Abstract:
The liberalization of the economic system in Ethiopia enabled the emergence of private
insurance companies and had created competitive environment in the insurance
industries. Most of service sectors failures were due to negative gap score between
perception and expectation of customer towards service quality dimensions. This is
mainly true in insurance companies that regularly interface with customers.The motives
of this study was examining the effects of service quality on customer satisfaction in four
selected insurance companies of Hossana town, SNNPR. This research was carried out
through cross-sectional survey design and mainly based on data collected through
questionnaires. Simple random sampling method was used to select four insurance
companies from currently operating eight insurance companies in the study area and
then convenience sampling method was used to select respondents from available
customers of each insurance company. Sample size 353 was determined by using the
formula given by Yamane. The descriptive and inferential statistical tools such as; mean,
percentage, correlation and multiple regressions were used to analyze collected data.
The result of individual companies and total Gap analyzes indicates that the mean score
of customers’ expectations exceeded perceptions in all five dimensions. This implies that
the selected insurance companies of Hossana town were not providing the level of service
quality as demanded by customers. The findings suggest that selected insurance
companies need to improve all the dimensions of service quality. Although, based on a
finding of regression analyzes responsiveness had relatively strong significant and direct
effect on customer satisfaction with beta value of .376 and followed by reliability with
beta value of .327, tangibility with beta value of .187, empathy with beta value of .149,
and assurance with beta value of .113 respectively. Based on the research results, it is
recommended for the selected insurance companies to improve the delivery of service
quality dimensions through Providing training to their employees, allocating resource
based on relative importance of dimensions, carrying out depth research, continuously
evaluating service performance, reviewing suggestion box and act accordingly.
