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

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. High-quality 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.

Keywords

• Insurance
• Service quality
• SERVPERF
• SEM
• Saudi Arabia