Project Abstract

Factors that Determine the Choice of Insurance Companies among Corporate Insurance Buyers Abstract
In the corporate world, insurance plays a crucial role in managing risks and protecting assets. Corporate insurance buyers often face the challenge of selecting the most suitable insurance company to meet their specific needs. This research aims to explore the factors that influence the choice of insurance companies among corporate insurance buyers. The study employs a qualitative research design, utilizing interviews and surveys to gather data from corporate insurance buyers across various industries. The findings reveal several key factors that influence the decision-making process of corporate insurance buyers. One significant factor is the reputation and financial stability of the insurance company. Corporate buyers prefer to engage with insurance providers that have a strong reputation for reliability and financial strength. This factor is crucial as it provides assurance to buyers that the insurance company will honor their obligations in the event of a claim. Another important factor is the range of insurance products and services offered by the insurance company. Corporate buyers look for insurers that can provide comprehensive coverage tailored to their specific needs. The ability of an insurance company to offer customized insurance solutions is highly valued by corporate buyers. Customer service and claims processing efficiency also play a vital role in the choice of insurance companies among corporate buyers. Responsive and efficient customer service is essential for building trust and maintaining a positive relationship between the corporate buyer and the insurance provider. Likewise, quick and hassle-free claims processing is crucial for corporate buyers, as it directly impacts their ability to recover from losses and resume business operations. Additionally, the pricing and cost-effectiveness of insurance policies are significant factors that influence the decision-making process of corporate buyers. While cost is important, corporate buyers also consider the value they receive in terms of coverage and service quality. Insurance companies that offer competitive pricing along with comprehensive coverage are more likely to attract corporate buyers. Overall, this research sheds light on the complex decision-making process of corporate insurance buyers and highlights the key factors that determine their choice of insurance companies. Understanding these factors is essential for insurance providers seeking to attract and retain corporate clients in a highly competitive market.

Project Overview

INTRODUCTION

1.1    Background of the Study

The advent of insurance industry in Nigeria could be traced to the British colonial trading companies that established agency offices in Nigeria, on behalf of insurance companies in UK. After the Nigerian political independence of 1960, indigenously owned insurance companies sprang up with lot of inadequacies, like lack of capital, valuation of risk selection and poor claims management. These inadequacies of capital coupled with lack of technical and managerial skill, poor service delivery, poor insurance regulatory framework, brought confidence crisis and strong apathy to insurance purchase in Nigeria as corporate buyers of insurance look for better service (Augustine and Bamidele, 2013).

The services provided by the insurance companies are almost similar in nature and type and thus the customers are exposed to diversified choices. This means that there are unlimited switching choices and /customers will choose the alternative that gives him maximum satisfaction in references to different factors that differentiate insurance benefit from each other (Mathur and Tripathi, 2014).

High level of competition is the most important factor in influencing the structure and activities of the insurance system around the globe. More and more insurance facilities are made available in every part of the country even to small cities, towns and rural areas. With the growing awareness among the people and businesses about insurance, various services provided by the companies and availability of insurance facilities across the globe, the insurance sector is emerging very rapidly and there is a need to identify the main factors that affect customer’s choice for a particular insurance company (Mathur and Tripathi, 2014).

Moreover, the success of a service company is immensely dependent on the availability and quality of their services to the consumers and thus is inextricably bound up with price/cost (Rajkumar and Kannan, 2014). According to insurance marketing theory the choice of insurance companies or products to be adopted by buyers could be influenced by many factors. Petra (2012) posited that factors, like cost, service quality, customers’ satisfaction, products’ features, payment of claims are some of the factors that influence corporate buyers to pick an insurance company.

In view of this, an insurance company designing its marketing strategy must be based on the full knowledge of factors influencing consumers’ purchase behavior and the factors that affect consumers’ decisions on the selection of an insurance company (Rajkumar and Kannan, 2014).

Literature has shown that the quality of services and the achievement of customer satisfaction and loyalty are fundamental for the survival of insurers. The quality of after sales services, in particular, can lead to very positive results through customer loyalty, positive word-of-mouth, repetitive sales and cross-selling. However, many insurers appear unwilling to take the necessary actions to improve their image (Wang & Lo, 2002). This creates problems for them as the market is extremely competitive and continuously becomes more so (Taylor, 2001).

Understanding the factors that determine the choice of insurance companies among corporate insurance buyers and creating demand is essential in facilitating the success of insurance services (Razak and Kasim, 2014). Hence, this research study will examine the factors that determine the choice of insurance companies among corporate insurance buyers in Lagos State Nigeria.

1.2    Statement of the Problem

Making a choice or choosing an insurance company by corporate insurance buyer may be affected by a number of factors depending on the nature of the product and the considered utility derivable from it. And for a corporate insurance buyer, the demand for insurance arises from the satisfaction that a consumer gains from the increase in financial security achieved by transferring the risk of loss to an insurer.

Delivering quality service is considered an essential strategy for success and survival in today’s competitive environment (Dawkins and Reichheld, 1990). Insurance sector is one of the most important entities which have been growing relatively in the past decade in Nigeria. With a greater choice among corporate insurance buyers in Lagos State and an increasing awareness, there is now a continuous increase in the customers’ expectations and they demand better quality service. Therefore, for insurance companies to sustain in the market, service quality andcustomers’ satisfaction becomes the most critical component of competitiveness for insurance companies in Nigeria.

With increasing demands among corporate insurance buyers, insurance sector has become competitive. Customers are becoming increasingly aware of their expectations and thus demand higher standards of services, as technology is enabling them to make comparisons quickly and accurately. Their perceptions and expectations are continually evolving, making it difficult for insurance providers in Nigeria to measure and manage services effectively. It has been observed that there is widespread customer dissatisfaction in the insurance industry (Omar, 2005), arising from poor service design and delivery, and inferior quality of services largely account for this.

Researches linking quality of service and choice of insurance companies among corporate insurance buyers in developing countries, Nigeria inclusive have shown that insurance services seem not to have been so accepted enthusiastically in developing countries. The abysmal level of consumers’ perception and ultimate demand for insurance products in developing economies has attracted relative interests among researchers and practitioners alike.

It is against this backdrop that this study seeks to examine the factors that determine the choice of insurance companies among corporate insurance buyers in Lagos State Nigeria with a special reference to First Bank Nig Plc and Union Bank Plc.

1.3    Objectives of the Study

The major objective of this study is to explore the factors that determine the choice of insurance companies among corporate insurance buyers. While other specific objectives include;

1.   To examine the effect of service quality on choice of corporate insurance buyers.

2.   To assess the impact of price on demand for insurance policy.

3.   To investigate the relationship between customers’ satisfaction and business purchase of insurance products.

1.4    Research Questions

The undertaking of this study will be guided by the following research questions;

1.   What is the effect of service quality on choice of corporate insurance buyers?

2.   To what extent is price related to demand for insurance policy?

3.   What is the relationship between customers’ satisfaction and business purchase of insurance products?

1.5    Research Hypotheses

In the course of this study the following research hypotheses will be tested:

Ho1:   There is no significant relationship between service quality and choice of corporate insurance buyers.

Ho2:   There is no significant relationship between price and demand for   insurance policy.

Ho3:   Customers’ satisfaction is not related to business purchase of insurance  products.