers are happy? How do you measure it?
Ans. Yes, to some extent but not all in all are they satisfied. This is because customers
have unsatisfied greed and expect more. Besides, there are internal and external factors
which make the service delivery to be delayed. Such as internally- work load, the issue
raised will be beyond capacity and referred to next authority level, etc and externally-
understanding policy issues in times of claims, and subsequent involvement of third
party, government and other bodies for evidence purposes, etc will make customers
dissatisfied. Satisfaction or dissatisfaction of customers is measured through face-to-face
conversation with customers and their tone of voice, feedback and word of mouth.
Qn. 7. Are there enough resources to meet customers’ satisfaction? If not specify the
lack of resources with a possible remedy.
Ans. Yes, of course. But the existing manpower needs further required skill training in
their profession to be more effective, efficient and competitive vis-à-vis with other peer
companies’ work force. There is also shortage of man power in some work units,
service/working vehicles and utility problems as electric power interruption and tele
network problems. As a remedy, the company should purchase additional working
vehicles, employ required personnel, & provide generators and Evideo to minimize
power interruption and network problems respectively.
Qn. 8. Do you have any other comment / suggestion regarding customer service
delivery?
Ans. It is better for the company to properly and adequately start e-mail service, install
call center, door to door service, adopt on time service delivery and keeping its promise,
make customers have clear understanding of policy and its ingredients such as excess
recovery, exceptions, fraudulent acts etc. Give due consideration for the internal
workforce (employees) and motivate them, provide commensurate empowerment. Avoid
unnecessary interference with in various work units from up/top to down the bottom.
lxii
4.5 The Ethiopian Insurance Industry
The major challenges/problems of the Ethiopian Insurance Industry in customer handling

are: unfair/unhealthy competition on premium rate cutting(under-pricing), higher
premium rates that the public or household can’t afford and increasing claims cost, lack
of new insurance product/service development, lack of required information exchange
system among insurance companies, unfair competition between state-owned and private
insurance companies, lack of public awareness of insurance, life insurance products,
insurance policies & their advantages.
The main factors that determine service quality for customer satisfaction in the industry
/insurance companies are: ability to perform promised services in time, capability of
delivering the service with accuracy and adequacy, knowledge of the product/service,
employees’ courtesy towards customers, willingness to help /provide prompt services and
appearance of facilities, personnel, communication skill/materials, etc. If there is a gap in
the perception of these mentioned service qualities between employees and customers,
customer dissatisfaction is inevitable to occur. This will have an effect on quality of
service/image of insurance companies and their employees and in finality affects the
ultimate business prospects i.e. profitability.
4.5.1 Functions of the Supervisory Authority with regard to Insurance Business

According to the proclamation No. 86/1994, the principal function of the supervisory
authority (National Bank of Ethiopia) with regard to insurance business in the country is
to formulate policy:
a) To promote the business of insurance in Ethiopia
b) In respect of reinsurance and of investment of insurance funds; and
c) On such other matters as may be conducive to the attainment of sound insurance
business in Ethiopia.
4.5.2 The General Status/information of the Ethiopian Insurance Industry
The first & dominant actor in the insurance industry sector is the state-owned Ethiopian
Insurance Company (EIC) established in the year 1975. The total number of its branches
reached 60. As it is observed in the table below (Table 4.13), NICE, Awash & Africa were
established in 1994 where as, Nyala &Abay in 1995. Currently the total number of
lxiii
branches for NICE, Awash, Africa, Nyala &Abay reached 22, 33, 19, 21 & 32
respectively. Global & UNIC insurances were founded in the year 1977 and currently
their branches reached 12 & 29 respectively. Nib Insurance Company was founded in
2002 and has 24 branches. The rest insurance companies: Lion, Ethio-life, Oromia
&Abay Insurance Share Company were established in the year 2007, 2008, 2009 & 2010
respectively. Their branches in respective order are: 21, 6, 24 & 15. Berhan & Bunna
founded in the year 2011 with currently available branches in number 9 & 4 respectively.
Finally; Tsehay & Lucy insurers (the youngest) were established in the year 2012 with
number of branches 8 & 4 respectively.
Table 4.14. The General Status of Ethiopian Insurance Industry
S.N Name of insurer Year/Date of No of Remark

Establishment branches
1. EIC 1975 60
2. NICE 23/09/1994 22
3. Awash 01/10/1994 33
4. Africa 01/12/1994 19
5. Nyala 06/01/1995 21
6. Abay 11/04/1995 29 3 branches recently installed
7. Global 11/01/1997 12
8. UNIC 01/04/1997 29
9. Nib 01/05/2002 24
10. Lion 01/07/2007 21
11. Ethio-life 23/10/2008 6
12. Oromia 26/01/2009 24
13. Abay Insurance 26/07/2010 15
Share Company
14. Berhan 24/05/2011 9
15. Bunna Aug 2011 4
16. Tsehay 28/03/2012 8
17. Lucy Nov 2012 4
Total 340
Source: Own computation based on data obtained from NBE & Eth. insurance
companies.
lxiv
4.5.3 Abay 's Market Share in the Insurance Industry vis-à-vis Competitors of
General Insurance (Non-life) in GWP
As shown in the Table 4.14 below, regarding General Insurance performance of the
insurance industry in Ethiopia, the 5 years average gross premium and market share for
EIC (the only Government Insurance) is Birr 1,160.36 million (about 40%) and 41.31%
respectively. The average gross premium and market share of the rest privately owned
insurance companies in total is Birr 1747.88 Million (about 60%) and 58.69%
respectively. With regard to Abay ’s position in the insurance industry in the five years’
both average premium and market share it stood 5th in rank, next to EIC, Africa, Nib and
Awash. That means Abay almost became last comparing it with main/peer group
competitors. Therefore, the BOD and management of the company should investigate all
possible reasons and try to find solutions to please all internal (employees) and external
customers to have a good competitive position in the industry.
lxv
Table 4.15. Abay 's Market Share (in %age) in the Insurance Industry vis-à-vis Competitors of General Insurance (Non-life) in
GWP for the Period 2021/22-2022/22 (five years)
INDUSTRY ANNUAL GROSS WRITTEN PREMIUM, MARKET SHARE AND GROWTH RATE OF 2021/22 AND 2022/23
No. Compan Non-Life Life Total Takaful
y
2021/22 2021/22 2022/23 2022/23 Growth 2021/22 2021/22 2022/23 2022/23 Growth 2021/22 2021/22 2022/23 2022/23 Growth
Mkt Mkt Mkt Mkt Mkt Mkt
Share Share Share Share Share Share
1 EIC 6,335.00 41% 6,654.50 31% 5% 206.00 16% 247.00 18% 20% 6,541.00 40% 6,901.50 30% 6%
2 Awash 1252 8% 2,076.00 10% 66% 497.00 39% 275.40 20% -45% 1,749.00 11% 2,351.40 10% 34% 40.00
3 Nyala 700 5% 1,070.00 5% 53% 192.00 15% 267.60 19% 39% 892 5% 1,337.60 6% 50%
4 United 845 6% 1,400.00 7% 66% 85.00 7% 155.00 11% 82% 930 6% 1,555.00 7% 67%
5 Oromyia 920 6% 1,640.00 8% 78% 19.30 2% 47.00 3% 144% 939.3 6% 1,687.00 7% 80% 26.00
6 Nile 717 5% 1,011.60 5% 41% 67.30 5% 70.78 5% 5% 784.3 5% 1,082.38 5% 38% 10.43
7 NIB 645 4% 1,000.00 5% 55% 64.70 5% 104.30 8% 61% 709.7 4% 1,104.30 5% 56%
8 Tsehay 585 4% 923.50 4% 58% 0.00 0 0 - 585 4% 923.50 4% 58%

9 Africa 558.5 4% 1,038.00 5% 86% 25.00 2% 32.95 2% 32% 583.50 4% 1,070.95 5% 84%
10 Bunna 461.8 3% 910.00 4% 97% 11.00 1% 20.00 1% - 472.8 3% 930.00 4% 97%
11 Lion 463.9 3% 869.00 4% 87% 0.00 0 4.40 0% - 463.9 3% 873.40 4% 88%

12 Abay 405 3% 655.10 3% 62% 20.00 2% 23.10 2% 16% 425 3% 678.20 3% 60%
13 NICE 410 3% 526.73 2% 28% - 0 0 - 410 2% 526.73 2% 28%

14 Ethio life 274 2% 406.20 2% 48% 72.90 6% 124.80 9% 71% 346.9 2% 531.00 2% 53%
15 Berehan 242 2% 410.40 2% 70% - 0 - 242 1% 410.40 2% 70%

16 Lucy 213 1% 285.20 1% 34% - 0 - 213 1% 285.20 1% 34%
17 Global 162 1% 291.00 1% 80% - 0 - 162 1% 291.00 1% 80% 56.60
18 Zemen 77 1% 327.50 2% 325% - 0 - 77 0% 327.5 1% 325%
TOTAL 15,266.20 100% 21,494.73 100% 41% 1,260.20 100% 1,372.33 100% 9% 16,526.40 100% 22,867.06 100% 38% 133.03
Source: Abay insurance’s Corporate Budget Preparation Document for the Fiscal Year 2013/14
66
4.5.4 Abay 's Market Share in the Insurance Industry vis-à-vis Competitors of Long-
term (Life) Insurance in GWP
As shown in the Table 4.15 below, the 5 years’ average gross premium and market share
for EIC
(the only Government Insurance) is Birr 94.96 million(about 49%) and 49.38%
respectively. The average gross premium and market share of the rest privately owned
insurance companies in total have Birr 99.49 Million (about 51%) and 50.62%
respectively. With regard to Abay ’s position in the five years’ both average premium and
market share has stood 5th in rank, next to EIC, Awash, Nyala, UNIC and EIC, Nyala,
Awash, UNIC respectively. Similarly, here Abay ’s position among the peer competing
groups is last. Hence the BOD & the management of the company must thoroughly
discuss the possible reasons why this is so, and find the required solutions in order the
company to get a better rank in the peer groups.
67
Table 4.16. Abay 's Market Share in the Insurance Industry vis-à-vis Competitors of
Long-term
5 Years -
Companies
2008/09 2009/10 2010/11 2011/12 2012/13

Insurance
Average
Market
Market
Market
Market
Market
Market
Premium
Premium
Premium
Premium
Premium
Premium
Share
Share
Share
Share
Share
Share
S/
N
1 Abay 9.5 9.49 11 8.85 12.73 7.11 18.4 6.89 20.4 6.82 14.41 7.83
2 Africa 9 8.99 10.3 8.29 12.31 6.87 13.3 4.98 20.2 6.75 13.02 7.18
3 Awash 5.5 5.49 7 5.63 18 10.05 18.7 7 60 20.06 21.84 9.65
4 Global N.A*
5 NICE N.A
6 Nyala 10 9.99 15 12.07 20.71 11.56 25 9.36 26.8 8.96 19.5 10.39
7 UNIC 8 7.99 10 8.05 24 13.4 15.2 5.69 16.9 5.65 14.82 8.15
8 Nib 3.6 3.6 5 4.02 10.67 5.96 13.5 5.05 13.3 4.45 9.21 4.62
9 Lion N.A
10 Oromia 0.07 0.03 1.58 0.53 0.83 0.28
11 Abay Insurance N.A
Share Company
12 Berhan 0 N.A
13 Ethio- 1 1 4 3.22 4 2.23 6.2 2.32 14.1 4.71 5.86 2.7
Life
14 Tsehay N.A
15 Lucy N.A
16 Bunna N.A
17 EIC 53.52 53.46 62 49.88 76.7 42.82 156.8 58.69 125.8 42.06 94.96 49.38
Life Total 100.12 124.3 179.12 267.17 299.1 194.5
N.A* = Data Not Available.
Source: Abay insurance's Corporate Budget Preparation Document for the Fiscal
Year 2013/14
68
4.5.5 Comparison of Abay ’s Asset with peer groups in the insurance industry in
General Insurance in terms of total assets from the year 1996 to 2013:
As shown below in the Table 4.16, comparing the peer group insurance companies in the
Industry with regard to total assets ( total liabilities and share holders’ fund) position in
Balance Sheet of general insurance for 18 years; Abay was the 2nd next to EIC. I.e. it
was the first among the private insurers for 12 consecutive years (1996- 2007).
But for the subsequent years, Abay left its position & had become 3rd, 4th, 5th, and 7th
for the periods 2008-09, 2010, 2011-12, and 2013 respectively. This is really terrible
when such a leading company among the private insurers next to EIC has gradually
become lagging behind/ follo-
wers to others.
Table 4.17. Ethiopian Insurance Industry Balance Sheet – General (None-Life)

Insurance for the Year Ended June 30, 1996-2013
(In millions Birr)
Name of Insurance Companies, their Total Assets, and Position(Rank)

-Year
-Asset EIC Africa Nib Awash UNIC Abay Nyala
-Rank
1996-2007:
Asset (average) 593.16 90.26 47.96 73.52 59.84 111.89 89.96
Rank 1st 3rd 7th 5th 6th 2nd 4th
2008-2009:
Asset (average) 1,116.96 270.98 126.14 96.21 63.65 126.50 120.88
Rank 1st 2nd 4th 6th 7th 3rd 5th
2010:
Asset 1,104.45 333.44 251.28 216.85 212.11 225.03 187.78
Rank 1st 2nd 3rd 5th 6th 4th 7th
2011-2012:
Asset (average) 961.29 468.06 390.44 399.75 308.62 315.89 261.66
Rank 1st 2nd 4th 3rd 6th 5th 7th
2013:
Asset 2,080.40 496.64 517.61 558.71 432.24 423.11 426.36
Rank 1st 4th 3rd 2nd 5th 7th 6th
Own Analysis; based on source: NBE Data
69
4.5.6 Comparison of Abay ’s Asset with the peer groups in the insurance industry in
Long-term Insurance in terms of total assets from the year 2001 to 2013:
As it is seen below in the Table 4.17, comparing the peer group insurance companies in
the
Industry with regard to total assets ( total liabilities and share holders’ fund) position in
Balance
Sheet of long-term insurance for 13 years; Abay was the 3 rdin total asset position next to
EIC & UNIC during the year 2001& 2002. I.e. it was the 2 ndamong the private insurers.
The same thing happened within four subsequent periods (2003-2006).
But for the succeeding years (2007- 2009), Abay missed its position and had become 4 th
next to EIC, UNIC, and Africa. During the remaining four consecutive years ( 2010-12)
& 2013) the position of Abay further declined and had become 6 th next to EIC, Africa,
UNIC, Nyala, Awash & EIC, Awash, Africa, UNIC, Nyala respectively. This gradual
decline in the asset position of the company will eventually lead it to be less competitive,
unless and otherwise a very constructive measure is taken by the concerned company’s
officials in order the company be more competitive and regain its position by thoroughly
discussing why the company has become declined from year to year. The peer group
insurers’ asset position is tabulated below as follows.
70
Table 4.18. Ethiopian Insurance Industry Balance Sheet – Long-term (Life)
Insurance for the
Name of Insurance Companies, their Total Assets, and Position(Rank)

-Year
-Asset EIC Africa Nib Awash UNIC Abay Nyala
-Rank
2001 –’02:
Asset (average) 132.24 4.33 N.A 4.48 8.78 5.61 N.A
st th th nd rd
Rank 1 5 - 4 2 3 -
2003 –’05:
Asset (average) 161.68 1st 6.02 N.A 4.19 10.78 7.98 N.A
Rank 4th - 5th 2nd 3rd -
2006:
Asset 196.26 8.24 N.A 8.25 11.95 9.75 4.51
st th th nd rd
Rank 1 5 - 4 2 3 6th
2007:
Asset 219.10 11.81 N.A 10.64 13.17 10.86 6.26
Rank 1st 3rd - 5th 2nd 4th 6th
2008:
Asset 255.64 17.72 10.84 13.62 19.03 15.09 7.82
Rank 1st 3rd 6th 5th 2nd 4th 7th
2009:
Asset 298.81 24.31 14.77 18.57 25.11 20.20 15.63
Rank 1st 3rd 7th 5th 2nd 4th 6th
2010 – 2012:
Asset (average) 384.70 44.35 20.64 33.75 36.48 28.57 34.44
Rank 1st 2nd 7th 5th 3rd 6th 4th
2013:
Asset 551.62 70.94 28.48 104.67 59.19 43.36 49.68
Rank 1st 3rd 7th 2nd 4th 6th 5th
Own Analysis, 2014; based on source: NBE Data.
71
4.5.7 Status of Employees’ Termination of Abay Insurance Share Company
Insurance Share CompanyCompany during the Fiscal Year 2013/14
The company has 306 permanent employees during the year specified. But as depicted in
the table below 58 employees have terminated during the year.
The possible reasons for terminating an agreement are: better opportunities, self
employment, further education, go to other foreign countries, not specified, disciplinary
cases, retirement, and etc. Their percentage share is displayed as follows in the table
Table 4.19. Terminated Employees of Abay Insurance Share Company Insurance

Share CompanyCompany in 2013/’14
S. No of Employees Percentage Possible Reasons Remark

N terminated (%)
1. 27 46.55% Better opportunity
2. 8 13.79% Self-Employment
3. 1 1.72% Further education
4. 3 5.17% Go to abroad
5. 11 18.97% Not specified
6. 4 6.90% Disciplinary measure
7. 2 3.45% Retirement
8. 2 3.45% Death
58 100.00%
Own Analysis; based on source: 2013/16 Annual Report of HRMPAD of Abay .
As shown in the table above, the number of internal customers (employees) leaving the
company for various reasons are many. Among the reasons, ‘better opportunity’ takes the
lion share (about 47%). If we compare the number of terminated employees with the total
employees in the company in terms of percentage, it is nearer to 19% which is
significant. In terms of position, most (almost all) of those leaving the company is less
and/or equal to divisional heads, senior officers, officers and so on. This is because other
peer group companies’ competitive pay and fringe benefits have been found more
attractive. As a result of this, Abay has got a name ‘training center’ as it recruits
employees, sooner or later they terminate and switch to other insurance companies. This
72
has been habituated in the company which is a waste of time, money and energy in terms
of frequent vacancy advertisement, screening and selection, placement, orientation,
introducing new ones to existing employees, etc. Such rush out trend of terminating
employees seems to continue unless the company takes a very serious measure to
improve and update in time the scale of competitive salary and commensurate benefit
packages and narrows the higher gap in salary/ benefit between hierarchical positions by
uplifting the salary and benefit of those very low paid positions which is very
discouraging and demoralizing for the workforce not to be more productive and proactive
for the company’s competitive advantage.
4.5.8 Policy lapsed/Terminated Customers of Abay during 2013/14 Budget Year
As depicted in the Table 4.19 below, about 36.14 million Birr premium, which is very
significant in magnitude, is lost within a year with a total policy of 5,834 due to
terminated customers. The possible reason for this is due to claim complaint, high
premium cost to be paid by customers to the company, loss of interest or not willing to
renew, project phase out, etc of which claims complaint and high premium rate take lion
share of the problems.
Due to policy lapsed or termination, 3658 number of customers left the company which is
about 23% losses of customers from the City branches. As the customer service principle
says keeping the existing customers with optimum satisfaction level is more
advantageous than searching new ones as exploring new customers demands high
cost/expense. Therefore the company should further work in customer handling in terms
of excellent customer service in claim settlement, setting commensurate premium rate,
proper psychological treatment to please customers to renew their policies and creating
warmest customer relationship.
73
Table 4.20. Status of A.A City Branch customers of Abay whose policy
lapsed/terminated during 2013/14 budget Year
S.N Name of Branch No of Terminated No of Lapsed Premium Lost

Customers Policies (Birr)
1. Kirkos 531 803 9,020,000.29
2. Tewodros 386 468 3,757,030.68
3. Addisketema 382 453 1,646,618.98
4. Beklobet 665 818 6,337,124.05
5. Gerji 437 598 2,375,924.66
6. Kality 384 476 2,060,597.00
7. Bole 170 225 1,161,166.17
8. Life 2 2 293,000.00
9. Abakoran 468 641 4,720,200.85
10. Megenagna 233 1350 4,764,384.21
Total 3,658 5834 36,136,046.89
Own Analysis; based on source: 2013/14 Data of Branch Operations Dep’t of Abay
4.5.9 Relationship between SERVQUAL Dimensions and Customer Satisfaction
The table 4.2, below, shows the nature of correlation exists between customer satisfaction
and service quality dimensions (based on SPSS version 20, Annex V). We can observe
that all the eight service quality dimensions have significant correlation with customer
satisfaction.
As we see from the table 4.20 below, the highest correlation is between customer
satisfaction and complaint handling with correlation coefficient of 0.947. This strong
correlation signifies the importance of executing customer complaints handling policy in
place which has strong human touch elements on the realization of customer satisfaction.
The other human touch variable is the underwriting service proved to have strong
positive relationship with customer satisfaction by scoring the second highest correlation
with correlation coefficient of 0.941. Here clarification/simplification of policies,
proposals, etc, & constant use of professionals/employees with technical
skill/competency have strong correlation with satisfaction. Tangibles scored the third
highest correlation coefficient which is 0.939. This strong correlation shows that the
74
company should provide appealing physical facilities & equipment, attractive working
environment and well-dressing employees to satisfy its customers. Claims service scored
the fourth highest correlation coefficient of 0.930. The result shows the importance of
providing adequate guide and service to customers, adequate empowerment to the
concerned employees to solve encountered problems.
Reliability scored the fifth highest correlation coefficient, 0.928. The result shows the
importance of respecting promises and in time service delivery, keeping
up-to-date/accurate records to the satisfaction of customer.
Responsiveness scored the sixth highest correlation coefficient with customer

satisfaction, 0.922. The result shows the significance of being interested to assist & give
prompt service to customers, always respond to customers’ request. Assurance scored the
seventh highest correlation coefficient, 0.920 with customer satisfaction. This means that
assuring customers’ service request is duly followed-up, equip front-line employees with
required capacity/ knowledge to answer customer’s request and provide individual
attention to customers. Empathy scored the eighth highest correlation coefficient, 0.919
with customer satisfaction. The result shows that understanding customers’ specific
needs, best interest, personal attention and time convenience are of paramount
importance for their satisfaction.
Table 4.21. Relationship between Customer satisfaction and Service quality

dimensions
Tang Reliab Responsive Assur Empathy U/writing Claims C/handling
Spearman’s rho
Customer satisfaction
.939** .928** .922** .920** .919** .941** .930** .947**
correlation Coefficient
Sig. (2-tailed)
N .000 .000 .000 .000 .000 .000 .000 .000
94 94 94 94 94 94 94 94
** Correlation is significant at the 0.01 level (2-tailed).
Own Survey, 2016
75
4.5.10 Frequency, Mean and Mean average of Customers’ perception on
SERVQUAL Dimensions
SPSS has also been applied to test status of customers’ perception on the 5 service quality
dimensions and 3 additional variables, in total 8 dimensions.
As it is well observed in the table 4.21 below, each mean and mean-average score of all
the service quality dimensions are higher than the median value of 3. This shows that
customers’ perception of service quality is higher regarding that Abay Insurance Share
Company Insurance Share Companycompany needs to: have better physical appearance
& modern equipment, perform the promised service accurately/dependably, be willing to
help customers & provide prompt service, have better knowledge & courtesy of
employees to inspire trust and confidence, give individualized attention & care of
customers, prepare documents/policies in more understandable language to customers,
adequately empower its employees to solve customers’ problems & improve accessibility
to customers in occurrence of claims, implement Customer service and Complaint
Management Policy in order to provide standardized service delivery and ultimate
customer satisfaction.
76
Table 4.22. Frequency, Mean and Mean average of Customers’ perception on
SERVQUAL Dimensions:
Tangibles 1 2 3 4 5 Total Mean Mean Average

Tangible 1 4 4 9 46 31 94 4.02
Tangible 2 5 5 8 33 43 94 4.11 4.01
Tangible 3 2 4 4 36 48 94 4.32
Tangible 4 7 10 21 34 22 94 3.57
Reliability 1 2 3 4 5 Total Mean Mean Average
Reliability 5 3 3 12 37 39 94 4.13
Reliability 6 3 5 12 35 39 94 4.09 4.17
Reliability 7 3 5 12 38 36 94 4.05
Reliability 8 3 3 11 33 44 94 4.19
Reliability 9 3 2 7 27 55 94 4.37
Responsiveness 1 2 3 4 5 Total Mean Mean Average
Responsiveness 10 3 4 7 34 46 94 4.23
Responsiveness 11 3 3 8 32 48 94 4.27 4.18
Responsiveness 12 2 3 6 36 47 94 4.31
Responsiveness 13 8 3 15 33 35 94 3.89
Assurance 1 2 3 4 5 Total Mean Mean Average
Assurance 14 4 2 11 34 43 94 4.17
Assurance 15 3 4 9 26 52 94 4.28 4.20
Assurance 16 4 1 5 37 47 94 4.30
Assurance 17 3 3 8 35 45 94 4.23
Assurance 18 4 5 15 33 37 94 4.00
Empathy 1 2 3 4 5 Total Mean Mean Average
Empathy 19 3 1 7 41 42 94 4.26
Empathy 20 2 4 12 27 49 94 4.25 4.23
Empathy 21 3 4 8 32 47 94 4.23
Empathy 22 2 4 10 39 39 94 4.16
77
Table 4.23Frequency, Mean and Mean average of Customers’ perception on
SERVQUAL Dimensions (cont’d):
Underwriting 1 2 3 4 5 Total Mean Mean Average
Underwriting 23 3 4 10 30 47 94 4.21
Underwriting 24 2 4 7 36 45 94 4.26 4.02
Underwriting 25 4 7 10 29 44 94 4.09
Underwriting 26 5 8 16 32 33 94 3.85
Underwriting 27 5 12 17 31 29 94 3.71
Claims service 1 2 3 4 5 Total Mean Mean Average
Claims service 28 3 6 14 32 39 94 4.04
Claims service 29 4 2 12 39 37 94 4.10 4.12
Claims service 30 3 3 13 42 33 94 4.05
Claims service 31 4 2 7 32 49 94 4.28
Complaint handling 1 2 3 4 5 Total Mean Mean Average
Complaint handling 32 5 8 18 28 35 94 3.79
Complaint handling 33 2 7 15 37 33 94 3.98 3.94
Complaint handling 34 4 6 10 35 39 94 4.05
Own survey, 2014
78
CHAPTER FIVE
5. SUMMARY, CONCLUSION, RECOMMENDATION,

&RECOMMENDATION
5.1 Summary of Major Findings
Based on the data analysis and interpretation, the major findings are summarized as
follows:
30% of front-line employees were not happy in their jobs due to workload, the routine
nature of the work, lack of promotional growth, and unsatisfactory salary, yet they need a
long journey to reach the top/middle-level management to get an optimum pay and
benefits package.
Regarding training in customer service delivery or complaint handling, 30% of the

employees have not had the opportunity to train. This is because they are new and/or the
company hesitates to provide such training.
Regarding the opportunity for employees to participate in decision-making about service

delivery, 20% of the employees have not been given the chance to make decisions.
Regarding the duration (time) of customers' existence in the company, 56.38% of the
company's customers are new entrants who have been with the company for 0-5 years.
Regarding the type of insurance coverage in the Company/Branch, motor insurance cover
is the dominant, accounting for 72.34%, and is also a significant source of customer
complaints during maintenance and claims.
Regarding the nature of the working environment, availability of parking, and security
checks, about 40% of employees expressed neutrality and dissatisfaction.
There was an average of 17% neutrality and dissatisfaction of customers regarding

Assurance, in terms of service follow-up, employees' knowledge/capacity, and giving
individual attention to dissatisfied customers.
79
The neutrality and dissatisfaction level of customers, on average, is about 16% regarding
Empathy in providing quality services, addressing specific needs, and giving attention to
customers' best interests.
The neutrality and dissatisfaction of customers is above 24% with regard to Underwriting
Services, such as in the areas of preparing documents in widely understood languages,
clarifying insurance policies, and the constant use of professionals.
Regarding the performance of Claims Service, the size of neutral and dissatisfied
customers, on average, is above 19% in terms of adequate guidance and service to
customers, adequate empowerment of employees, and improving accessibility to
customers when claims happen.
In the analysis of customers' Complaint handling Service, the total percentage of

dissatisfied and neutral customers, on average, is 27%, which is very significant and
deserves attention. The overall performance is moderate, as only 37.94% of customers
are highly satisfied on average.
Regarding Abay's comparative position in the insurance industry over the five years from
2008/09 to 2012/13, Abay's average premium and market share in general and long-term
insurance were almost the lowest among the main/peer group competitors/insurers.
Comparing the peer group insurance companies in the industry with regard to total assets
(Total Liabilities and Shareholders' Fund) position in the Balance Sheet of general
insurance for 18 years, Abay was the 2nd next to EIC or the first among the private
insurers for 12 consecutive years (1996-2007). But for the subsequent years, Abay lost its
position and became 3rd, 4th, 5th, and 7th for the periods 2008-09, 2010, 2011-12, and
2013, respectively.
Comparing the peer group insurance companies in the industry with regard to total assets
(Total Liabilities and Shareholders' Fund) position in the Balance Sheet of long-term
insurance for 13 consecutive years, Abay was the 3rd in total asset position next to EIC &
UNIC or 2nd among private insurers for six subsequent periods (2001-2006). But for the
succeeding years (2007-2013), Abay missed its position and became 4th & 6th in rank.
80
There has been a higher turnover (termination) of employees and customers in Abay in
the year 2013/14. The number of terminated employees compared with the total number
of employees in the Company, in terms of percentage, is close to 19%, which is
significant. Due to policy lapse or termination, 3,658 customers left the company, which
is about a 23% loss of customers from the City branches only. In terms of premium
revenue, Abay lost Birr 36,136,046.89 within a year from the City branches only, which
is a very significant amount, due to the termination of those customers with a total
number of lapsed policies of 5,834.
The observable challenges in the insurance industry regarding customer handling are:
unhealthy premium rate cutting, increasing claims cost, lack of information exchange
system, lack of public awareness of insurance, new insurance product/service
development, and unfair competition between the state-owned and private insurance
companies.
5.2 Conclusions
The study used the SERVQUAL Model to analyze the level of customer satisfaction by
measuring customers' perceptions regarding the quality of service delivered by the
insurance company using the five service quality dimensions: Tangibles, Reliability,
Responsiveness, Assurance, and Empathy, plus three additional variables - Underwriting,
Claims service, and Complaint Handling. These eight dimensions and their respective
attributes of the model are expressed using a five-point Likert Scale: Very dissatisfied,
Dissatisfied, Neither Satisfied nor Dissatisfied, Satisfied, and Very satisfied.
Based on the findings of the study, the following conclusions are forwarded:
 The company has accomplished less in terms of providing training and pleasing its
employees in their job roles, particularly with regard to customers' complaint
handling and motivational packages such as salary and benefit packages. If the
company does not care for and appreciate its staff, they might move to other, better
competitors who can satisfy them.
 About 20% of the employees were not empowered to make decisions regarding
service delivery in the company. This will cause delays and wastage of time, energy,
and money for the company's customers.
81
 Motor insurance is the dominant class of business in terms of insurance coverage,
accounting for 72.34%, and is also a good source of premium. Unless this business is
handled with excellent and prompt service delivery, it will be a source of complaints
in claims handling, resulting in customers switching to other insurers that provide
them with proper service.
 Regarding the duration of customers' existence with the company, more than half
(56.38%) of the company's customers are new entrants who have been with the
company for 0-5 years. This shows a tendency of long-standing customers leaving,
which causes the company to lose a significant amount of premium revenue.
 Nearly 40% of customers expressed neutrality and dissatisfaction with the nature of
the working environment, availability of parking, and security checks. Unless due
consideration is given to improve these aspects, customers will be further dissatisfied
and hesitant to continue doing business with the company.
 In terms of assuring service follow-up and the capacity of employees to give
individual attention to dissatisfied customers, 17% of customers expressed
dissatisfaction and neutrality. Regarding Empathy, the dissatisfaction and neutrality
level of customers on average is about 16% in providing quality services, addressing
specific needs, and giving attention to the best interests of customers. Therefore,
employees need to be further equipped with the required knowledge and motivation
to be proactive and self-starters in pleasing dissatisfied customers individually to
retain them sustainably.
 With regard to underwriting services, the dissatisfaction and neutrality of customers is
more than 24%, which deserves due attention, care, and emphasis, as underwriting
service is the ultimate source of the company's overall revenue. This requires an all-
out and concerted effort to improve the service, such as preparing required documents
in widely understood languages like Amharic, regular use of professionals, and
equipping employees with necessary technical and professional skills.
 Regarding claims service, the total size of dissatisfaction and neutrality is above 19%,
which also needs due care. If the claims handling process makes customers annoyed
in every class of insurance business, especially in the motor insurance business,
which contributes a major share of revenue, the company will lose its comparative
82
financial position as customers are forced to exit and go to other competitors.
Adequate training and empowerment of employees are required to provide adequate
guidance and immediate service, as well as accessibility to customers at the time of
claims occurrence.
 The total percentage of dissatisfied and neutral customers on average is 27%
regarding Complaint Handling Service. As this is significant, it requires top attention.
Executing a Customer Service and Complaint Management Policy is of paramount
importance for the company to provide standardized service delivery and ultimate
customer satisfaction.
 In the average premium and market share analysis of the insurance industry in general
and long-term insurance over a five-year period (2008/09-2012/13), Abay had
become almost last in rank among its peer groups. Besides, in total assets position in
both general and long-term insurances (for 18 and 13 years respectively), Abay had
steadily declined from year to year and lost its remarkable financial position,
becoming the bottom of the rank compared to its peer groups. This trend will further
continue, and Abay will also be subsequent to other insurance companies other than
the peer groups in its market share and financial position if and only if the company
does not take sound, proactive, and participatory measures with required stakeholders
to make significant improvements to regain its competitive and comparative position.
 There has been a higher turnover of customers and employees observed in the
Company in 2013/14. Due to policy termination, 3,658 customers, about 23% of the
City branches' customers, left the company. As a result, Abay lost 5,834 policies with
a total of Birr 36,136,046.89 in premium revenue. Regarding employees, 19% of the
total number of employees have terminated, which is significant. Hence, Abay should
revisit and radically improve its way of handling both external and internal customers
with duly attractive relationships in all aspects, with particular emphasis on excellent
customer service and competitive pay and benefit packages.
83
5.3Recommendations
Based on the overall assessment and findings of the research/study, the following major
recommendations are forwarded:
 Abay Insurance Share Company's management should strive to satisfy its customers
by creating proper communication, a favorable working environment, and showing
commitment towards achieving the desired needs and wants of customers. Due to
policy lapses, a significant number of customers, about 23%, left the company from
the City branches. More than half of the company's customers are new entrants who
have existed within the range of 0-5 years. This shows a tendency of outgoing long-
existing and potential customers, which makes the company lose a good amount of
income. Therefore, I recommend that the company should improve its way/strategy of
customer handling, as customers are the primary source of premium revenue.
 As far as Tangibility is concerned, it is recommended that the company should fulfill
good working environments, such as required parking for vehicles and well-furnished
offices in branches, as the magnitude of neutrality and dissatisfaction of customers is
high, about 40%. This makes customers hesitant to come to the company.
 Regarding empathy, assurance, responsibility, and reliability, though the satisfaction
of customers is positive, much more can be done in terms of customers' best
interests/needs, service follow-up and individual attention, promise-keeping in
fulfilling customers' needs, and keeping up-to-date and accurate records related to
customers' policies.
 With regard to Underwriting services, dissatisfaction and neutrality of customers is
more than 24%, which really deserves due attention, care, and emphasis, as
underwriting service is the ultimate source of the company's overall revenue.
Therefore, it is strongly recommended that an all-out and concerted effort is to be
made to improve the service quality, such as preparing required documents in widely
understandable languages, regular use of professionals, and equipping employees
with necessary technical and professional skills.
84
 Regarding Claims service, I strongly recommend that the company should show the
required dedication and make it practical in providing adequate guidance and service
to customers, adequate empowerment to the concerned employees to solve problems
on the spot, and improve accessibility to customers when claims occur to minimize
the shortfall, as neutral and dissatisfied customers in this regard are, on average,
above 19%.
 As per the analysis of the eight service quality dimensions, regarding Complaint
handling service, the level of customer satisfaction, on average, is the least of all,
which was about 73%. On the other hand, the total percentage of dissatisfied and
neutral customers, on average, is 27%. Therefore, it is highly recommended that the
company should give top concern to installing an appropriate complaint handling
procedure and act accordingly to fully resolve complaints and retain satisfied and
loyal customers for the long run via quality and prompt service delivery.
 In the Gross written premium (GWP), Market share, and Total Assets analysis of the
insurance industry, in general and long-term insurance, Abay had steadily declined
from year to year and gradually lost its remarkable financial position, finding itself
almost at the bottom of the rank compared to its peer groups. Therefore, I strongly
recommend that the company should feel remorseful and take all required endeavors,
proactive and participatory measures with all concerned, in order to make a great deal
of all-round improvement in appropriate customer handling and quality service
delivery in the eyes of the customer to regain its competitive strength and
comparative position in the industry.
 As per the analysis, there has been a high turnover of employees, about 19% of the
total number of employees in Abay. Among the reasons, employees left the company;
'better opportunity' takes the lion's share (about 47%). Therefore, it is strongly
recommended that the top officials of the company should take constructive measures
to improve/update the scale of competitive salary and benefit packages and narrow
the higher gap in salary/benefit between hierarchical positions by uplifting the salary
and benefit of those in very low-paid positions, which is discouraging and
demoralizing for the workforce to be more productive and proactive for the
company's competitive advantage.
85
 Training should be conducted for all staff as required, especially for front-line
customer contact employees on Customer/complaint handling, so that they can exert
their maximum possible efforts to improve service quality and retain existing loyal
customers with the possibility of attracting newcomers.
 Even though the result based on SERVQUAL dimensions is moderately satisfied in
terms of service perception, on average, about 21% of the customers are at a neutral
and dissatisfaction level of service. This indicates there is a high probability for these
customers to switch to other nearby competitors to get prompt service. Therefore, the
company should strive to gain more and pertinent information about the attitudes of
its customers regarding quality service and prepare a plan to improve weaknesses
sustainably. Satisfying customers' service expectations is critical for the company to
stay within the insurance market and regain its position among its peer competitors.
 With regard to the prevailing problems in the insurance industry, such as unfair
competition in premium pricing and unhealthy competition between state-owned and
private insurance companies, the supervisory authority (NBE) should make practical
endeavors to resolve such unnecessary situations to promote sound insurance business
in Ethiopia.
5.4 Suggestion for Future Researcher
As this is the first study on Customer Handling in Abay Insurance Share Company in the
Ethiopian Insurance Industry, the limitation of the study would be overcome by adopting
new approaches for future research. In general, the following points could be considered
for upcoming studies in this field:
5.4.1 Samples from Many Firms
Even if customers of the Ethiopian insurance industry have much in common, each
insurance company may have its own special characteristics in terms of customer
handling services. Hence, it is important to consider large samples from many insurance
companies to come up with a very detailed analysis.
86
5.4.2 Considering Larger Sample Size
Though adequate for analysis in relation to other studies, the samples on which this study
was undertaken were small. This can be considered as further limiting the generalization
of the findings.
5.4.3 Using Alternative Sampling Methods
Even though a systematic random sampling approach is common in management studies,

it may have its own limitations. For further study, along with a larger sample size and
incorporation of more companies from the industry, a change in sampling techniques may
cause deviations from the present study's results.
87
References
Ennew, C. T. (2022). The Service‐Profit Chain. Wiley Encyclopedia of Management,
January 2015, 1–4. https://doi.org/10.1002/9781118785317.weom090241
Govindarajan, S. (2019). A CASE STUDY : CUSTOMERS ’ SATISFACTION TOWARDS

SERVICES PROVIDED BY COMMERCIAL BANK OF ETHIOPIA-AXUM
BRANCH A CASE STUDY : CUSTOMERS ’ SATISFACTION TOWARDS
SERVICES PROVIDED BY COMMERCIAL BANK OF ETHIOPIA-AXUM
BRANCH. October.
Jeyalakshmi, S. S., & Meenakumari, S. (2016). Service Quality : A Literature Review.

Shanlax International Journal of Management, 3(4), 22–45.
Nsiah, A. Y., Yusif, H., Tweneboah, G., Agyei, K., & Baidoo, S. T. (2021). The effect of
financial inclusion on poverty reduction in Sub-Sahara Africa: Does threshold
matter? Cogent Social Sciences, 7(1). https://doi.org/10.1080/ 23311886.
2021.1903138
Ouechtati, I. (2020). The contribution of financial inclusion in reducing poverty and

income inequality in developing countries. Asian Economic and Financial Review,
10(9), 1051–1061. https://doi.org/10.18488/JOURNAL.AEFR.2020.109.1051.1061
Parasuraman, A; Berry, Leonard L; Zeithaml, V. A., Kelley, S. W., & Turley, L. . (2021).
SERVQUAL: A Multiple-Item Scale for Measuring Consumer Perceptions of
Service Quality. Journal of Retailing, 64(1), 5–6. http://linkinghub.elsevier.com/
retrieve/pii/S0148296399000843
Pedreño-santos, A. (2022). A conceptual framework for customer value management

Marco conceptual para la gestión del valor del cliente. 5(2022), 43–65.
Ramya, N. (2019). SERVICE QUALITY AND ITS DIMENSIONS. February.
Vu, H. M. (2020). Employee empowerment and empowering leadership: A literature

review. Technium: Romanian Journal of Applied Sciences and Technology, 2(7),
20–28. https://doi.org/10.47577/technium.v2i7.1653
88
Annex
Annex I

Questionnaire for Customers
Dear Respondent,
This questionnaire is designed to gather data regarding customer handling in relation to
insurance service and delivery in the insurance industry in Ethiopia, the case study at
Abay Insurance Share Company Insurance Share Company. The purpose of the study is
to fulfill a thesis requirement for the Master of Business Administration (MBA) at
IGNOU in Distance Education Program. Besides to recommend for the improvement of
required customer service if there is a gap in the quality of customer service delivery.
Your genuine, esteemed and timely response for the questions enclosed here is
extremely important for the successful completion of my thesis. The information that
you provide will be used purely for the purpose of academic study and will be kept
strictly confidential. Therefore, I kindly request you to respond each question carefully
to help me be able to accomplish the project on time.
Please Note:
1. No need of writing your name.
2. Where alternative answers are given, encircle your choice and put ‘’√’’ mark where
required.
3. Please return the completed & filled questionnaire in time.
I would like to thank you very much in advance for your cooperation and sparing your
valuable time to fill the questionnaire and return timely.
With Best Regards,
Aselef Gashu
Code No: ___
89
Annex I

Questionnaire for Customers of Abay Insurance Share Company
Insurance Share Company S.C (Section I-III)
Section I Personal Information:
Please put a thick ‘’√’’ mark where appropriate:
1. Gender: Male Female
2. Age (Year):18-30 31-45 46-60 above 60
3. Occupation: Doing own business Private organization employed
Government employee NGO’s employee other
4. How long are you a customer of the Company?
More than 10 years 6-10 years 1-5 years Less than 1 year
5. What type of insurance cover do you have in the company/branch? (Select more
than one, if there is any)
Motor Marine Fire and lightening Life insurance other
6. How frequent do you come to the Branch/Company to get service in a month?
1 time 1-3 times 4-6 times 7-10 times more than 10 times
90
Section II: Service Satisfaction Questionnaire for customers
Please rate the degree of satisfaction of the following services being provided by the
company/branch on scale of five points by circling a number among the five
alternatives.
Where: 1=Highly dissatisfied, 2= Dissatisfied, 3= Neutral, 4= Satisfied, 5=Highly

satisfied.
S.N Comparison Factors/SERVQUAL Dimensions or Attributes Rating Points
Tangibles:
1. the physical facilities of the service provider such as logo, agenda,

building, office furniture, etc will be appealing 1 2 3 4 5
2. The availability of modern technology and equipment such as

1 2 3 4 5
PREMIA, computer soft wares, etc
3. Neatness of employees and well-dressing, their approaches 1 2 3 4 5
4. The nature of working environment, availability of parking, security

1 2 3 4 5
checkup, etc
Reliability:
5. The service provider respects its promises to fulfill customer 1 2 3 4 5

requirements
6. The service provider performs service delivery in time 1 2 3 4 5
7. At time of the customer is in problem, the service provider shows

due interest in solving it 1 2 3 4 5
8. Service giver keeps the up-to-date records related to customer’s

policy accurately 1 2 3 4 5
9. The service provider is dependably serves customer 1 2 3 4 5
Responsiveness:
10. Employees tell customers exactly when services are performed 1 2 3 4 5
11. Employees give prompt service to customers 1 2 3 4 5
12. Employees are always interested to assist customers 1 2 3 4 5
13. Employees are never too busy to respond to customers’ request 1 2 3 4 5
Assurance:
14. The behavior of employees inspires confidence in customers 1 2 3 4 5

91
15. Customers feel assured that service requests are duly followed up. 1 2 3 4 5
Front line personnel provide services in courteous and friendly 1 2 3 4 5

16.
manner
17. Front line employees have capacity/knowledge to answer customers’

1 2 3 4 5
questions
18. Service providers give customers individual attention 1 2 3 4 5
Empathy:
19. Service providers have operating hours convenient to all their 1 2 3 4 5

customers
20. Employees providing quality services give personal attention to 1 2 3 4 5

customers
21. Service provider gives attention for customer’s best interest, heartily 1 2 3 4 5
22. Service provider understands the specific needs of its customers 1 2 3 4 5

Underwriting Service:
23. Employees be committed to give clarification on insurance policy

1 2 3 4 5
benefits, rights and duties of concerned parties
24. Employees providing underwriting service have the necessary
technical and professional skill/competence 1 2 3 4 5
25. Service providers simplify insurance documents; such as policies,

proposals, endorsements, claims procedures, etc. to suite customers 1 2 3 4 5
26. Service providers build constant use of professionals; like agents,

surveyors, lawyers, etc to advice customers on insurance matters 1 2 3 4 5
27. Service providers prepare documents in the widely understood

languages to customers 1 2 3 4 5
Claims Service:
28. Employees provide adequate guide and service to customers in case

1 2 3 4 5
of claims
29. Service providers are accessible to customers in time of claims via

telephone, in person, in writing, etc. 1 2 3 4 5
30. Employees providing claims service have adequate empowerment to

solve customer’s problem. 1 2 3 4 5
31. Employees assigned in claims service are free of integrity/ ethical

problems 1 2 3 4 5
92
Complaint Handling:
32. Service providers installed complaint handling procedures in place to

the customers. 1 2 3 4 5
33. Complaints handling procedure/system of service provider is time

effective. 1 2 3 4 5
34. Complaint handling procedure at service provider is simple and

straight forward. 1 2 3 4 5
Annex II
93
Questionnaire for Employees of Abay (Sec. IV)
Section IV: Questionnaire for Front-line Employees:
Please put a thick ‘’√’’ mark where appropriate for your choice:
1. Gender: Male Female
2. Age (Year):18-30 31-45 46-60 Above 60
3. Educational Status: High School Complete Diploma Degree
Master
4. Work Unit: Underwriting Claims Engineering Other
5. How long have you been serving in the insurance company?
Less than 1 year 1 -3 years 3 – 5 years above 5 years
6. Are you happy with your job?
Yes No
If no, what are the possible reasons?
7. How is your interaction or communication with customers?
Very good Good Moderate Poor Very poor
8. Have you ever taken any training in relation to customer service
delivery/complaint handling?
Yes No
9. If the answer for question no 8 is ‘No’ what do you suggest is the reason for
this? __
10. How do you rate your capacity/knowledge regarding the standard of your service
delivery?
Very good Good Moderate Poor Very poor
11. Does the company give a chance to employees to participate in decision making
with
regard to service delivery?
Yes No
12. If your answer for question 11 is ‘No’ what do you think the reason? ___
13. Do you have any suggestion or comment to make with regard to excellent
service provision? .
Annex III
94
Interview Questions for Managers
Dear Respondent,
This interview question is designed to gather data regarding customer handling in

relation to insurance service and delivery in the insurance industry in Ethiopia, the case
study at Abay Insurance Share Company Insurance Share Company. The purpose of the
study is to fulfill a thesis requirement for the Master of Business Administration (MBA)
at IGNOU in Distance Education Program. Besides to recommend for the improvement
of required customer service if there is a gap in the quality of customer service delivery.
Your genuine, esteemed and timely response for the questions is extremely
important for the successful completion of my thesis. The information that you
provide will be used purely for the purpose of academic study and will be kept
strictly confidential.
Therefore, I kindly request you to respond each question carefully to help me be able to
accomplish the project on time.
I would like to thank you very much in advance for your cooperation and sparing your
valuable time in the interview conversation.
With Best Regards,
Aselef Gashu
Annex III

Interview Questions for Managers of Abay (Sec. V)
Section V: Interview Questions for Operational & Branch Managers

95
1. What is customer for you & how is your interaction?
2. In which areas of the “insurance products” is complaint more visible? .
3. How do you handle customer complaint in your work unit in the company? .
4. What is the effort of your unit to improve the service quality of the company?.
5. Has it been established proper way of receiving customers’ suggestion/ complaints?

If no how would you entertain it? .
6. Do you think that the service delivered to customers is satisfactory and customers
are happy? How do you measure it? .
7. Are there enough resources to meet customers’ satisfaction? If not specify the lack
resources with a possible remedy .
8. If you have any other comment/suggestion regarding customer service delivery?
With Best Regards,
Aselef Gashu
96

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SCHOOL OF POSTGRADUATE STUDIES

ACCOUNTING AND FINANCE PROGRAM

EFFECTS OF SERVICE QUALITY ON CUSTOMER

Master’s thesis Submitted to Admas University of the School of

BY:-ASELEF GASHU WONDIM

ADVISOR: GIDAY ENAPH (PHD)

ADDIS ABABA, ETHIOPIA

Name of the candidate ------------------------ Date-------------------- Signature---------

SCHOOL OF POSTGRADUATE STUDIES

ACCOUNTING AND FINANCE PROGRAM

_____________________ ________________ _____________

Supervisor’s name Signature Date

_____________________ ________________ _____________

Name of Department Head Signature Date

I am immensely indebted to my advisor Dr. Gidye whose invaluable guidance and

I would also like to extend my appreciation to my friends for their continuous

Table 4.1. Selected Service Sites/Branches.......................................................................22

NBE National Bank of Ethiopia

EIC Ethiopian Insurance Corporation

NICE National Insurance Company of Ethiopia S.C

UNIC United Insurance Share Company

HRMPAD Human Resource Management and Property Administration Dep’t

BOD Board of Directors

GWP Gross Written Premium

SERVQUAL Service Quality

SPSS Statistical Package for the Social Sciences

The service industry plays an increasingly important role in a country’s economy. In

Companies face the consequences of declining customer loyalty, deteriorating market

1.2 Background of Abay Insurance Share Company

The company follows a mixed approach of administration by which branches are

Abay Insurance S.C. recognizes professionally skilled and well-motivated employees as

The quality-of-service computation, market fluctuation and attitude, perception, and

1.4 Research Questions

The study will try to address the following questions

1.5 Objective of the Study

1.5.1 General Objective

 To examine views of insurance companies about customer service & handling

1.6 Significance of the Study

 Serves for insurance companies as inputs to understand the overall impact of

1.7 Scope of the Research

1.9. Definition of Terms

SERVQUAL: A function of the gap between customers’ expectations of a service and

Service Quality: The expected and perceived quality of service offerings

Customer Satisfaction: The result of a product or services meeting or exceeding the

Dissatisfaction: The un-pleasurable fulfillment response to a customer experience.

Customer: A person or organization receiving advice, a service, using the facilities

Complaint: A genuine expression of dissatisfaction/concern with the product/service

2.1 Theoretical Review

Therefore, a model designed to measure customers' perceptions of service quality,

 Tangibles - the physical facilities, equipment, and appearance of personnel.

2.3 The Service-Profit Chain

2.5 Employee Empowerment

2.6 Customer Handling

Complaints and Recovery: No organization can avoid complaints. Complaints often

Customer /Service recovery is a crucial issue in managing the relationship between

Customer satisfaction is an excellent market-based performance metric and barometer of

Figure 2. 1Determination of customers delivered value:

Figure 2. 2Measuring Customer Satisfaction

Source: Niguel Hill & Jim Alexander, 2003

_________ _

_________ _