Antecedents of Customer Loyalty: Reference to Insurance Companies in Addis Ababa

Abstract

The objective of this study was to analyze antecedents of customer loyalty in the insurance sector of Ethiopia. In order to achieve the objectives of the study descriptive research design was employed in which descriptive study could help to identify patterns or trends in a situation of influencing loyalty in the insurance sector. In order to elicit attitude from the target group , questionnaires were designed, and then the data obtained from target group respondents’ were produced and discussed. Pearson correlation, χ2, and regression analysis were used to examine the relationships between service quality, customer satisfaction, customer trust, switching cost and customer loyalty using SPSS 16.0 and Amos 5.0 software. The result of the study indicates that service quality perception, customer satisfaction, customer trust and switching cost have direct and positive relationship to customer loyalty. In this study, it was also found that customer satisfaction has a mediating effect on the relationships between service quality and customer loyalty link. Based on these, recommendations are forwarded for insurers in order to aware them to give focus on improving service, increasing customer satisfaction , developing policy holders trust on the company and building barriers of churning which could initiate customers for repeat purchase and influence them to retain in the existing company which entails attracting new policy holders for the company.