Assessing Customer Satisfaction and Loyalty in Microinsurance Markets

Thesis Abstract

Microinsurance has emerged as a vital instrument for enhancing financial inclusion among low-income populations; however, low customer retention and inconsistent satisfaction levels threaten its broader effectiveness and sustainability. This study investigates the determinants of customer satisfaction and loyalty within microinsurance markets, aiming to provide empirical insights into the factors that influence customer retention and their implications for microinsurance providers. The specific objectives include identifying key service quality dimensions, evaluating the role of perceived value and trust, and examining demographic moderating variables affecting customer satisfaction and loyalty. Employing a quantitative research design, the study adopts a cross-sectional survey approach to gather data from microinsurance clients. The target population comprises policyholders across microinsurance schemes operated by three leading providers in a developing country context, with a total population estimated at 15,000 clients. Using stratified random sampling, a sample of 400 insured clients was drawn to ensure representative coverage of diverse demographic groups and policy types. Data collection was conducted through structured questionnaires—developed based on validated scales from existing literature—covering service quality, perceived value, trust, customer satisfaction, and loyalty indicators. The questionnaire's content validity was confirmed through expert review, and reliability was established with Cronbach’s alpha coefficients exceeding 0.80 for all scales. Data analysis was carried out using SPSS version 26 and structural equation modeling (SEM) via AMOS to test the hypothesized relationships among constructs aligned with the Expectation-Disconfirmation Theory and SERVQUAL framework. Descriptive statistics summarized respondent demographics, while exploratory and confirmatory factor analyses validated the measurement model. Path analysis examined direct and indirect relationships among variables, and moderation effects of demographic factors were tested through multi-group SEM analyses. The model’s fit was assessed using indices such as CFI, TLI, GFI, and RMSEA. It is anticipated that the results will reveal significant positive relationships between service quality dimensions (reliability, assurance, tangibility, empathy, responsiveness), perceived value, and trust with customer satisfaction and loyalty. Specifically, service reliability and empathy are expected to exert substantial influence on satisfaction, which in turn predicts loyalty intentions. The study also hypothesizes that demographic variables such as age, income level, and education moderate these relationships, with younger clients exhibiting higher sensitivity to service quality variations. This research contributes to the existing body of knowledge by applying validated theoretical frameworks—particularly SERVQUAL and Expectation-Disconfirmation—to the microinsurance context, which remains under-explored in developing economies. The findings offer empirical evidence on the critical drivers of satisfaction and loyalty, thereby informing microinsurance providers’ customer engagement strategies and product design. Additionally, the study extends understanding of how demographic factors influence customer perceptions and behaviors in microinsurance settings. Concluding, the study underscores the importance of enhancing service quality and perceived value to foster customer satisfaction and loyalty, crucial for the long-term viability of microinsurance schemes. Policy recommendations include targeted quality improvement initiatives, development of trust-building measures, and customized communication strategies addressing demographic disparities. Future research should explore longitudinal data to examine causal relationships over time and incorporate qualitative methods to deepen understanding of customer experiences. This research notably advances knowledge on customer retention mechanisms in microinsurance markets, providing actionable insights for practitioners, regulators, and scholars aiming to strengthen financial inclusion initiatives through improved customer satisfaction policies.