A structural equation modeling approach to validate the dimensions of SERVPERF in insurance industry of Saudi Arabia

Mohammad Imdadul Haque,Zafar Ahmad Sultan

doi:10.5267/j.msl.2019.1.012

Mohammad Imdadul Haque, Zafar Ahmad Sultan

Open Access

https://doi.org/10.5267/j.msl.2019.1.012

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Abstract

The Saudi Arabian insurance sector has two distinctive features. First, major revenue for this sector comes from the mandatory medical and motor insurance. Second, this sector is dominated by a few companies which generally provide the same products in the sector. Therefore, a company may focus on providing better service quality in order to attain future growth and stability. Highquality service is essential to gain a competitive advantage in the insurance sector. In this context, the present study identifies a gap in assessing the quality of service in the insurance sector of Saudi Arabia, using the SERVPERF scale in particular. Structural Equation Modeling is used to assess the quality of service. The results indicate that SERVPERF is not adequate to measure service quality in the context of Saudi Arabia. In the process, this study opens a debate on, whether a universally acknowledged SERVPERF scale is suitable to apply in an environment where service is of mandatory nature.

Highlights

The insurance industry in Saudi Arabia is an important service sector
The present study identifies a gap in assessing the quality of service in the insurance sector of Saudi Arabia, using the SERVPERF scale in particular
A survey has been accomplished on the college-going students in Saudi Arabia to measure the service quality and its relationship with customer satisfaction

Summary

Introduction

The insurance industry in Saudi Arabia is an important service sector. The annual compound growth rate of insurance sector’s share in non-oil GDP of Saudi Arabia is 7.7 percent and the ratio of insurance sector’s total assets to non-oil GDP is 3.8 percent for the period 2013-2017 (AlBilad Capital, 2018). Among them in 2017, the market share of Tawuniya was 23.7 percent, Bupa Arabia was 21.8 percent and the remaining companies had a share of less than 10 percent each (AlBilad Capital, 2018). Delivering high-quality service in today's competitive business environment is required to achieve a competitive advantage in the insurance sector. This service quality is what differentiates between service organizations.

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