Investigating the effect of providing insurance coverage on the satisfaction and loyalty of customers of branches of Agricultural Bank of Tehran province

Academic Thesis for Master's Degree

Field: Business Management Major: Insurance

Abstract

Iranian organizations need strategic change and transformation now more than ever. Environmental opportunities and threats today have shown their effects in Iran's economy more than in the past. Organizations in the process of gaining a suitable competitive position are in dire need of changing their internal organizational mechanisms with the needs and demands of customers. On the other hand, according to Harold's theory (2013), satisfaction provides twenty-nine percent of customer loyalty prerequisites. On the other hand, insurance coverage is considered as a guarantor of activities in the economic cycle. Therefore, with this scientific foundation, the researcher entered this field and seeks to find the effects of insurance coverage on satisfaction and loyalty. With this interpretation, the main and fundamental goal of the present research is to investigate the effect of providing insurance coverage on the satisfaction and loyalty of customers of branches of Agricultural Bank of Tehran province. The statistical population of the current research is limited to customers who suffered damage and are covered by the insurance of Agricultural Bank, two branches of Greater Tehran branches and Tehran province branches, and a sample of 374 people was selected and studied. In order to collect information, a questionnaire tool is used. The research questionnaire is the standard questionnaire of Zakaria and Younes (2014) which contains 30 questions regarding the measurement of research variables. The result of the analysis of the research hypotheses showed that the provision of insurance coverage has a significant effect on the satisfaction of the customers of the branches of Agricultural Bank of Tehran province (management of bank branches in Greater Tehran and Tehran province). Also, the findings of the research showed that the provision of insurance coverage has a significant effect on the loyalty of customers of branches of Agricultural Bank of Tehran Province.

Key words: insurance coverage, satisfaction, loyalty, customer, Bank of Agriculture

Introduction

Globalization of business has accelerated so much in recent decades that even the possibility of using the words of the past to describe the situation in the financial markets has become impossible. The barriers of time and place that insurers and re-insurers used to define their markets, now no longer have a place in the Arabs. Which insurer can cover property and liability (liability) risk for computer interns who are based in India but have the rest of their operations entirely within the US? The outlook of the insurance industry and insurance coverage is more globalization; No reinsurance can be limited to its own country anymore (Neshat Tehrani, 2018). Insurance coverage and investment in insurance affairs can play a fundamental role in activating the capital market due to its special features. Mathematical reserves accumulated in insurance companies can cause profitable economic activities. Since in insurance, there is usually a significant time gap between the time of receipt of insurance premiums by insurance companies and the time of payment, significant mathematical reserves are formed in relation to each contract, which the insurance company can activate the capital market and play a more serious role in investment activities, which in turn increases employment and economic growth. The effect of insurance growth in the economy is such that many applied researches have found a one-to-one relationship between it and economic development and growth with high significant coefficients (Zakaria and Younes, 2014). The increasing efficiency within different sectors of this industry has intensified the competition of insurance business players. Increased productivity has reduced marginal costs and excess capacity has emerged in the global insurance industry. Excess capacities are clearly visible in markets with stricter regulations. As a result, the liberalization of insurance markets has become absolutely necessary in order to quickly transform a highly specialized and fragmented industry into an industry that can compete efficiently in the globalized environment; A liberation that will be very difficult to achieve at the same time (Shadkam et al., 2019). On the other hand, along with the globalization of insurance companies' customers, the insurers of the world's primary insurance markets have also inevitably expanded their activities at the global level. Concentrated insurers in a particular country can hardly maintain their independence in such circumstances.Local insurers with little capital cannot compete with insurance giants that serve their customers over a wider geographical area. The reinsurance market has long been global in nature, even before global primary insurance markets emerged. Such a situation arises both from the nature of reinsurance as a source of risk diversification and the geographical diversity of primary insurers, and historically, the reinsurance structure has generally been less subject to restrictive regulations (Melkizadeh et al., 2018). In contrast to primary insurance markets, which have been subject to rigid regulations in all countries, reinsurance markets have operated for many years without the slightest regulatory intervention. The very complexity of the needs of customers from the insurance industry necessitated the existence of regulations; Regulations that protect primary insurers' customers. Such regulations were themselves barriers that were clearly visible in the retail financial services markets. While there were fewer of these barriers in reinsurance markets, they were therefore easier to change. This fact caused that, despite the changing situation of the primary insurance industry as well as the changes in the commercial and financial markets, the reinsurance industry could better respond to the rapid changes in the global markets (Jabari, 2009). Meanwhile, all managers are aware of the importance of keeping customers. As we know, keeping an old customer is four to six times cheaper than creating a new one. Recently, companies have focused a lot on customer loyalty and retention. According to many researchers, one of the important factors in making customers loyal is their satisfaction. As many people consider satisfaction equal to loyalty. This big mistake (equating customer satisfaction and loyalty) led to the failure of General Motors many years ago (Wong et al., 2014). Experts believe that customer loyalty and satisfaction have an irregular and uncertain relationship. Although most loyal customers are satisfied, satisfaction does not always lead to loyalty. According to one of the new views, satisfaction does not necessarily lead to loyalty. In fact, Frederick Reichheld's findings [1] correspond to the term "satisfaction trap". Using data from Brain Company's consulting group[2], he found that between 65% and 85% of consumers who claim to be satisfied or very satisfied with a product/service will return it. In his article entitled "The effect of loyalty" [3], Richheld states that companies' high attention to customer satisfaction causes them to ignore their loyalty. It also argues that customer satisfaction does not necessarily translate into their loyalty (Zakaria and Younes, 2014). On the other hand, today is practically no longer the age of six satisfactions, today is the age of loyalty. Customer loyalty, employee loyalty, management loyalty, loyalty to society and principles, ideals and beliefs. Many researches have shown that satisfaction is not the ultimate key to success and profitability. In fact, the concepts of marketing, which emphasized this importance until yesterday, no longer recognize it, but today, only happy and happy customers and customers who have found a sense of belonging and belonging in the heart are considered to be profitable and long-lived assets for organizations (Wong et al., 2014). With regard to the above necessities and the fact that the activity in the agricultural sector due to its high reliance on nature and its dependence on atmospheric and environmental factors and conditions is considered an activity with risk and the producers of this sector always face losses due to the occurrence of forced accidents and natural disasters and their economic life is exposed to serious risks, so that farmers and ranchers are always worried about the repayment of various production costs and even the necessary costs of their living and livelihood as well as Repayment of loan installments received from banks. Therefore, the survival and durability of their activities in this sector requires serious support from the producers and investors of this sector. Among various support policies such as insurance as a useful and appropriate solution to deal with these risks, it has always been emphasized and emphasized. All kinds of insurance coverage as a lever helps farmers to use the best management plans and sustainable strategies in order to reduce risk. In Iran, after the approval of the insurance law in 1316 and the insurance of agricultural products in 1362, insurance as a means to achieve the goals and policies of the agricultural sector was established and started to operate in the Bank of Agriculture, which (insurance coverage) has expanded significantly in the Bank of Agriculture.