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org
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&ol.'( No.21( 201)

1)
Assessing the Life Insurance Industry in Ghana

*ran+is Boadu
1,
(-r. Eli.a/et0 -womo-*o1uo
1
(Josep0 2ofi Boa13e
2
(4l/ert %po1u *rimpong
1

1.Institute of Entrepreneurs0ip 5 Enterprise -e6elopment( 2umasi !ol3te+0ni+( !% /o7 #5)(2umasi( 80ana
2.S+0ool of Business and Management Studies( 2umasi !ol3te+0ni+( !% /o7 #5)(2umasi( 80ana
, E-mail of t0e +orresponding aut0or9 linna+us:3a0oo.+om

Abstract
Insuran+e 0as a +ru+ial role to pla3 in e6er3 e+onom3. In 80ana( t0ere 0a6e /een a num/er of disasters resulting
in loss of life and propert3. ;0is paper attempts to assess t0e life insuran+e industr3 in 80ana t0roug0 a sample
of $$0 +ustomers of life insuran+e +ompanies operating in t0e 2umasi Metropolis. ;0e stud3 re6ealed t0at life
insuran+e +ompanies find it diffi+ult to settle +laim pa3ment and su/<e+t +ustomers to long pro+essing period
w0ile some settlement end up in +ourt. =0> of t0e +ustomers do not re+ei6ed feed/a+1 after lodging +omplains.
;0ese insuran+e +ompanies 0owe6er +olle+t t0eir premium promptl3.
Keywords: insuran+e( effe+ti6eness( satisfa+tion( +laim( premium

1. Introduction
Insuran+e in6ol6es pooling funds from man3 insured entities 1nown as e7posures" to pa3 for t0e losses t0at
some ma3 in+ur. It offers prote+tion against t0e e+onomi+ impa+t of an untimel3 deat0( 0ealt0( a++idents( funeral
among ot0ers. Insuran+e pla3s a +ru+ial role in t0e fun+tioning of modern e+onomies. *or e7ample( t0e insuran+e
penetration le6els a++ounted for ).# > of t0e gross domesti+ produ+t 8-!" of India in 2011 and furt0er grew to
' > in 2012 Bari1( 2012". ;0e situation in 80ana is ?uite different as onl3 5 > of t0e population 0as an
insuran+e produ+t in t0e form of prote+tion for t0emsel6es( t0eir /enefi+iaries and possessions NI@( 2011". ;0e
industr3As +ontri/ution to t0e +ountr3As gross domesti+ produ+t 0o6ers around 1 >( as +ompared to Sout0 4fri+a
1).# >( Nami/ia =.$ >( 2en3a 2.# >( Nigeria 0.' > and Mala3sia ).# > Swiss Be Sigma Beport( 2012".
80anaAs insuran+e 0istor3 dates /a+1 in t0e +olonial era in 192)( w0en Bo3al 8uardian Enterprise( +urrentl3
1nown as Enterprise Insuran+e @ompan3 Cimited was esta/lis0ed. In 1955( 8old @oast Insuran+e @ompan3
was formed as t0e first indigenous pri6ate insuran+e +ompan3 followed /3 State Insuran+e @ompan3 in 19'2. B3
t0e 3ear 200#( li+ensed insuran+e +ompanies wit0in t0e +ountr3 0ad in+reased to $9( gi6en t0e /rea1down as 1=
in t0e life insuran+e and 22 for non life insuran+e. Insuran+e +ompanies in 80ana are in t0ree +ategories namel3D
Cife Insuran+e( Non-Cife Insuran+e and @omposite Insuran+e w0i+0 is t0e +om/ination of life and non-life
insuran+e.
;0e pla3ers of t0e insuran+e mar1et +onsist of insuran+e +ompanies and poli+3 0olders insurers". ;0e insuran+e
mar1et is di6ided into t0e Cife and Non-life insuran+e .Ea+0 mar1et 0as its suppl3 and demand. ;0e demand side
of t0e Cife mar1et is +onstituted /3 t0e poli+3 0older w0o wants +ompensation upon deat0( terminal illness or
+riti+al illness( w0ile t0e Non-Cife mar1et demand si.e is formed /3 t0e automo/ile and 0ome ownersA poli+3
0olders. ;0e suppl3 side of /ot0 mar1ets is populated /3 insurers w0o see1 to indemnif3 poli+3 0olders.
Insuran+e mar1et 0as tremendous effe+t on t0e national e+onom3 /3 +reating <o/s( pa3ing ta7es to go6ernment
for ot0er de6elopmental a+ti6ities and prote+ting t0e +iti.enr3 from loss of properties among ot0ers.
;0e 19#9 insuran+e law( !N-@ Caw 229( esta/lis0ed t0e National Insuran+e @ommission NI@" 8ada0n( 2010"(
as t0e aut0oritati6e /od3 in +0arge of insuran+e issues in 80ana. It is mandated to ensure effe+ti6e administration(
super6ision( regulation and +ontrol a+ti6ities as ena+ted in t0e Insuran+e 4+t( 200' 4+t =2)".
;0e +ommission was set up mostl3 to deal wit0 t0e numerous +omplains of +ustomers o6er t0e 3ears +on+erning
t0e t3pe of ser6i+es t0e3 re+ei6ed from t0e insuran+e +ompanies. @ustomers are 6alua/le assets for an3
organi.ation as t0e3 are t0e ultimate destination of an3 produ+ts or ser6i+es ;0apa( 2010". ;0e su++ess of an3
organi.ation depends upon t0e satisfa+tion of t0e +onsumers sin+e t0e3 are t0e end users of organi.ational
produ+ts or ser6i+es and +an de+ide to sta3 or swit+0 to ot0er /rands /ased on t0eir satisfa+tion. ;0e +ustomer is
t0e onl3 sour+e of t0e +ompan3As present profit and future growt0 8ra3 5 B3un( 2001". -ue to 0ig0 degree of
glo/ali.ation of mar1ets and intense +ompetition among t0e pla3ers in t0e insuran+e industr3( more attention
need to /e paid towards +ustomer satisfa+tion and retention if t0e ma<or pla3ers do not want to lose t0eir e7isting
+ustomers. ;0e 1e3 sustaina/le +ompetiti6e ad6antage in toda3As +ompetiti6e /usiness en6ironments lies in
deli6ering 0ig0-?ualit3 ser6i+e t0at result in satisfied +ustomers !arasuraman( Berr3 5 Eeit0aml( 1991".
4ddressing +ustomer needs 0ad /e+ome a great differentiator( t0e most powerful +ompetiti6e weapon w0i+0
man3 leading ser6i+e organi.ations possess Ba0t.( Sirg3 5 2osen1o( 199#".
-espite t0e esta/lis0ment of NI@( 80anaian insuran+e +ompanies are often a++used of /e0a6ing as if t0e3 are
doing a fa6our to t0eir +ustomers. ;0e insuran+e industr3 suffers most from negati6e image as a result of lower
+ustomer satisfa+tion per+eption NI@( 200#". ;0e general pu/li+ 0as different per+eption on life assuran+e
poli+3. Most of t0e time( +lients +omplains of ina/ilit3 of insuran+e +ompanies to pa3 prompt +laims( sometimes
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e6en den3ing t0em of t0e +laims and ultimatel3 ending up in t0e +ourt of law. F4t t0e 3ear ending 200#( two
0undred and fort3-fi6e 2)5" +omplaints were re+ei6ed from t0e pu/li+ against insuran+e +ompaniesG NI@(
4nnual Beport( 200#". It is 6er3 +ommon to 0ear people remar1ing t0at insuran+e +ompanies are ?ui+1er in
re+ei6ing premiums /ut slower w0en it +omes to +laims pa3ment. Insuran+e +ompanies 0a6e alwa3s /een
/lamed for late deli6er3 of ser6i+es. It is +ommonpla+e to 0ear people +omplaining of late deli6er3 of poli+3
do+uments( renewal noti+es or e6en undue dela3 in responding to +ustomersA re?uests.
@onsidering t0e numerous insuran+e +ompanies in 80ana and t0e eas3 a++ess to e6er3 indi6idual( +ustomers are
/e+oming intolerant and easil3 /rea1 up t0eir relations0ip as pro/lems arise. ;0is 0as led to mo6ement of
potential +ustomers from one +ompan3 to anot0er owing to ill-treatment. @ustomers in t0e insuran+e industr3
swit+0 t0eir w0ole /usiness unli1e t0ose in tele+ommuni+ation w0o partl3 swit+0 to a +ompetitor Ed6ardsson(
8ustafsson 5 Boos( 200)". @ustomer retention is a +ore +on+ern of e6er3 organi.ation. -ue to t0is reasons( t0e
satisfa+tion of t0e +onsumers /e+omes priorit3 for an3 organi.ations in+luding t0ose in t0e insuran+e industr3.
;0e purpose of t0is stud3 is to assess 0ow life insuran+e industr3 in 80ana is performing. ;0e stud3 e7plores t0e
e7tent to w0i+0 +laims assessment( premium pa3ment( +ustomer +omplain issues are affe+ting life insuran+e
industr3 in 80ana. %ur findings +ould enri+0 dis+ussions of appropriate poli+3 framewor1 t0at +ould stimulate
insuran+e se+tor of t0e e+onom3.
;0e paper pro+eeds wit0 t0e o6er6iew of insuran+e industr3 and +ustomer e7pe+tations( met0odolog3 and data
issues( reporting and dis+ussion of empiri+al results and t0en +on+lusion.

2. Overview of Insurance Industry and Customer !"ectations
Insuran+e is a pooling of ris1s /3 indi6iduals( w0ere part of t0e pa3ment of t0e man3 is used to pa3 to t0e few
w0o suffer losses Se/i3am( 2005D Be<da( 1992D 8art 5 -a6id( 1990D ;ro7el 5 @omi+1( 19#$". 4nderson and
Brown 2005" opined t0at under a formal insuran+e arrangement( ea+0 insuran+e poli+3 pur+0aser poli+30older"
still impli+itl3 pools 0is ris1 wit0 all ot0er poli+30olders. Insuran+e is designed to meet t0e finan+ial well-/eing
of an indi6idual( +ompan3 or ot0er entit3 in t0e +ase of unpredi+ted losses. Some forms of insuran+e are
+ompulsor3 w0ile ot0ers are optional Ho3oa1e 5Ieipers( 1999". Insuran+e operation in 80ana started far /a+1
in 1955( and t0e mar1et is /e+oming more 6i/rant and +ontinues to ma1e progress espe+iall3 /etween 200) and
2009 NI@( 2009". It 0as +ontri/uted immensel3 to t0e growt0 of t0e *inan+ial Ser6i+es Se+tor and 0elped
propelled t0e e+onom3 of 80ana for t0e past 3ears 4ll 4fri+a 8lo/al Media( 2010". ;0e industr3 0as a 0uge
potential( w0i+0 0as /arel3 /een s+rat+0ed. !rospe+ts in life /usinesses are 3et to /e full3 tapped. Benefits t0at
a++rued from life insuran+e industr3 to t0e nation( organi.ations and indi6iduals in+lude t0e use of life insuran+e
poli+ies as +ollateral se+urit3 for /an1 loans o6erdrafts( and mortgage as well as pro6ision for retirement NI@(
200'". @ustomers in t0is industr3 e7pe+t a lot from t0eir insurers or ser6i+e pro6iders. ;0e3 e7pe+tD prompt
deli6er3 of +ompetent and effi+ient ser6i+es paramount among w0i+0 is pa3ment of +laims( 1nowledgea/le and
ser6i+ea/le frontline staff t0at are e6er prepared to gi6e information on re?uest and relia/le feed/a+1 among
ot0ers 4marte3-&ondee( 200=". Jnderstanding +ustomer e7pe+tations is an important and essential element in
ser6i+e deli6er3. 4++ording to Eeit0aml( Bitner and 8remler 200$"( +ustomer e7pe+tation is /asi+all3 a /elief
a/out t0e ser6i+e deli6er3. Mainl3 two ma<or t3pes of e7pe+tation are predominant in +ase of life insuran+e
pur+0asing s+enario Bari1( 2012". ;0ese are ideal or desired ser6i+e and ade?uate ser6i+e. %f +ourse /ot0 t0ese
ser6i+e e7pe+tation 6aries from produ+t to produ+t( /usiness to /usiness( ad6isor to ad6isor and industr3 to
industr3 Bari1( 2012". @ustomer satisfa+tion is an o6erall attitude towards a produ+t or an organi.ation t0at
pro6ides ser6i+es or +ustomerAs rea+tion towards t0e differen+e /etween +ustomerAs e7pe+tation and w0at is
re+ei6ed +on+erning t0e satisfa+tion of needs( desires or goal Hansemar1 5 4l/inson( 200)". 8ood +ustomer
6alue +an /e a+0ie6ed onl3 w0en ser6i+e ?ualit3( produ+t ?ualit3 and t0e 6alue-/ased pri+es e7+eed t0e +ustomer
satisfa+tion. If one of t0ese is negle+ted t0e +ustomer satisfa+tion will suffer a tremendous set/a+1. E6en if pri+e
and t0e produ+t are good /ut t0e ser6i+e is /ad( t0e entire image of t0e +ompan3 produ+t will /e /ad and t0e
+ustomer will +ertainl3 not /e 0app3 M+Neil 5 @rotts( 200'". 4++ording to Ho3er and Ma+lnnis 2001"
+ustomers t0at are not satisfied ma3 de+ide to stop patroni.ing a /usiness to pur+0ase insuran+e produ+ts and
ser6i+es( t0e3 ma3 +omplain to a t0ird part3 or t0e /usiness organi.ation and t0e3 ma3 also gi6e negati6e word
of mout0. @ustomer dissatisfa+tion usuall3 +omes a/out as a result of poor /usiness management and /usiness
pra+ti+es Broad/ridge 5 Mars0all( 1995". Ndu/iasi 2005" and !feifer 2005" 0ad posited t0at t0e +ost of
ser6ing a lo3al +ustomer is fi6e or si7 times less t0an t0e +ost of a+?uiring a new one. ;0is is line wit0 t0e 6iew
e7pressed /3 Ials0 et al. 2005" w0en 0e said t0at it is +0eaper to loo1 after e7isting +ustomers t0an a+?uiring
new ones. Ser6i+e firms must t0erefore do somet0ing a/out it in order to pro6ide good +ustomer ser6i+eD
en0an+e +ustomer lo3alt3 and repeat patronage of ser6i+e. Ser6i+e failure as possi/l3 per+ei6ed /3 +ustomers is a
ma<or +on+ern for t0e ser6i+e firm /e+ause of its potential effe+ts on t0e ser6i+e out+ome 8ustafsson( 2009".
Ser6i+es +an onl3 /e e7perien+ed( /e+ause it is +onsumed at t0e point of pur+0ase Boadu( -womo-*o1uo(
Boa13e( 5 *rimpong 201)". 4++ording to N3er 2000"( good 0andlings and positi6e responses to +ustomersA
+omplaints +an in+rease +ustomer lo3alt3 to ser6i+e industr3. Broad/ridge and Mars0all 1995" posited t0at
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+onsumers +an resort to so man3 different 1inds of a+tions in settling dissatisfa+tion. *or instan+e( +ustomers +an
ta1e pri6ate or pu/li+ a+tion Ba+1lund 5 Holmg6ist( 200'". Insuran+e pro6iders need to /e +areful and pro6ide
ade?uate ser6i+e to t0eir 6arious +ustomers to a6oid an3 misunderstanding t0at +an end up in +ourt for redress.
;0is stud3 e7amines 0ow life insuran+e industr3 is performing in 80ana.

#. $ateria%s and $ethods
3.1 Area of Study
;0is stud3 was +ondu+ted wit0in Cife Insuran+e @ompanies in 2umasi Metropolitan 4ssem/l3 to 0a6e an in-
dept0 understanding and appre+iation of 0ow +ustomers assessed t0e performan+e of t0e industr3. It is also
aimed at identif3ing inno6ati6e measures and te+0nolog3 deli6er3 +0annels t0at life Insuran+e @ompanies 0a6e
deplo3ed to ensure +on6enient insuran+e. ;0e stud3 was limited to Cife 4ssuran+e @ompanies in 2umasi
metropolis. 2umasi is t0e +apital of t0e 4s0anti region of 80ana and t0erefore +onsidered appropriate /e+ause
most insuran+e +ompanies 0a6e /ran+0es lo+ated in it( to ser6e t0e middle /elt.
3.2 Population
;0e target population for t0is stud3 +onsists of all +ustomers of life assuran+e industr3 wit0 /ran+0es in 2umasi
Metropolis as at Ma3( 201$.
3.3 Sampling Design, Size and Procedure
4 sample si.e of t0ree 0undred and t0irt3 $$0" was sele+ted from t0e +ustomers of some life assuran+e
+ompanies operating in 2umasi Metropolis as at Ma3( 201$. ;0e +ompanies are J; life insuran+e( ME; life
insuran+e( 8li+o life insuran+e( !ro6ident life insuran+e( Kualit3 life insuran+e( Star life insuran+e( !0oeni7
insuran+e( -onewell insuran+e( SI@ life insuran+e( E7press life insuran+e and Enterprise life assuran+e.
4ll t0e ele6en 11" /ran+0es of t0e life assuran+e +ompanies in 2umasi were +onta+ted for t0e stud3. In ea+0
/ran+0( t0irt3 +ustomers were sele+ted using purposi6e sampling. ;0is met0od was +0osen /e+ause t0e
resear+0ers targeted +ustomers of t0e life assuran+e +ompanies. ;0is made t0e sample si.e to /e t0ree 0undred
and t0irt3 $$0" t0at is $0 +ustomers in e6er3 /ran+0 multipl3 /3 11 insuran+e firms".
;0e resear+0ers emplo3ed pro/a/ilit3 te+0ni?ue to sele+t sample respondents for in+lusion in t0e sample for t0e
stud3. ;0e3 used random sampling te+0ni?ues to sele+t all t0e elements. !rimar3 data for t0e stud3 were
o/tained wit0 t0e aid of ?uestionnaire administered personall3 to t0e respondents. -ata +olle+ted in+luded +laim
assessment( assessment of premium pa3ment( +ustomer +omplaining issues( and +ustomer swit+0ing in insuran+e
+ompanies. Information on general +0ara+teristi+s of +ustomers were also o/tained. -ata gat0ered were anal3sed
using des+ripti6e statisti+s. ;0e sur6e3 data were +oded( 6erified and +leaned up( and t0en entered and anal3sed
using t0e S!SS programme. ;0e findings of t0e stud3 were presented using appropriate ta/les and +0arts to
ensure eas3 interpretation.
;0e sur6e3 distri/ution period of t0is paper lasted from Ma3 to Septem/er 201$. 4 total of $$0 ?uestionnaire
were +olle+ted.

&. 'esu%ts and (iscussion
4.1 General Caracteristics of te !espondents
;0e general +0ara+teristi+s of t0e sample are reported in ;a/le 1. In terms of gender distri/ution( male
respondents of t0e o6erall sample are 0ig0er t0an female respondents /3 )5.)' >. In terms of age( t0e result
indi+ates t0at ma<orit3 ='.$' >" of t0e respondents were wit0in t0e age group of 21-50. ;0is means t0at t0e
+ustomers are relati6el3 3oung and +an +ontri/ute towards effe+ti6e insuran+e s3stem in t0e e+onom3 o6er a
longer period. In terms of edu+ational /a+1ground( t0e +ustomers of life insuran+e +ompanies tended to /e 0ig0l3
edu+ated( t0e ma<orit3 0ad eit0er a first degree or 0ig0er national diploma ?ualifi+ation. ;0is means t0at life
insuran+e industr3 0as a/le and 0ig0l3 edu+ated +ustomers w0o understand t0e operations of t0e industr3. ;0is in
t0e long run will 0elp transfer 1nowledge and ideas easil3 among /ot0 +ustomers and mem/ers of staff.
@laim( premium( +omplaining issues and swit+0ing 6aria/les are e7amined separatel3 in t0e following se+tion.
4.2 Claim Assessment "ssues
;0is se+tion of t0e paper presents an anal3sis of findings of t0e sur6e3 w0i+0 e7plored 0ow insuran+e
+ompanies in 80ana deal wit0 t0eir +laims.
;0e respondents +laimed t0at pro6iding t0e do+uments posed a +0allenge and t0erefore one of t0e ma<or +auses
of t0e dela3. ;0e3 are not made aware of t0e +orre+t do+uments re?uired in times of disaster. 4gain( t0e3 find it
diffi+ult to gat0er all t0e do+uments re?uired /3 t0e insuran+e +ompan3. ;0e3 ma3 not a/le to get all t0e
preferred +ertifi+ates and do+uments due to dela3 from go6ernment offi+es and ot0er state agen+ies. E7amples of
su+0 do+uments in+lude deat0 +ertifi+ate in +ase of Muslims( a testimon3 from +0ief Imam"( identifi+ation proof
of t0e insured and nominee( original poli+3 /ond( postmortem report and p0otograp0 of t0e person at t0e
a++ident pla+e( first information report( among ot0ers. It is impossi/le for a +ountr3 li1e 80ana to pro6ide t0e
p0otograp0 of a person at t0e a++ident site.
4s indi+ated in ;a/le 2( '$.') > of respondents reported t0at t0e3 see +laim pa3ment /3 life insuran+e
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+ompanies as /ad. ;0is ma3 /e due to long( rigorous( +um/ersome and frustrating pro+ess t0at +ustomers of
insuran+e produ+ts normall3 go t0roug0 /efore t0e3 get a++ess to t0eir +laims( a++ording to t0e +lients. If t0is
assertion is not +0e+1ed /3 National Insuran+e @ommission( it will +ontinue to affe+t +ustomer satisfa+tion as
well as t0e image of t0e industr3. ;0e resear+0ers are of t0e 6iew t0at t0e long pro+ess of e6aluation of t0e
do+uments is ne+essar3 as insuran+e is a 0ig0 ris1 and as su+0 effe+ti6e measures s0ould /e put in pla+e in
minimi.ing t0is ris1. Howe6er( it s0ould not /e undul3 dela3ed sin+e some of t0e settlement mone3" needed are
time /ound e7ample( t0ose w0o insured for funeral( edu+ational and a++ident poli+ies. @ustomers assess t0e
performan+e of t0eir +ompanies /ased on +laim settlement ratio. If t0e +laim settlement is not paid prompt( it
affe+ts t0eir e7pe+tation. ;0is finding is in-line wit0 4marte3-&ondee 200=" 6iew( w0i+0 maintains t0at
+ustomers e7pe+t prompt pa3ment( 1nowledgea/le and ser6i+ea/le frontline staffs t0at are e6er prepared to assist
t0eir needs.
4.3 Assessment of Premium Payment
4++ording to ;a/le $( '#.1# per+ent of t0e respondents +onsider t0e mode of pa3ment of premium as not
satisfa+tor3. ;0e remaining $1.#2 per+ent see t0e mode of pa3ment of premium satisfa+tor3 and not0ing wrong
wit0 t0at. In ;a/le )( a ma<orit3 of t0e +ustomers agree to t0e fa+t t0at life assuran+e +ompaniesA premium
+0arges are e7pensi6e. ;0is suggests t0at insuran+e +ompanies need to do more a/out t0eir mode of pa3ment of
premium in order to attra+t more +ustomers to t0eir ser6i+esLprodu+ts. ;0ere must /e reasona/le rate of premium
so t0at a lot of +ustomers +an patroni.e after fulfilling /asi+ needs. @ustomers a+ross t0e net anti+ipate low pri+e
produ+ts wit0 same returns and ot0er 6alua/le distin+tions. In order for life assuran+e produ+ts to /e understood
and patroni.ed /3 more people espe+iall3 rural fol1s w0o are supposed to /e num/er one /enefi+iar3 of
insuran+e produ+ts su+0 as life( funeral poli+3( a++idental poli+3( farming poli+3 et+ premium +0arges need to /e
redu+ed in order to attra+t more people to parta1e in insuran+e produ+ts.
In ;a/le 5( =2.=$ > of respondents s+ored t0e performan+e of t0e life assuran+e industr3 as a/o6e a6erage. ;0is
means t0at( most of t0e life assuran+e +ompanies are doing well in t0e +ountr3 so far as +olle+tion of premium is
+on+erned. ;0is goes a long wa3 to 0elp go6ernment raise enoug0 re6enue t0roug0 ta7ation from insuran+e
+ompanies to em/ar1 on de6elopmental pro<e+ts. ;0e resear+0ers are of t0e 6iew t0at sin+e life assuran+e
+ompanies +olle+ts t0eir premium promptl3( t0e3 s0ould do well to settle t0eir +ustomersA on time to +reate good
impression a/out t0eir produ+ts. 4++ording to Eeit0aml( Bitner 5 8remler 200$"( +ustomer e7pe+tation is
/asi+all3 a /elief a/out t0e ser6i+e deli6er3. If t0e3 are not satisfied( t0e possi/ilit3 of doing +omparison to
sear+0 for new a/ode for safet3 and se+urit3 is great. ;0e finding tend to support earlier resear+0( nota/l3( Ho3er
and Ma+lnnis 2001" w0o maintain t0at +ustomers t0at are not satisfied ma3 de+ide to stop patroni.ing a /usiness
to pur+0ase insuran+e produ+ts and ser6i+es( and t0e3 ma3 also gi6e negati6e word of mout0.
4.4 Customer Complaining "ssues
;a/le ' indi+ates t0at more t0an 0alf of t0e respondents 0a6e ne6er +omplained a/out a poli+3 /efore. E6en
t0oug0 less t0an 0alf of t0e respondents 0a6e +omplained. ;0is is 6er3 +riti+al /e+ause t0e sur6i6al of an3
ser6i+e +ompan3 depends on su+0 +omplaints and 0ow t0e3 are addressed. It was o/ser6ed t0at most +ustomers
+omplain a/out pa3ment of low surrender 6alues( dela3 in returning refund of wrongful dedu+tions( unaut0ori.ed
premium dedu+tions( /enefits promised /3 insurers differ from /enefits on poli+3 do+uments( among ot0ers.
;0e resear+0ers are of t0e 6iew t0at insuran+e +ompanies s0ould adopt effi+ient and prompt measures for
0andling of +omplains internall3 wit0out allowing NI@ to +ome in. ;0is +an ser6e as ad6ertisement and
+ustomers will per+ei6e t0e +ompan3 as a /etter +ompan3. 4gain( if +ustomers are allowed to go a0ead and
report +omplains to NI@( t0e li1eli0ood of +ustomers swit+0ing +ompan3 will /e 0ig0 or will affe+t +ustomer
retention.
4.# $eed%ac& "ssues
More t0an M of respondents +laim t0e3 ne6er get feed/a+1 after +omplaining. ;0is ma3 a++ount for t0e reason
w03 +ustomers do not +omplain a/out poli+3 ;a/le =" fre?uentl3.
If +ustomers lose interest a/out insuran+e produ+t t0e negati6e effe+t will /e disastrous for t0e s3stem.
4++ording to t0e latest report from NI@ 201$"( ninet3-fi6e per+ent of 80anaians do not 0a6e an3 form of
insuran+e prote+tion for t0emsel6es( t0eir /enefi+iaries and possessions. If t0is trend +ontinues( it will lower t0e
+onfiden+e le6el of t0e few people w0o are alread3 in t0e industr3. ;0e resear+0ers are of t0e 6iew t0at NI@ as a
regulator3 /od3 s0ould +ome out wit0 strategies to arrest t0e situation( so t0at people will gain +onfiden+e in t0e
industr3.
Customer switching in Insurance Com"anies
4.' !ating of Ser(ice Pro(iders %y Customers
4s o/ser6ed from t0e ;a/le #( )5.)5 > respondents rated t0e ser6i+e offered /3 life assuran+e +ompanies as
satisfa+tor3 as against 5).55 per+ent w0o 0a6e dissent 6iew a/out t0eir performan+e and rated t0em poorl3. ;0is
is per0aps due to t0e dela3 in pa3ment of +laims among ot0ers. 4nd e6en some +ustomers were of t0e 6iew t0at
insuran+e +ompanies were gi6ing /a+1 less to +ustomers /3 wa3 of +laims. 4gain( t0is will a++ount for t0e low
patronage of t0e ser6i+e. @ustomer dissatisfa+tion usuall3 +omes a/out as a result of poor /usiness management
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1#
and /usiness pra+ti+es Broad/ridge 5 Mars0all( 1995".
Insuran+e /usiness s0ould /e +ondu+ted in a +ordial atmosp0ere t0at is transparent( fair and +ost effe+ti6e
manner. It is onl3 t0roug0 t0is t0at +ustomers will +ontinue to 0a6e good <udgment as to w0et0er t0e3 are
re+ei6ing 6alue for mone3( de6elop +onfiden+e and trust in t0e +ompan3 as well as t0e industr3. Begulators
s0ould not a+t li1e arm+0air operators /ut rat0er go to t0e field and monitor t0e a+ti6ities of t0e insuran+e
+ompanies( and ma1e sure t0at rig0t t0ings are alwa3s done.
4.) !ecommendation of Ser(ice Pro(ider to any Potential Customer
Businesses all o6er t0e world are alwa3s in to get more +ustomers in order to get returns on t0eir in6estment to
satisf3 t0e ma<or sta1e0olders. Insuran+e +ompanies are no e7+eption from t0is p0enomenon( t0e3 are alwa3s
read3 to re+ei6e new +ustomers t0roug0 re+ommendation from e7isting +ustomers. ;a/le 9 s0ows t0e responses
of +ustomers +on+erning w0et0er t0e3 are prepared to re+ommend t0eir +ompan3 to an3 potential +ustomer or
not. Nearl3 M of t0e respondents a++ounting for '1.#2 > said t0e3 will not re+ommend t0eir +ompan3 to an3
potential +ustomer. ;0is +an lead to lower le6els of +ustomer /ase( affe+ting mar1et s0ares( de+reasing
profita/ilit3 of t0e +ompan3 as well as go6ernment re6enue t0roug0 ta7ation. Indi6iduals w0o ma3 /e su/<e+t to
disaster +an also /e affe+ted in terms of prompt response to t0eir situation. !ro6iding ?ualit3 ser6i+e is a means
of ensuring +ustomer satisfa+tion and retention( /e+ause it is widel3 0eld /elief t0at ser6i+e ?ualit3 and +ustomer
retention are ma<or dri6ers of profit( +ustomer /ase and mar1et s0are Hoffman and Bateson( 2001". ;0e
resear+0ers suggest t0at t0ere must /e fre?uent intera+tion /etween pro6iders and re+ei6ers of ser6i+e to identif3
pro/lems fa+ed /3 +ustomers and address a++ordingl3 to 0ead off an3 de+ision w0i+0 ma3 not /e in fa6our of
ser6i+e pro6iders.
4.* "ntention of S+itcing to any oter Ser(ice Pro(ider
Swit+0ing in insuran+e +ompanies o++urs w0en +ustomers are not satisfied wit0 t0eir ser6i+e pro6iders or w0en a
+ompetitor introdu+e new produ+t /ase on t0eir spe+ifi+ation. ;0is +an /e +lassified as pus0 and pull fa+tors in
insuran+e set up. Iit0 pus0 fa+tors dissatisfa+tion wit0 ser6i+e pro6ided or ser6i+e pro6ider +an lead to
unwanted swit+0ing. @ustomers swit+0 to anot0er ser6i+e pro6ider due to man3 reasons( and it differs widel3
;a/le 10". If t0ere are no opportunit3 to 6oi+e t0ese +on+erns +ustomers tend to loo1 elsew0ere for anot0er
ser6i+e pro6ider. Jnder t0e pull fa+tors( +ompetitors +an easil3 offer /etter produ+ts or ser6i+es w0i+0 +an lure
t0e +ustomer to e7perien+e t0e ser6i+eLprodu+t for first time. ;0e +ustomers need to s+rutini.e t0e ser6i+es of t0e
new pro6ider to ensure t0at t0e3 1now w0at t0e +ompetition is offering. *rom ;a/le 10( more t0an 0alf of t0e
respondents 0a6e e7pressed t0eir intention of swit+0ing to ot0er insuran+e +ompan3. @ustomers e7pe+tations
regarding ser6i+e and its deli6er3 are 0ig0 on t0eir +ustomers" agenda( and need to /e treated as su+0 in order to
+reate +ordial en6ironment towards /uilding strong lo3alt3. @ustomers are essential resour+es to an3 /usiness(
determining future su++ess. If +ustomers 1eep on lea6ing( it will affe+t t0e +ompan3 reputation and e6entuall3
+ollapse it. ;0e effe+t of +ustomer swit+0ing is enormous and represent /ot0 dire+t and indire+t +osts. ;0e
resear+0ers suggest t0at operators of life insuran+e +ompanies s0ould /e inno6ati6e in terms of idea generation
and met0ods to differentiate t0eir produ+ts to satisf3 +ustomers along t0e line for mutual /enefits to esta/lis0
among t0e 1e3 sta1e0olders all t0e time.
4., !easons for S+itcing to Anoter Company
Swit+0ing 0as /een a ma<or +on+ern to most insuran+e +ompanies a+ross t0e glo/e. It is prudent for insuran+e
+ompanies to +ondu+t routine +0e+1 a/out 0ow +ustomers 6iew t0eir ser6i+es. ;0is will 0elp to address t0e issues
in6ol6ing t0e danger t0at +ustomers fa+e /efore ma1ing final de+ision to swit+0 full3 or partiall3 to anot0er
ser6i+e pro6ider. *rom ;a/le 11( t0e reasons for swit+0ing differ widel3. ;0irt3-si7 per+ent of t0e respondents
indi+ated t0at t0eir intention to swit+0 to anot0er ser6i+e pro6ider is due to pri+e of t0e insuran+e produ+ts.
Insuran+e +ompanies espe+iall3 t0ose in t0e de6eloping world s0ould distinguis0 t0emsel6es and attra+t t0ose
+ustomers w0o do not feel /ound ties to lo3alt3 /3 offering t0em 1eener pri+ing( /etter ser6i+e( /etter produ+ts
t0at will ma1e t0em feel for 6alue for mone3. ;0is in t0e long run will retain( attra+t and return mo6e +ustomers.
But t0ere s0ould /e a great +on+ern to t0e insuran+e pro6iders sin+e soft pri+ing at times +an +ause serious
destru+tion to t0eir a+ti6ities. *or e7ample( Singaporean @osmi+ insuran+e in 2002 suffered from inade?uate
reser6ing. E6en t0oug0 t0e +ompan3 grew rapidl3 in its +ompetiti6e mar1ets after introdu+ing low pri+ing
s+0eme and re+orded 0uge patronage of its produ+ts( it later pro6ed inade?uate in t0e fa+e of growing pa3ments
to poli+30olders( dri6en /3 +ourt rulings on pa3ments t0at were 0ig0er t0an anti+ipated.
;0e resear+0ers are of t0e 6iew t0at it is prudent for insuran+e +ompanies to +0arge moderate pri+e to its
numerous +ustomers. Iit0 t0e low pri+e s3stem( t0e +ompanies are li1el3 to e7pand t0eir operations to attra+t
new +ustomers espe+iall3 t0ose w0o are in untapped segments. But t0e3 s0ould at t0e same time /e +areful a/out
0ow t0e3 approa+0 t0e potential +ustomers. Bigorous in6estigation s0ould /e +ondu+ted on t0e +ustomers
+on+erning potential ris1 0ealt0 pro/lem( smo1ing( older person et+" t0at t0e3 are li1el3 to +ause. 4fter t0at
proper +lassifi+ation or +ategori.ation +an /e made and appropriate pri+ing s+0eme assigned to ea+0 +ategor3.
;0is resear+0 t0erefore( suggests t0at poor pri+ing and poor ser6i+e on t0e part of insuran+e pro6iders +an lead to
+ustomer swit+0ing to ot0er ser6i+e pro6iders. Ser6i+e pro6iders spend a lot of mone3 in a+?uiring new
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+ustomers after losing t0eir lo3al +ustomers to t0eir +ompetitors. ;0is is +onsistent wit0 t0e pre6ious resear+0
findings /3 Ndu/iasi 5 !feifer 2005"( Ials0 et al. 2005". It is important to point out t0at insuran+e pro6iders
need to pro6ide t0eir +ustomers wit0 good ser6i+es to a6oid an3 +0ange o6er.

). Conc%usion
;0e per+eption of 80anaians toward insuran+e produ+ts must /e of great +on+ern to e6er3 +iti.en. Ninet3-fi6e
per+ent of 80anaians do not 0a6e an3 form of insuran+e prote+tion for t0emsel6es( t0eir /enefi+iaries and
possessions due to /ad per+eption. ;0is 0as a negati6e impli+ation towards nation /uilding. 80anaians o6er t0e
3ears 0a6e witnessed a lot of fire out/rea1s in mar1et pla+es( farms and ot0er go6ernment agen+ies( a++idents on
t0e road and at t0e wor1 pla+esD gas e7plosion and 0ouse /urglar3 among ot0ers. In all t0ese in+idents( t0e
+iti.enr3 +r3 to t0e +entral go6ernment to +ome to t0e aid of t0e 6i+tims. ;0is is /e+ause t0e +asualties do not
0a6e insuran+e +o6er. ;0ere is t0e need to /uild +onfiden+e in t0e insuran+e se+tor and t0is will go a long wa3 to
0elp in+rease t0e patronage of insuran+e. ;0is paper t0erefore( assessed t0e life insuran+e industr3 in 80ana
using primar3 and se+ondar3 data o/tained from +ustomers( insuran+e +ompanies and National Insuran+e
@ommission. ;0e stud3 re6ealed t0at life assuran+e +ompanies find it diffi+ult to settle +laim pa3ment and t0e3
su/<e+t +ustomers to long pro+essing period w0ile some +laim settlements end up in +ourt for redress. 4gain a
ma<orit3 of t0e +ustomersLpoli+30olders agreed to t0e fa+t t0at t0e premiums +0arged /3 life assuran+e
+ompaniesA are 0ig0. ;0e operations of t0e ser6i+e pro6iders( a++ording to a se+tion of t0e +ustomers need to /e
impro6ed due to some lapses identified in t0e stud3. 4ppro7imatel3 fift3-fi6e per+ent of t0e +ustomers rated t0e
performan+e of life assuran+e industr3 in 80ana as unsatisfa+tor3. In addition( '1.#2 > of t0e +ustomers
indi+ated +learl3 t0at t0e3 will not re+ommend t0eir ser6i+e pro6ider to an3 potential +ustomer( and also more
t0an 0alf N" of t0e respondents e7pressed t0eir intention of swit+0ing to ot0er ser6i+e pro6ider. 4ll t0ese gi6e
out a signal t0at National Insuran+e @ommission needs to sit up in its dealings to identif3 t0e needs of +ustomers
and de6elop appropriate ser6i+e ?ualit3 strategies to meet t0eir needs. It was +lear t0at most of t0e life assuran+e
+ompanies are doing well in t0e +ountr3 so far as +olle+tion of premium is +on+erned. ;0e stud3 also re6ealed
t0at some =0.00 >" of +ustomers do not re+ei6e feed/a+1 after lodging +omplains +on+erning t0eir poli+ies.
*inall3( it was e6ident t0at( +ustomers swit+0 to ot0er +ompanies for 6arious reasons su+0 as pri+e( non
preparedness of insuran+e +ompanies to pa3 +laims( ?ualit3 of t0e ser6i+e( and dela3 in pro+essing of +laims.

*. 'ecommendation
In t0e lig0t of t0e findings( +on+lusion a/o6e and t0e /enefits of insuran+e( it is re+ommended t0at t0e9
go6ernment s0ould pla3 an important role in ensuring a +ondu+i6e en6ironment( +apa+it3 /uilding( appropriate
regulator3 and legal framewor1 as well as strategies to guide insuran+e operation in t0e +ountr3.
4lso long pro+essing of +laim /3 insuran+e +ompanies +an /e redu+ed t0roug0 edu+ating potential
insuredL+ustomers a/out t0e do+uments needed for +laim assessment( and t0is will address t0e negati6e
per+eption people 0a6e a/out insuran+e. E6en t0e +ompanies +an institute on-line pa3ment of +laims( w0ere
+ustomers +an fill all t0eir do+uments on-line for onward pro+essing for +laim settlement to a6oid unne+essar3
tra6elling. 4lso( insuran+e +ompanies +an reward t0eir +ustomers for lo3alt3 t0roug0 pri+e dis+ounts or e7tra
6alue( pu/li+ation of t0eir names in national dailies( free insuran+e poli+3 for a 3ear( spe+ial dinner dan+e(
meeting wit0 @E%( among ot0ers.
4lso( serious attention need to /e paid to produ+t differentiation( /e+ause it will 0elp +ompanies to distinguis0ed
t0eir produ+ts from +ompetitors( insuran+e +ompanies s0ould +ontinue to design new produ+ts to suit +ustomersA
needs. @ustomers are alwa3s willing to pa3 for 0ig0 pri+e espe+iall3 if produ+t or ser6i+e is of ?ualit3.
;0e National Insuran+e @ommission NI@" in +olla/oration wit0 t0e insuran+e +ompanies s0ould de6elop an
edu+ational and information program on insuran+e poli+ies to en0an+e pu/li+ +onfiden+e in t0e insuran+e se+tor.
;0is will go a long wa3 to 0elp in+rease t0e patronage of insuran+e produ+ts in t0e +ountr3 and its +ontri/ution
towards t0e e+onom3.
NI@ s0ould de6elop a national league s3stem for insuran+e +ompanies and rate t0em /i-annuall3 or annuall3
a++ording to t0eir ser6i+es to t0e general pu/li+. ;0is will 0elp t0e +ompanies to pla3 t0eir role well as t0e3
1now t0at t0e regulator3 /od3 is wat+0ing t0em.
;0e +ost of disasters is enormous and t0erefore e6er3 +iti.en w0o la+1s information must sear+0 for t0e rele6ant
insuran+e information. 4gain( an assessment of a6aila/le /est ser6i+es s0ould /e made /3 /ot0 new entrants and
t0ose w0o want to swit+0 pro6iders in order to sele+t t0e /est insuran+e +ompan3.

+. Ac,now%edgement
;0e resear+0ers we" appre+iate t0e 6alua/le +omments from t0e Editor and t0e two anon3mous re6iewers. Ie
gratefull3 a+1nowledge data support from t0e National Insuran+e @ommission and staff mem/ers of 6arious life
insuran+e +ompanies operating in 4s0anti region of 80ana. Ie t0an1 Edward 2wadwo ;a/i for finan+ial
support.
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&ol.'( No.21( 201)

20
-. Co"yright (isc%aimer
@op3rig0t reser6ed /3 t0e aut0or s". ;0is arti+le is an open-a++ess arti+le distri/uted under t0e terms and
+onditions of t0e @reati6e @ommons 4ttri/ution li+ense.

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21
!ropert3 and Cia/ilit3 Jnderwriters( !enns3l6ania
Ials0( 8.( 8rot0( M.( 5 Iiedmann( 2.!. 2005". 4n e7amination of +onsumersA moti6es to swit+0 energ3
suppliers. -ournal of /ar&eting /anagement, 214special issue5, 4216448.
Eeit0aml( &( 4.( Bitner( M. J.( 5 8remler( -( -. 200$". Ser(ices mar&eting. $
rd
ed.". New -el0i9 ;ata M+8raw-
Hill !u/lis0ing @ompan3 Cimited.
www.standardandpoors.+omLratingsdire+t

.ab%e 1: /am"%e Characteristic
/am"%e characteristic Items 0re1uency 234 ##56 7ercent of .ota%
Gender $a%e
0ema%e
2&5
85
+2.+#
2+.2+
'es"ondents age 9e%ow 25 years
21:#5
#1:&5
&1:)5
)1:*5
*1 and above
2&
+2
85
85
#*
1-
+.2+
21.-2
2+.2+
2+.2+
15.81
).&*
ducation %ementary
/econdary
7o%ytechnic
;niversity
Others
12
11&
+2
125
12
#.*&
#&.)&
21.-2
#*.#*
#.*&
7o%icy %ength 9e%ow 1 year
1:# years
&:* years
+ years and above
*5
1-5
&)
&)
1-.1-
)&.)&
1#.*&
1#.*&
/ource: 0ie%dwor,< 251#

.ab%e 2: 7ercentage distribution of c%ients "erce"tion concerning accessing c%aims
=ariab%e 3umber 7ercent of .ota%
!ce%%ent
Good
9ad
#5
85
215
8.58
2+.2+
*#.*&
.ota% ##5 155.55
/ource: 0ie%dwor,< 251#

.ab%e #: Is the mode of "ayment of "remium satisfactory>
=ariab%e 3umber 7ercent of .ota%
?es
3o
15)
22)
#1.-2
*-.1-
.ota% ##5 155.55
/ource: 0ie%dwor,< 251#

.ab%e &: @ow do you rate "remium charged by %ife assurance com"anies>
=ariab%e 3umber 7ercent of .ota%
!"ensive
$oderate
Low
Average
1#)
-1
)1
*#
&5.81
2&.))
1).&)
18.58
.ota% ##5 155.55
/ource: 0ie%dwor,< 251#
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 !aper" ISSN 2222-2#$9 %nline"
&ol.'( No.21( 201)

22
.ab%e ): @ow do you rate the "erformance of the %ife assurance industry in terms of "remium co%%ection>
=ariab%e 3umber 7ercent of .ota%
!ce%%ent
Good
Average
7oor
15)
1#)
+)
1)
#1.-2
&5.81
22.+#
&.)&
.ota% ##5 155.55
/ource: 0ie%dwor,< 251#

.ab%e *: Com"%aining about "o%icy
=ariab%e 3umber 7ercent of .ota%
?es
3o
1)*
1+&
&+.2+
)2.+#
.ota% ##5 155.55
/ource: 0ie%dwor,< 251#

.ab%e +: !"ected feedbac, after com"%aining
=ariab%e 3umber 7ercent of .ota%
?es
3o
&*
115
28.&8
+5.)1
.ota% 1)* 155.55
/ource: 0ie%dwor,< 251#

.ab%e -: 'ating of services "roviders by customers
=ariab%e 3umber 7ercent of .ota%
=ery satisfactory
/atisfactory
7oor
=ery "oor
+5
-5
15)
+)
21.21
2&.2&
#1.-2
22.+#
.ota% ##5 155.55
/ource: 0ie%dwor,< 251#

.ab%e 8: 'ecommendation of service "rovider to any "otentia% customer
=ariab%e 3umber 7ercent of .ota%
?es
3o
12*
25&
#-.1-
*1.-2
.ota% ##5 155.5
/ource: 0ie%dwor,< 251#

.ab%e 15: Intention of switching to any other service "rovider
=ariab%e 3umber 7ercent of .ota%
?es
3eutra%
3o
1+5
)5
115
)1.)2
1).1)
##.##
.ota% ##5 155
/ource: 0ie%dwor,< 251#

.ab%e 11: 'easons for switching to another com"any
'eason for /witching 3umber 7ercent of .ota%
7rice
3on "re"aredness to "ay c%aims
Aua%ity of the service
Long time in "rocessing of c%aims
125
85
*5
*5
#*.#+
2+.2+
1-.1-
1-.1-
.ota% ##5 155.55
/ource: 0ie%dwor,< 251#

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