Enhancing Unit-linked Insurance Consumer Loyalty: The Role of Service Quality, Information Asymmetry, and Agent Marketing Strategies
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Published
9 February 2024
Keywords:
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agent service quality, consumer loyalty, consumer satisfaction, information asymmetry, PAYDI insurance
Abstract
Unit-linked insurance (PAYDI), Indonesia's top-selling life insurance product, has driven industrial growth in the last two decades through effective agent marketing. However, its complexity, blending protection, and investment have drawn criticism for consumers’ detriment and increasing complaints about insurance agent practices. This study aimed to achieve critical objectives by examining consumer perceptions of agent-provided service quality and distinguishing between active and lapsed policyholders as a measure of loyalty. It also seeks to construct a model that delineates the impact of service quality on consumer satisfaction and loyalty with information asymmetry as a moderating variable. This study used a cross-sectional research design, and gathered data through electronic questionnaires distributed to PAYDI insurance consumers. Purposive sampling was used to select participants, resulting in 159 respondents meeting the study’s criteria. Data analysis was conducted using Partial Least Squares Structural Equation Modelling (PLS-SEM). These findings underscore the critical influence of agent reliability and empathy on consumer satisfaction with information asymmetry emerging as a key moderator between satisfaction and loyalty. These results imply that reinforcing agent training in reliability, empathy, and efforts to minimize information asymmetry significantly enhances consumer satisfaction and loyalty in the insurance sector. This research suggests that companies should develop a Key Performance Indicator (KPI) and incentives for agents to enhance both customer acquisition and post-purchase services, ensure transparent information sharing, and set measurable satisfaction targets such as the Net Promoter Score (NPS). Future studies should focus on operational diversity and alternative proxies of firms.
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Yamora, R., Rosi, M., & Serpina, N. (2021). Unit Link 101. Jakarta (ID): IFG Progress. Retrieved from https://ifgprogress.id/wp-content/uploads/2022/01/IFG-Eco-Bulletin-no.-3_16122021.pdf
Zhang, A., Prang, K., Devlin, N., Scott, A., & Kelaher, M. (2020). The impact of price transparency on consumers and providers: A scoping review. Health Policy, 124(8), 819-825. https://doi.org/10.1016/j.healthpol.2020.06.001
Zeng, N., Liu, Y., Hertogh, M., Konig, M. (2021). Do right PLS and do PLS right: a critical review of the application of PLS-SEM in construction management research. Frontiers of Engineering Management, 8, 356-369. Retrieved from https://link.springer.com/article/10.1007/s42524-021-0153-5
Zulfa, V., Andini, N. F., & Hamiyati. (2023). The purchase intention of environmentally friendly milk bottles: role of product knowledge and environmental concern. Journal of Consumer Sciences, 8(3), 379–394. https://doi.org/10.29244/jcs.8.3.379-394
Andini, T. P., Adawiyah, R., & Indriani, Y. (2023). Attitudes, decision making and purchasing patterns of online vegetable consumers. Journal of Consumer Sciences, 8(3), 296-317. https://doi.org/10.29244/jcs.8.3.296-317
Araslı, H., Mehtap‐Smadi, S., & Katırcıoğlu, S. (2005). Customer service quality in the Greek Cypriot banking industry. Managing Service Quality, 15(1), 41-56. https://doi.org/10.1108/09604520510575254
Balinado, J., Prasetyo, Y., Young, M., Persada, S., Miraja, B., & Redi, A. (2021). The effect of service quality on customer satisfaction in an automotive after-sales service. Journal of Open Innovation: Technology, Market, and Complexity, 7(2), 116. https://doi.org/10.3390/joitmc7020116
Bennett, D. F. S. A., & Zultowski, W. (2014). The Art and Science of Life Insurance Distribution. Greenland (US): ACTEX Publications.
Chen, T. J. (2021). The role of distribution channels in market discipline for the life insurance industry. The Geneva Papers on Risk and Insurance-Issues and Practice, 46, 107–129. https://doi.org/10.1057/s41288-020-00172-9
Ciavolino, E., & Dahlgaard, J. J. (2007). ECSI–customer satisfaction modeling and analysis: A case study. Total Quality Management, 18(5), 545–554. https://doi.org/10.1080/14783360701240337
Dominique-Ferreira, S. (2018). The key role played by intermediaries in the retail insurance distribution. International Journal of Retail & Distribution Management, 46(11/12), 1170–1192. https://doi.org/10.1108/IJRDM-10-2017-0234
Gera, R. (2011). Modelling the service antecedents of favorable and unfavorable behavior intentions in life insurance services in India: An SEM study. International Journal of Quality and Service Sciences, 3(2), 225–242. https://doi.org/10.1108/17566691111146113
Ghotbabadi, A. R., Feiz, S., & Baharun, R. (2015). Service quality measurements: A review. International Journal of Academic Research in Business and Social Sciences, 5(2), 267–286. http://dx.doi.org/10.6007/IJARBSS/v5-i2/1484
Giri, M. (2018). A behavioral study of life insurance purchase decisions. Retrieved from https://www. iitk. ac. in/ime/devlina/data/Manohar% 20Giri% 20PhD% 20Thesis% 20_Final-4-10-19. pdf.
Hair, J. F., Risher, J. J., Sarstedt, M., & Ringle, C. M. (2019). When to use and how to report the results of PLS-SEM. European Business Review, 31(1), 2–24. https://doi.org/10.1108/EBR-11-2018-0203
Hair, J. F., Matthews, L. M., Matthews, R. L., & Sarstedt, M. (2017). PLS-SEM or CB-SEM: Updated guidelines on which method to use. International Journal of Multivariate Data Analysis, 1(2), 107–123. https://doi.org/10.1504/IJMDA.2017.087624
Haaften, R. (March 22, 2017). Customer Satisfaction Models. Rovana Marketing, Strategy & Management. Retrieved from https://www.van-haaften.nl/customer-satisfaction/customer-satisfaction-models/62-the-norwegian-customer-satisfaction-barometer
Mosahab, R., Mahamad, O., & Ramayah, T. (2010). Service quality, customer satisfaction and loyalty: A test of mediation. International Business Research, 3(4). https://doi.org/10.5539/ibr.v3n4p72
Nathan, N. (June 18, 2016). ULIP in India: A Good Concept Hit by Mis-selling. The Economic Times. Retrieved from https://economictimes.indiatimes.com/blogs/counter-point/ulip-in-india-a-good-concept-hit-by-mis-selling/
[OJK RI] Financial Services Authority Republic of Indonesia. (2020). OJK Circular Letter No. 19/SEOJK.05/2020. Jakarta (ID): OJK RI.
[OJK RI] Financial Services Authority Republic of Indonesia. (2021). Insurance Statistics 2020. Jakarta (ID): OJK RI.
[OJK RI] Financial Services Authority Republic of Indonesia. (2022). Indonesian Insurance Architecture 2022-2026. Jakarta (ID): OJK RI.
Parasuraman, A., Zeithaml, V. A., & Berry, L. (1988). SERVQUAL: A multiple-item scale for measuring consumer perceptions of service quality. Journal of Retailing, 64(1), 12–40. Retrieved from https://psycnet.apa.org/record/1989-10632-001
Putera, A. K., & Wahyono, W. (2018). The effect of service quality, brand image and product quality on customer loyalty through customer satisfaction. Management Analysis Journal, 7(1), 110-119. https://doi.org/10.15294/maj.v7i1.20445
Rahmah, K., & Satyaninggrat, L. M. W. (2023). The effect of consumer characteristics and lifestyle toward purchase decision. Journal of Consumer Sciences, 8(3), 395–413. https://doi.org/10.29244/jcs.8.3.395-413
Rita, P., Oliveira, T., & Farisa, A. (2019). The impact of e-service quality and customer satisfaction on customer behavior in online shopping. Heliyon, 5(10), e02690. https://doi.org/10.1016/j.heliyon.2019.e02690
Riyadi, S., Hermawan, A., & Sumarwan, U. (2015). The public satisfaction to service quality of land agency of indramayu district. Jurnal Ilmu Keluarga dan Konsumen, 8(1), 49-58. https://doi.org/10.24156/jikk.2015.8.1.49
Tseng, L. M., Kang, Y. M., & Chung, C. E. (2016). The insurance agents' intention to make inappropriate product recommendations: Some observations from Taiwan life insurance industry. Journal of Financial Regulation and Compliance, 24(3), 230–247. https://doi.org/10.1108/JFRC-03-2015-0014
Wareza, M. (January 21, 2022). Nasabah unit link asuransi menjerit, apa memang bikin rugi. CNBC Indonesia. Retrieved from https://www.cnbcindonesia.com/market/20220121104042-17-309304/nasabah-unit-link-asuransi-menjerit-apa-memang-bikin-rugi.
Yamora, R., Rosi, M., & Serpina, N. (2021). Unit Link 101. Jakarta (ID): IFG Progress. Retrieved from https://ifgprogress.id/wp-content/uploads/2022/01/IFG-Eco-Bulletin-no.-3_16122021.pdf
Zhang, A., Prang, K., Devlin, N., Scott, A., & Kelaher, M. (2020). The impact of price transparency on consumers and providers: A scoping review. Health Policy, 124(8), 819-825. https://doi.org/10.1016/j.healthpol.2020.06.001
Zeng, N., Liu, Y., Hertogh, M., Konig, M. (2021). Do right PLS and do PLS right: a critical review of the application of PLS-SEM in construction management research. Frontiers of Engineering Management, 8, 356-369. Retrieved from https://link.springer.com/article/10.1007/s42524-021-0153-5
Zulfa, V., Andini, N. F., & Hamiyati. (2023). The purchase intention of environmentally friendly milk bottles: role of product knowledge and environmental concern. Journal of Consumer Sciences, 8(3), 379–394. https://doi.org/10.29244/jcs.8.3.379-394
Authors
PrasetyoE. Y., SumarwanU., & HasanahN. (2024). Enhancing Unit-linked Insurance Consumer Loyalty: The Role of Service Quality, Information Asymmetry, and Agent Marketing Strategies. Journal of Consumer Sciences, 9(1), 142-162. https://doi.org/10.29244/jcs.9.1.142-162
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