1

EFFECTS OF PERCEIVED SERVICE QUALITY, CUSTOMER SATISFACTION,

PERCEIVED SWITCHING COSTS, AND PRICE SENSITIVITY ON

PERSONAL AUTOMOBILE POLICY CONTINUANCE INTENTION

Dissertation Manuscript

Presented to the Glenn R. Jones College of Business

of Trident University International,

a Member of the American InterContinental University System

in Partial Fulfillment of the Requirements for the Degree of

Doctor of Philosophy in Business Administration

by

MICHAEL LEE BURKHARDT

Chandler, Arizona

2022

Defended November 11, 2022

Approved by

Office of Academic Affairs

November 30, 2022

Dean: Lisa Mohanty, Ph.D.

Director of Doctoral Studies: Indira Guzman, Ph.D.

Committee Chair: Jose Angeles, Ph.D.

Committee Member: Kenneth Cromer, Ph.D.

Committee Member: Angie Cox, Ph.D.

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© 2022 Michael Lee Burkhardt

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Abstract

Continuance intention refers to a customer’s intention to continue using a product or service in

the post-acceptance stage. Personal automobile policy renewals help provide a stable revenue

stream for insurance companies. This study offers a predictive model that addresses the retention

(or turnover/churn) of existing customers in the automobile insurance industry. Specifically, the

research effort considers the influences of perceived service quality, customer satisfaction,

perceived switching costs, and price sensitivity on customer retention in the automobile

insurance domain. Past research such as the American Customer Satisfaction Theory,

Expectancy Confirmation Theory, and Elaboration Likelihood Theory support the theoretical

framework. The research method is quantitative; Linear Multiple Regression with path analysis

using (PLS-SEM) partial least squares structural equation modeling, specifically. The results

showed a significant positive relationship between Perceived Service Quality and Continuance

Intention, a significant positive relationship between Perceived Service Quality and Satisfaction,

a complementary-partial mediating role of Satisfaction (mediating) in the relationship between

Perceived Service Quality and Continuance Intention, an insignificant moderating relationship of

Perceived Switching Costs on Continuance Intention, and a negative and significant moderating

impact of Price Sensitivity (moderating) on the relationship between Satisfaction (mediating) and

Continuance Intention. In addition, the study provided direction for operational implications for

automobile insurance managers’ strategies toward reduced attrition and the improvement of

policyholder retention. In conclusion, future research could include other constructs towards the

prediction of Continuance Intention for personal automobile insurance and for other insurance

industry personal and commercial insurance policies. Lastly, the model in this study affords

other industries an appropriate application towards the study of continuance intention.

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Biographical Sketch

The author of this study, Michael Lee Burkhardt, is a professor, faculty lead, and program

quality leader for the Insurance & Risk Management program at Northwood University. The

author holds a B.S. from Ferris State University, a Michigan Secondary Teachers' License – GM,

BD, GQ, VB, VM, CTE, and an MBA from Olivet College. The author retired after a 21-year

career as an Independent Insurance Agent. The author holds the CPCU – Chartered Property

Casualty Underwriter designation, widely considered the premier insurance industry designation.
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Acknowledgments

I would like to thank my loving wife, Nancy, for her unwavering support during the past

four years. Without her willingness to champion me on, certainly, this momentous undertaking

would not have been possible. To my two daughters, Summer and Elizabeth, thank you for your

love and patience as dad spent numerous hours in front of his laptop.

My Dissertation Committee members are true professionals, taking it upon themselves to read,

provide feedback, and support my effort; thank you, Dr. Kenneth Cromer and Dr. Angie Cox.

The chair of the dissertation committee, Dr. Jose Angeles provided mentorship, motivation, and

patience, all the while, promptly providing advice and perspective. Finally, the module-designed

doctoral program at Trident University International surpassed my expectations, which was a

true blessing. To God be the glory.

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Table of Contents

Abstract ............................................................................................................................................3

Biographical Sketch .........................................................................................................................4

Acknowledgments ............................................................................................................................5

Table of Contents .............................................................................................................................6

List of Tables .................................................................................................................................11

List of Figures ................................................................................................................................13

Chapter I: Introduction ...................................................................................................................14

Background ................................................................................................................... 17

Problem Statement ........................................................................................................ 21

Research Questions ....................................................................................................... 23

Definition of Key Terms ............................................................................................... 23

Chapter II: Literature Review ........................................................................................................25

Theoretical Orientation and Conceptual Framework ..................................................... 25

The American Customer Satisfaction Theory ........................................................... 25

Expectancy Confirmation Theory ............................................................................. 28

Elaboration Likelihood Theory ................................................................................. 30

According to.............................................................................................................. 31

Foundational Theories Condensation ............................................................................ 32

Model Under Investigation ............................................................................................ 32

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Continuance Intention ................................................................................................33

Perceived Service Quality .......................................................................................... 38

Relationship between Perceived Service Quality and Continuance Intention ...........41

Customer Satisfaction.................................................................................................42

Relationship between Perceived Service Quality and Customer Satisfaction ............46

Mediating Effect of CS between the relationship of PSQ and CI ..............................47

Perceived Switching Costs .........................................................................................48

Moderating Effect of PSC between the relationship of CS and CI ............................52

Price Sensitivity ..........................................................................................................53

Moderating Effect of PS between the relationship of CS and CI ...............................58

Chapter III: Methodology...............................................................................................................61

Research Design .............................................................................................................61

Population and Sample ................................................................................................... 62

Materials and Instrumentality .........................................................................................64

Variables and Operational Definitions ...........................................................................65

Continuance Intention ................................................................................................65

Price Sensitivity ..........................................................................................................65

Perceived Switching Costs .........................................................................................65

Customer Satisfaction.................................................................................................66

Perceived Service Quality ..........................................................................................66

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Demographic Control Data ........................................................................................66

Data Collection and Statistical Analysis ........................................................................67

Data Collection ...........................................................................................................67

Statistical Analysis ......................................................................................................... 68

Data Preparation .........................................................................................................68

Measurement Model ...................................................................................................68

Structural Model......................................................................................................... 70

Chapter IV: Data Analysis and Results ..........................................................................................72

Data Screening ...............................................................................................................72

Sample Descriptives .......................................................................................................72

Gender ............................................................................................................................73

Age .................................................................................................................................73

Education........................................................................................................................73

Income ............................................................................................................................74

Claims ............................................................................................................................74

Renewals ........................................................................................................................75

Shopped Insurance .........................................................................................................75

Multipolicy Discount Applied ........................................................................................76

Number of Insureds on Policy ........................................................................................76

Vehicles ..........................................................................................................................77
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Measurement Model Analysis ........................................................................................77

Structural Model Analysis .............................................................................................. 83

Explained Variance ........................................................................................................84

Effect Size Analysis .......................................................................................................84

Bivariate Analysis ..........................................................................................................86

(H1) PSQ has a significant positive effect on CI........................................................86

(H2) PSQ has a positive significant effect on CS.......................................................86

Multivariate Analysis .....................................................................................................87

(H4) PSC moderates the effect between CS and CI ...................................................88

(H5) PS moderates the effect between CS and CI. .....................................................89

Correlations ....................................................................................................................91

Evaluation of Findings ...................................................................................................92

Chapter V: Discussion and Conclusions ........................................................................................93

Interpretation of Results .................................................................................................93

Research Question 1...................................................................................................94

Research Question 2...................................................................................................96

Correlations ....................................................................................................................97

Implications for Theory ..................................................................................................97

Implications for Practice.................................................................................................99

Implications for Research ............................................................................................. 100

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Limitations ................................................................................................................... 101

Conclusions .................................................................................................................. 101

References .................................................................................................................................... 102

Appendix A Institutional Review Board Approval, PHRP Certificate......................................... 125

Appendix B Demographic Questions ........................................................................................... 127

Appendix C Variable Reliability, Sources, and Indicators ........................................................... 129

Appendix D Original and Adapted Survey Questions .................................................................. 132

Appendix E Consent to Participate in Research, Survey ............................................................. 136

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List of Tables

Table 1 Key Terms and Operational Definitions .............................................................. 24

Table 2 Relationship of Research Problem, Question, Hypotheses, Theory ..................... 60

Table 3 Table of Variables ................................................................................................ 67

Table 4 Measurement and Structural Model Tests/Benchmarks ....................................... 71

Table 5 Frequency Distribution for Gender ...................................................................... 73

Table 6 Frequency Distribution for Age ........................................................................... 73

Table 7 Frequency Distribution for Education .................................................................. 74

Table 8 Frequency Distribution for Income ...................................................................... 74

Table 9 Frequency Distribution for Claims ....................................................................... 75

Table 10 Frequency Distribution of Renewals .................................................................. 75

Table 11 Frequency Distribution of Shopped Insurance ................................................... 75

Table 12 Frequency Distribution of Multipolicy Discount Applied ................................. 76

Table 13 Frequency Distribution of the Number of Insureds on the Policy ...................... 76

Table 14 Frequency Distribution for the Number of Vehicles in Household .................... 77

Table 15 Indicator Reliability (Indicator Loadings).......................................................... 78

Table 16 Internal Consistency Reliability ......................................................................... 79

Table 17 Convergent Validity (AVE - Average Variance Extracted) ............................... 79

Table 18 Discriminate Validity (Fornell-Larcker) ............................................................ 80

Table 19 Discriminate Validity (HTMT) .......................................................................... 80

Table 20 Collinearity Statistics (VIF) ............................................................................... 81

Table 21 Construct and Variable Descriptives and Normality .......................................... 82

Table 22 Explained Variance ............................................................................................ 84

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Table 23 Effect Size (f Square) ..........................................................................................85

Table 24 Q Squared ............................................................................................................85

Table 25 Direct Effect Path Coefficients and P-Values .....................................................86

Table 26 Bivariate Analysis ...............................................................................................87

Table 27 Multivariate Analyses – Mediation .....................................................................88

Table 28 Hypotheses Results .............................................................................................90

Table 29 Moderation Analysis ...........................................................................................91

Table 30 Correlations .........................................................................................................91

Table 31 Perceived Switching Costs for Females ..............................................................96

Table 32 Demographic Questions .................................................................................... 127

Table 33 Variable Reliability, Sources, and Indicators .................................................... 129

Table 34 Original and Adapted Survey Questions ........................................................... 132

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List of Figures

Figure 1 The American Customer Satisfaction Theory ..................................................................27

Figure 2 Expectancy Confirmation Theory ....................................................................................30

Figure 3 Elaboration Likelihood Theory ........................................................................................32

Figure 4 Moderated Mediation of PSQ on CI for Automobile Insurance ......................................59

Figure 5 G*Power R2 Deviation from Zero ...................................................................................63

Figure 6 Total Sample Size Indicator .............................................................................................64

Figure 7 Measurement Model Results............................................................................................82

Figure 8 Structural Model Results .................................................................................................84

Figure 9 Slope Analysis .................................................................................................................90

Figure 10 Institutional Review Board Approval ..........................................................................125

Figure 11 Protecting Human Research Participants Online Certificate of Completion ...............126

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Chapter I: Introduction

The beginnings for property and casualty insurance in the United States were born from

Benjamin Franklin’s 1752 Philadelphia Contribution, the first insurance company in the colonies

to provide fire insurance. Later on, Benjamin Franklin also recommended coverage for life and

crop insurance (Allstate, 2022). By 1897, Dayton, Ohio resident Gilbert J. Loomis purchased the

first automobile insurance policy for $1,000 from the Travelers Insurance Company providing

protection for death, bodily injury, and property damage (Ohiohistorycentral.org, 2022).

Following this first automobile insurance policy purchase by Loomis, the International Risk

Management Institute claimed in 1902, the first automobile fire and theft policy was offered, and

by 1912, the forerunner of the modern automobile insurance policy was available for purchase,

providing property, liability, and fire in one automobile insurance policy (Irmi.com, 2022).

The automobile insurance policy is a critical component for a modern society providing

vital protection to affected parties for the financial losses associated with automobile accidents

(Bbb.org, 2017). In the U.S.A., there are around 215 million automobile insurance policyholders

paying an average annual insurance premium of $1,674 with Louisiana having the highest

automobile insurance premiums at $2724 per year (Bowman, 2021). There are 6 million car

accidents annually in the United States and more than 90 people are killed daily in car accidents.

Each year, 3 million people are injured with 2 million experiencing permanent injury from car

accidents. 6% of automobile crashes are fatal, 27% non-fatal, and 72% involving property

damage (Car accident statistics in the U.S. DriverKnowledge, 2021).

The automobile insurance industry has flourished in the United States, with automobile

insurance being governed at the state level along with each state appointing its own insurance

commissioner and department of insurance. “Tort” and “no-fault” liability are the two main legal
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forms of automobile insurance coverage in the 50 states, with half the states represented by each

or variations of these two main legal forms of liability insurance. States utilizing tort law require

the at-fault driver to pay for the entire loss, including property damage, medical and pain and

suffering of the other driver. On the other hand, states utilizing no-fault law require insurance

companies to indemnify their own insureds, regardless of who caused the accident.

Comprehensive and collision coverage is also available for policyholders needing

automobile physical damage coverage. Comprehensive coverage, also known as “other than

collision”, indemnifies an insured for a stolen or damaged vehicle that has not been in a collision.

Typical perils covered by comprehensive include fire, falling objects, vandalism, and a couple

exceptions, stones hitting the windshield (glass breakage) and hitting animals while a vehicle is

moving (Irmi.com, 2022). Collision coverage indemnifies an insured, when a vehicle collides

with another vehicle, an object, or is overturned.

According to Iii.org (2021) in 1927, Massachusetts was the first state to require the

purchase of automobile liability insurance to drive a car, and thereafter, slowly, every state

enacted similar legislation.

Today, each state enjoys many insurance companies offering automobile insurance

policies with a variety of coverages. In fact, according to Iii (2020) the US has nearly 6,000

insurance companies employing 2.8 million. United States automobile insurance companies will

generate revenue that exceeds 316 billion (Ibisworld, 2022). Revenue is the total amount

received from selling a good or performing a service (Averkamp, 2022). For insurance

companies, the payment of insurance premiums by insureds are a major source of revenue.

Due to the vast profit potential of the automobile insurance industry, insurance

companies are interested and motivated to sell as many policies as possible in accord with each
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insurance company’s financial restraints. After the sale of an insurance policy, a leading concern

is the policyholder repurchasing the same automobile policy at a six or twelve-month renewal

period. If a policyholder cancels their original automobile insurance policy and starts a new

automobile insurance policy with a different insurance company, this action diminishes the

original insurance company’s customer/insured retention rate. With around 215 million

automobile insurance policyholders in the U.S.A., approximately 34 million or 16% of the

policyholders annually switch to a different automobile insurance company (Furlong, 2018;

Independent Insurance Agents of Dallas, Inc. (2021).

Maximizing policyholder renewals help stabilize an insurance company’s revenue

stream. This study offers a predictive model that considers factors influencing personal

automobile insurance policyholder retention. This empirical study is anticipated to be a useful

tool for anticipating automobile policyholder continuance intention and for practitioners; the

predictive value of this model could provide insight for future development of policyholder

retention techniques.

A practitioner would be interested in methods/practices/techniques to improve the

retention rate. Instead, the intent of this study is to fill the knowledge gap with consideration for

the significance of policyholder perceived service quality, customer satisfaction, perceived

switching costs, and price sensitivity towards the determination of automobile policyholder

continuance intention. From a theoretical perspective, this research effort extends existing

foundational theories on continuance intention factors into a domain that has limited empirical

research.
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Background

Significant practitioner literature exists on the importance of policyholder retention. A

central theme of Gupta et al. (2004) was the perception of policyholders as insurance company

intangible assets and Verhoef (2002) emphasized an aspect of policyholder equity management

as policyholder retention. Đukić and Stanković (2014) considered long-term customer equity a

most valued insurance company asset and Takhar-Lail (2014) stated that along with customer

service, long-term customer relationships are considered significant factors to competition.

Of the nearly 6,000 United States based insurance companies, 2,476 insurance companies

offer property/casualty policies, such as automobile insurance, making for a palpable competitive

insurance industry environment (Iii, 2020). Typically, automobile insurance legislation provides

the benefit for policyholders to cancel an automobile insurance policy with immediate notice to

the providing insurance company. Generally, for a canceled automobile insurance policy, the

policyholder will receive a prorated policy premium. The ease of automobile insurance

policyholder cancellations along with the competitive environment, as well as, other insurance

companies bidding for other insurance company’s policyholders, provides a grave scenario for

an unsuspecting/uninformed insurance company management team. It is critical for insurance

company management to understand the benefits of policyholder continuance intention, offering

insurance companies an improved revenue stream.

Through the theoretical associations of this empirical study, it is envisioned to be a useful

tool for predicting automobile policyholder continuance intention and for practitioners; the

predictive value of this model may provide insight for future development of policyholder

retention techniques.
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The insurance industry, on average, has a policyholder retention rate of around 84%

(Furlong, 2018; Independent Insurance Agents of Dallas, Inc. (2021). Even though this may look

good on the surface, this percentage rate equates to 160 customers lost every year out of every

1,000 clients in a book of business. For an insurer, retaining insureds not only provides for

insurance company profit, but also helps offset new customer recruitment, advertising, and

marketing cost. The loss of insureds for an insurance company is the biggest threat to survival.

Dotter (2020) stated that in today's fast-changing markets, continuance intention is a

challenge, and meeting the need for speed and agility in the insurance industry are crucial.

Shifting to innovations and customer-focused principles proves to be a major investment but

opens the door to lower cost and growing revenue ideas that are tested and delivered. Reflecting

on changing customer needs and wants and the need for an insurance company to evolve, a

major strategy includes attention to customer intimacy to grow and is a driver of business. From

this customer-first perspective, asking “what might insurers do to make customers want to stay”,

time was spent learning the circumstances, concerns, and needs of policyholders in an effort to

cultivate an understanding of the problems faced and then to ideate on possible solutions.

There are a few empirical research studies in the area of insurance continuance intention.

Honka (2014) quantified the actual “search and switching cost” based on price only as ranging

from $35 for an internet search to $170 for the cost of a price search via an insurance agent in a

community. Honka (2014) suggested the cost of switching lends itself to the incumbent

insurance company retaining insureds. Furthermore, she suggested the reason insurance company

advertisements emphasize the high savings for switching to another insurance company is in an

effort to overcome these switching costs.

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In addition, Honka (2014) studied the effects of eliminating market frictions on consumer

welfare. Market friction is anything that interferes with trade DeGennaro and Robotti (2007).

Consumer welfare signifies an individual’s benefits derived from the utilization of goods and

services. Theoretically, the assessment of benefits from goods and services signifies each

individual’s welfare (OECD Statistics Directorate, 2022). Honka (2014) contributed to insurance

literature by imparting evidence of the scale and significance of market frictions in the insurance

industry. Market frictions explain the stickiness in consumer choices from year to year, along

with influencing preference, price elasticity, and consumer welfare analyses.

Antón et al. (2007) studied policyholders’ continuance intention involving four

moderating actions of firms, which end up leading to disillusionment with the current insurance

company. These moderating actions include: 1) service quality failures; 2) unfair price; 3) low

perceived commitment; and 4) anger incidents. The dissolution process moderators were

analyzed as they relate to the purchase situation. The study found that an increase in the policy

premium or a specific incident in which policyholders experienced anxiety and worry were the

main determinants of the disillusionment process. Finally, the study advanced the idea that the

level of policyholder involvement and their knowledge of alternatives, moderates continuance

intention.

Bond and Stone (2004) studied the attitude of policyholders after the claim

adjustment/settlement process. The study determined that policyholders are acutely aware of the

premium they pay for their automobile insurance policies. In contrast, the study stated that

policyholders are not as aware of what they are buying; the coverages and exclusions in an

automobile insurance policy.

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Findings showed that 75% of the respondents believed that the blend of product, service,

and premium were the main elements for automobile insurance policy purchase. Of interest, only

13 percent thought premium was the foremost influence.

The message to insurance companies is that the policyholders’ claims experience is

improved when the promised standard of indemnification is communicated during the initial sale

and at each renewal, and this in turn creates a differentiated advantage for those insurance

companies offering a higher level of service.

Brockett et al. (2008) focused on households that had purchased multiple insurance

policies with the same insurance company and after the cancellation of one policy, discerned

how long an insurance company would have to retain the insured, avoiding cancellation of all the

policies and losing an insured to a competitor. Brockett et al. (2008) found that the longer

insureds were with an insurance company, the more likely they were to stay with that company.

Furthermore, when there was the occurrence of a cancelled policy, the longer an insured had

been with an insurance company the longer the policyholder would remain with an insurance

company after the first cancellation. In addition, the study considered the characteristics of

customers exhibiting loyalty and found that loyal policyholders, on average, remain loyal. With

this said, it is paramount for insurance companies to avoid the tendency to ignore loyal

policyholders for market share.

Core insureds with multiple policies are the most likely to simultaneously move all their

insurance policies to a competitor. Since core insureds are most valued and the most targeted by

competitors, strategically, in an effort to fend off strong competitors, the incumbent insurance

company will want to make it a goal to provide core insureds with the attention they merit.
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According to Brockett et al. (2008), since an address change, the claims experience, or

competition are the main determinants of losing a core insured and their multiple policies, a

longer-term perspective is an appropriate (CRM) customer relationship management strategy.

Due to the wait required until the prior core insured is ready to brand switch again, a longer-term

CRM strategy is best in an effort to win back this prior core insured.

For this study, the dissertation model under investigation is unique within the automobile

insurance industry, providing an encompassing focus on four influences of policyholder

continuance intention: 1) perceived service quality; 2) customer satisfaction; 3) perceived

switching costs, and 4) price sensitivity. The preceding four factors have been determined to be

predictors of retention in commercial domains and all four factors were investigated in prior

empirical research studies (Colgate & Lang, 2001; Hu et al. 2009; Rust & Zahorik, 1993;

Zeithaml et al, 1996; Goldsmith & Newell, 1997). What sets this study apart is that the study’s

model will be applied to the personal automobile insurance industry.

These theoretical associations are intended to be a useful tool for predicting automobile

policyholder continuance intention and for practitioners; the predictive value of this model may

provide insight for future development of policyholder retention techniques.

The originality and value of this research rest on the creation and validation of a model

structured on limited factors towards the prediction of automobile insurance continuance

intention.

Problem Statement

From a theoretical perspective, the study addressed gaps in current literature associated

with Perceived Service Quality, Customer Satisfaction and Continuance Intention, along with the

effects of Perceived Switching Costs and Price Sensitivity, all of which had not been factored on
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these relationships to date. From a practical perspective, the problem this research effort

addressed is a means to assess retention (or turnover/churn) of existing customers in the

automobile insurance industry which causes economic instability for insurance companies.

Developing a predictive model addressed the problem by providing insurance companies a

means to assess and hopefully reduce instability.

To address this problem, the current study was conceived to fill a knowledge gap by

developing a model that assessed factors that predicted policyholder continuance intention,

which if successful, may help insurance companies develop strategies for financial stability and

growth. However, there is limited research on the insurance industry and even less research

related to the property/casualty insurance sector. Furthermore, when continuance intention was

studied, much of the existing research focused on the health insurance industry. For the whole of

the personal automobile insurance industry, empirical research based on predictive modeling are

focused on other influences of policyholder retention. For this study, the broad, but specific

factors analyzed should lead to additional discernment of the influences on personal automobile

insurance policyholder continuance intention.

The participants in the study included individuals paying for an automobile insurance

policy, known as policyholders. The population included automobile insurance policyholders

living in the United States of America. This study closed the gap in this research field and

provides implications for practice and a foundation for further research. Addressing this problem

may enable insurance companies to develop strategies to increase retention leading to increased

profits, reduced operating costs, or lowered premiums for customers thereby giving insurers an

increased competitive advantage.

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Research Questions

To focus our research problem, two broad research questions were proposed leading to

the development of a predictive model. The research questions were as follows:

RQ1: How do individual-level factors affect customer intention of policy renewal?

RQ2: How do external (environment imposed) factors affect customer intention of policy

renewal?

This research study showed the impact of influences behind automobile policyholder’s

continuance intention, leading to policyholder renewal. For example, if it were discovered that

perceived service quality significantly influences customer satisfaction and/or continuance

intention, then this would imply an ability on the part of practitioners to stabilize and/or increase

automobile insurance company policy renewals, underpinning financial performance. By

exploring the relationship between these constructs, this research study added something unique

to the research field.

Definition of Key Terms

The constructs used in this study included perceived service quality, customer

satisfaction, perceived switching costs, price sensitivity, and continuance intention. The

following terms were used frequently and while there may have been alternatives, the definitions

that were identified for each are outlined in Table 1.

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Table 1

Key Terms and Operational Definitions

Key Term Operational Definition Source

Continuance Continuance intention is a customer’s Bhattacherjee
Intention (DV) intention to continue using a product or (2001)
service in the post-acceptance stage.
Perceived Service Perceived service quality is the customer Zeithaml
Quality (IV) assessment of overall superiority or (1988)
excellence of a service.
Customer Customer Satisfaction is a resultant Churchill and
Satisfaction conclusion based on a comparison of pre- Surprenant
(Med. V) purchase expectation, perceived actual (1982)
performance, and cost.
Perceived Switching costs is a customer's idea of the Blut et al.,
Switching Costs necessary compulsory additional costs to (2016)
(Mod. V) make a change from one supplier to
another supplier.

Price Sensitivity Price sensitivity reflects how consumers Goldsmith &

(Mod. V) feel about paying a certain price for a Newell,
product (1997)
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Chapter II: Literature Review

The literature review starts with the theoretical orientation, including identification and

explanation of the three foundational theories that when applied, explain the model under

investigation. This was followed by a literature review of the constructs in our model to include

the identification, articulation, and description of each construct of the working model. Chapter 2

concluded with a review of the research problem, research questions and their alignment to the

developed hypotheses and the foundational theories.

Theoretical Orientation and Conceptual Framework

The foundational theories for this research effort included: 1) The American Customer

Satisfaction Theory; 2) Expectation Confirmation Theory; and 3) Elaboration Likelihood

Theory. These foundational theories align with past research and support the conceptual model in

this study.

The American Customer Satisfaction Theory

The American Customer Satisfaction Theory’s core ideas include: 1) strong financial

performance is often led by customer satisfaction; 2) the willingness of consumers to buy is

underlain by changes in customer satisfaction; 3) more and better products support economic

growth which is an indicator of a change in customer satisfaction; and 4) quality, not price

provides more of an impact on customer satisfaction.

The theory has been cited over 7,200 times for varied topics including, online customer

satisfaction, tourism, mobile phones, firm values, website evaluation, customer relations,

banking, corporate social responsibility, and government social programs, providing an

indication of the numerous peer reviewed papers applying the American Customer Satisfaction

Theory.
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A forerunner to the American Customer Satisfaction Theory was the (CSB) Customer

Satisfaction Barometer established in 1989. The Customer Satisfaction Barometer has been used

by more than 100 companies and 20 industries to measure the quality of output, meaning the

measure of quality to total consumption processed as customer satisfaction as experienced by

buyers.

Dr. Claes Fornell developed the (ACSI) American Customer Satisfaction Index (Fornell

et al., 1996). The index provides an economic barometer to gauge cross-industry satisfaction

levels of customers in the United States economy by forecasting future paths to advance

customer satisfaction, along with the new integrated new factor, “perceived quality” (Ding et al.,

2021; Liu et al., 2003). For insurance companies, concerned with the perceived service quality

and customer satisfaction of policyholders, the American Customer Satisfaction theory underpins

this research through its use of customer expectation, perceived quality, and customer

satisfaction in measuring the level of customer loyalty. With the establishment of trust between

an organization and a customer, the commitment behavior of loyalty ensues (Lin et al., 2011).

Previous research has established loyalty as a precursor of continuance intention (Bhattacherjee,

2001; Cyr et al., 2006), thus, automobile policyholders may consider perceived quality and

customer satisfaction in measuring the level of customer loyalty, a foremost indicator of

policyholder continuance intention.

Figure 1 is an illustration of the American Customer Satisfaction Theory; the model is

designed to explain which satisfaction drivers, when improved, would provide a greater degree

of customer loyalty. The American Customer Satisfaction Index score is a weighted average of

survey questions that quantify attributes of satisfaction for products and services (Fornell et al.,

1996).
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The components of the American Customer Satisfaction Theory model are defined as

follows: 1) Customer expectations measure consumers expectancy of the quality of goods and

services and these expectations are based off prior use, including word-of-mouth, advertising,

and a projection of companies’ proficiencies to deliver future quality; 2) Perceived quality

measures consumers quality assessments of recent purchases of goods and services. Quality

includes customization, meeting the consumers individual needs, and reliability, meaning the

frequency of things going wrong with the product or service; 3) Perceived value measures the

quality of goods and services relative to the cost. Generally, for repeat purchases, the cost of

products and services are less important; 4) Customer complaints are considered as direct

complaints, measured as a percentage of respondents, to a company and are within a certain time

frame; 5) Customer loyalty is the consumers likelihood of repurchase from the same source along

with the likelihood of purchase at varied price points. The American Customer Satisfaction

Theory model is found in figure 1.

Figure 1

The American Customer Satisfaction Theory (Adapted from Fornell et al., 1996)
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Expectancy Confirmation Theory

Oliver (1993), in a series of two articles in 1977 and 1980, developed this cognitive

theory explaining post-purchase or post-adoption satisfaction in relation to perceived

performance and disconfirmation of beliefs. Cordoni (2022) defined post-purchase as the way a

person thinks, feels, and acts after they make a purchase.

The core ideas of Expectancy Confirmation Theory postulate that expectations and

perceived performance lead to satisfaction. If positive confirmation ensues, the outperformance

of expectation of a product, satisfaction is the result. If negative confirmation ensues, a product

falling short of expectations, dissatisfaction is the result (Oliver, 1980; Spreng et al., 1996).

Expectancy Confirmation Theory postulates that customer satisfaction derives from

expectation, perceived performance, and confirmation/disconfirmation. With a customer

expectation as a reference point, customers judge products and services (Petty & Cacioppo,

1984). Thus, for this study, automobile policyholders may postulate their perceived performance,

level of customer satisfaction from expectation, and confirmation/disconfirmation.

A non-inclusive list of areas of concern for insurance companies wanting to increase their

policyholder’s perceived performance and level of customer satisfaction from expectation

include fairness of vehicle insurance premiums, product offerings, and claims settlement. Catlin

et al., 2016 listed others, including advice provided, employee politeness simplicity of

communication with the insurer, employee expertise and professionalism, clarity and ease of the

process, along with the speed of claim settlement.

Assessments and convictions a customer renders in reference to a product or service when

considering their original expectations is known as confirmation or disconfirmation. There are

three degrees of confirmation/disconfirmation. Positive confirmation means the product or

 29

service surpasses the customers’ original expectations, which should enhance customer

satisfaction. Negative (dis) confirmation – the product or service is inferior to the customers’

original expectations, which diminishes satisfaction or increase dissatisfaction. Maintaining

confirmation – the product or service matches expectations, which preserves customer

satisfaction (Oliver, 2014).

Customers may not necessarily exhibit a repurchase intention propensity based only on a

level of satisfaction (Blut et al., 2014). In fact, continuous decision-making involves not only

performance but also the availability of other products or services, except for automatic

repurchase habits. Once a customer forms an unconscious, repurchase habit, the repurchase takes

place with cues and is an automatic function (Verplanken et al, 1998).

Expectation Conformation Theory has been applied over 5,600 times in studies for varied

topics including fruits and vegetables, consumption, public services, price increases, teacher

effects on students’ outcome, firm stakeholder propensities, and political tweets, providing an

indication of the numerous peer reviewed papers applying the Expectancy Confirmation Theory.

The following figure illustrating the Expectancy Confirmation Theory model employs

and defines the following four primary factors: 1) Expectations referring to traits and features a

consumer expects and foresees through the associations with the company’s product or service;

2) Perceived performance indicating consumers perceptions of the genuine performance of a

product or service; 3) Positive Confirmation or Disconfirmation of beliefs considers the

discernments or assessments a consumer has with respect to a product or service; and 4)

Satisfaction meaning that after the purchase and use of goods and services, the gained level of

satisfaction or gratification. 5) Repurchase Intention is a consumer’s conclusion to return for

 30

future transactions with a product or service supplier (Hume et al., 2007). The Expectancy

Confirmation Theory model is found in figure 2.

Figure 2

Expectancy Confirmation Theory (Adapted from Oliver, 1993)

Elaboration Likelihood Theory

Petty and Cacioppo (1986) developed the model to explain stimuli processing, why

stimuli are used, and the resulting attitudinal change(s). The dual processes of the central and

peripheral paths change attitude. The central path ensues with an elevated cognitive effort and

the peripheral path affords an insignificant cognitive effort.

For example, during the purchase of a car, the “central path” includes consideration of

purchase price, insurance cost, safety rating, reliability, reviews, and fuel efficiency. On the

other hand, the “peripheral path” includes the color, speed, sex appeal, and impression on

others.

The core ideas of Elaboration Likelihood Theory include processing messages from low

elaboration to high elaboration levels of thought. The peripheral path includes classical

conditioning and mere exposure, and the central path includes expectancy-value and cognitive

response processes. Central path processes are persistent, resist persuasion, and influence others

to a greater degree than the peripheral path. Variable operation is determined by low to high
 31

elaboration and variables play multiple roles of persuasion, including a clue to judgment or an

influence or direction of thought concerning a message.

The central path considers true merits, a high level of message elaboration, and cognition

of arguments generated by the receiver of the message. As a result, the attitudinal change is

enduring, resistant, and predictive of behavior. Whereas the peripheral path considers positive

and negative clues including simple inferences of merits and a lack of relatedness to the logical

quality of the message.

According to Kitchen et al. (2014), prior to the theory, conceptual ambiguities and

methodological deficiencies prevailed when considering the formation of consumer attitudes,

even with consideration for the dominate models of the time including (Fishbein & Ajzen, 1972,

1980, 2010).

The Elaboration Likelihood Theory has become so prominent, journal publishers and

peer reviewers demand its inclusion, it is one of marketing communications most cited and

sacred models (Pasadeos et al., 2008). The theory has been cited over 13,000 times in studies for

varied topics including, coping behaviors, auditor judgement, user attitude and behavior, internet

recruitment, online gaming, and persuasive messaging to provide an indication of the numerous

peer reviewed papers applying the Elaboration Likelihood Theory.

The following figure illustrating the Elaboration Likelihood Theory employs and defines

the following two components, the 1) Central path which considers true merits, a high level of

message elaboration, and cognition of arguments generated by the receiver of the message and

the 2) peripheral path which considers positive and negative clues including simple inferences of

merits and a lack of relatedness to the logical quality of the message. The Elaboration Likelihood

Theory model is found in figure 3.

 32

Figure 3

Elaboration Likelihood Theory (Adapted from Petty and Cacioppo, 1986)

Foundational Theories Condensation

The applicable theoretical orientation, existing theory, conceptual framework, and model

under investigation are based on established, formal, and peer-reviewed foundational theories.

Furthermore, the study establishes a path forward towards the fulfillment of a knowledge gap for

the automobile insurance industry. Specifically, the study offers solutions and greater clarity in

efforts to explain the dynamics of continuance intention of automobile insurance policyholders.

For insurance companies, these insights should provide meaningful avenues for growth and

financial stability.

Model Under Investigation

With the establishment of the study’s foundational theories, we turn to a review of the

history and definitions associated with the constructs in our predictive model. For each construct

we will discuss its history, definitions, characteristics, as well as provide examples of the

application in prior empirical research. An understanding of the characteristics associated with

the constructs are essential for discernment of how they manifest themselves in an environment.

A review of past studies denotes whether their utilization are appropriate for this study and
 33

especially if they are a good fit for the target population and research objectives. As you will see,

there has been limited use of some of the proposed constructs in the automobile industry; doing

so through this study will expand their applicability to this environment.

Continuance Intention

Continuance intention is the definitive dependent variable of consequence in this study

and has been intently scrutinized in consumer behavior studies (Jackson et al., 1997; Chow and

Leitch, 1997; Yi & La, 2004; Zeithaml et al., 1996).

History. The inception of this variable is often tied to studies applying Expectancy

Confirmation Theory and specifically Bhattacherjee’s Expectation Confirmation Model (ECM)

towards a determination of continuance intention. Abu-Salim et al. (2017) applied continuance

intention when considering health insurance, but without existing Expectancy Confirmation

Theory applied to the automobile insurance industry, this appropriate and necessary extant

research opportunity is timely.

Due to the cost efficiencies of customer repeat purchase of products and services

compared to the effort and cost associated with attracting new customers, organizations are

interested in achieving optimal continuance intention. For the insurance industry, the cost of

attracting new insureds greatly outweighs the cost associated with retaining insureds.

Consistent insurance renewals and overall customer loyalty are cornerstones for insurance

companies to achieve genuine growth. For agents/insurance companies, acquisition costs average

up to $900 per insured. The high acquisition cost per insured places the insurance industry in the

top three industries, along with banking, as the most expensive industries for customer

acquisition. A 2% reduction of policy non-renewals equates to a cost cutting measure of

 34

approximately 10%+ and a permanent 5% reduction in non-renewals, and this equates to a

doubling of profit within a 5-year period (Patra, 2019).

Wills (2009) indicated that attracting new customers is five times the cost of sales to

existing customers and Fornell (1992) stipulated the importance of defense strategies to retain

profitable existing customers.

Wu and Lin (2009) stated that long-term renewing insureds provide greater profits for

insurers and a Conning & Company (1988) study found that there was a 30 percent increase in

profitability for renewal vs new business. With renewing insureds, insurance companies can

effectively price insurance policies due to the observation of past claims. Furthermore,

relationships built through time, policies renewing, provide profitable insureds advantageous

insurance policy premiums.

Definitions Associated with Continuance Intention. An examination of literature leads

to the conclusion that there are a number of definitions for continuance intention. Bhattacherjee

(2001) explained continuance intention as a person’s intention to continue using a service in the

post-acceptance stage. Continuance intention is the consummate dependent variable of interest

for the studies of consumer behavior and information sciences (Jackson et al’s 1997; Yi & La,

2004; Zeithaml et al., 1996).

Continuance Intention is associated with a service provider’s ability to attain and retain

customer loyalty by ensuring customer satisfaction. Meeting the customers’ expectations and

satisfying their needs is therefore the central strategy in the firm’s efforts to retain its customers,

earn their loyalty, and gain competitive advantage (Cronin and Taylor 1992; Parasuraman et al.

1988; Udo et al. 2010; Hafeez and Muhammad 2012).

 35

Han et al’s (2018) defined continuance intention, as a customer’s choice to continue the

usage of a product or service that is being used or has been used and this act is differentiated

from a first-time use of a product or service. Furthermore, the continued used of a product or

service promotes an organization’s sustained survival.

Continuance intention is the probability that a customer who has bought and used an item

or service plans to continue buying and using it and is a vital behavioral construct often

examined by researchers (Soderlund and Ohman 2003; Zhang et al. 2011).

Characteristics of Individuals Demonstrating Continuance Intention.

(Berkowitz et al., 1978; Olsen, 2002) described another variation of continuance

intention as the combination of intention and action loyalty covering both behavioral frequency,

known as repurchase loyalty and intention of consumption/purchase (Pritchard et al., 1999;

Szymanski & Henard, 2001). This characterization is in accord with Oliver (1997) that loyalty

may include the commitment to repurchase a product or service in the future.

Meeboonsalang and Chaveesuk (2019) described loyalty as embodying assurance,

empathy, reliability, relationship quality, responsiveness, and tangibility. Thus, marketing

researchers consider loyalty a characteristic and foremost indicator of continuance intention

(Zeithaml et al, 1996; Wu et al, 2011; Gera, 2011; Yu & Tseng, 2016, Zeithaml 1991).

Guelman, Guillén and Pérez-Marín (2014) shared that one of the factors in determining

the premium charged for an insurance policy is the need for profitable insureds to renew their

insurance policy, known as (retention) for insurance companies. Furthermore, in the long term,

insurers are willing to somewhat reduce profits for continued policy renewals of profitable

policyholders, thus customer loyalty and continuance intention follows customer’s perceptions of

clear pricing and an advantageous evaluation of perceived satisfaction (Rothenberger, 2015).

 36

Building loyalty can start with getting to know your insureds and looking for opportunities of

understanding and accord that lead to current and future risk analyses and the sale of insurance

products and services (Nowotarska-Romania, 2020) which leads to the ultimate reward for

insurance companies, a higher policy renewal rate leading to financial stability.

Past Studies Using Continuance Intention. The use of continuance intention as a

research model variable are numerous in scholarly studies’ and are found in a variety of

industries including mobile banking services, mobile payment, e-learning, social networking,

health, applications, e-government, mobile commerce, among others (Franque et al, 2020; 2021).

Continuance intention is associated with a service provider’s ability to attain and retain

customer loyalty by ensuring customer satisfaction. Meeting the customers’ expectations and

satisfying their needs is therefore the central strategy in the firm’s efforts to retain its customers,

earn their loyalty, and gain competitive advantage (Cronin and Taylor, 1992; Parasuraman et al.,

1988; Udo et al., 2010; Hafeez & Muhammad, 2012).

When considering customer commitment, Morgan and Hunt (1994) considered the

construct of continuance intention an aim and a determined endeavor for maintaining a

relationship with merit. Xiang et al. (2018) stated that commitment engenders continuance

intention, and according to Allen and Meyer (1990) continuance commitment focuses on the

perceived switching costs of separating from a committed relationship, later examined as the

moderating variable. Chiu and Won (2016) concluded that commitment to a brand reinforces

continuance intention and brand loyalty and customer satisfaction reinforces customer

investment of a brand.

Scholarly studies for continuance intention in the insurance industry are limited. Abu-

Salim et al., (2017) found that discontented health insurance insureds would not necessarily
 37

terminate their patronage and highly satisfied health insurance insureds would likely renew their

current health insurance policies. Furthermore, Christiansen et al. (2016) found that policyholder

continuance intention, benefiting an insurance company, increases with decreasing insurance

policy premiums and that premium adjustments affect the retention rate of policy renewals.

Luo et al. (2021) recognize that the quality of access to insurance company websites and

third-party online insurance platforms positively influence policyholders’ trust, thus increasing

continuance intention. For policyholders, when seeking insurance company information or

when purchasing policies, the website attributes of adaptability, availability, response time,

reliability, and usability are considerable, with both potential insureds and renewing

policyholders evaluating the credibility and quality of insurance company websites. Zhou

(2013) confirmed that mobile payment system quality significantly affects users’ trust and

continuance intention. Luo et al. (2021) predicted that a fast, well designed, easy to use website

platform sends a message of higher competency and rigorous system maintenance to potential

and current policyholders that, in the end influence continuance intention.

Ampaw (2019) stated that customer loyalty, a characteristic and indicator of continuance

intention (Zeithaml et al, 1996; Wu et al, 2011; Gera, 2011; Yu & Tseng, 2016, Zeithaml 1991),

is predicated on the antecedents of loyalty, specifically service quality, trust, and corporate

identity. Consequently, management must unremittingly enhance the facets of loyalty that lead to

continuance intention.

Nowotarska-Romaniak (2020) asserted that the insurance market is highly competitive

and customer loyalty is an important problem with companies fighting for insureds. For

insurance companies, it is vital to learn and apply factors to influence policyholder loyalty, a

characteristic of continuance intention (Zeithaml et al, 1996).

 38

Perceived Service Quality

Perceived Service Quality is the independent variable in this study; its application in

many service sectors is well noted.

History of Perceived Quality. The inception of this variable lies in studied

conceptualization of the disconfirmation paradigm applied to physical goods (Churchill &

Surprenant, 1982; Oliver 1997). Furthermore, other researchers established additional models

towards the study of perceived service quality, including: 1) the Gronroos (1984) Nordic

Model; 2) the SERVQUAL Model (Parasuraman et al., 1988; 3) the Three Component Model

(Rust & Oliver, 1994); and 4) the Multilevel Model (Dabholkar et al., 1996).

Service quality is a tactical consideration for firms attempting to differentiate themselves

from competitors within the service sector (Karatepe et al., 2005; Ladhari, 2008) and is a

principal influence on an organizations service competitiveness (Parasuraman et al., 1985, 1988;

Porter, 1986).

Service quality indicates a measure of service performance excellence (Zeithaml et al.,

2011), and customers measure their experienced service quality alongside their expected service

quality. In the end, customer’s service quality expectations determines if and to what degree the

experienced service quality equals the expected service quality (Ennew & Waite, 2013).

Definitions. An examination of literature leads to the conclusion that there are a number

of definitions for Perceived Service Quality. Perceived service quality is the customer

assessment of overall superiority or excellence of a service (Zeithaml, 1988) and it is “the extent

of discrepancy between customers’ expectations or desire and their perceptions” of the actual

quality of the service received (Zeithaml et al., 1990).

 39

Parasuraman et al. (1985) theoretical definition of service quality, “the discrepancy

between consumers’ perceptions of services offered by a particular firm and their expectations

about firms offering such services” is often sourced when assessing excellence for customer

service encounters. (Berry et al., 1988; Eshghi et al., 2008; Tan et al., 2010) generally, defined

perceived service quality as an accruing resultant customer attitude when comparing customer

expectations to delivered performance.

Perceived service quality is the actual quality as experienced and evaluated by the

customers rather than as claimed by a firm (Padma et al., 2009). In a study that examined brand

equity in the healthcare service context, Chahal and Bala (2012) conceptualized perceived

service quality as the consumers’ overall perception of the superiority of a particular service in

comparison to other available services.

Ennew and Waite (2013) stated that service quality is derived from customer perceptions

of service match – expectation and need, thus comparing expected to actual service. Chahal and

Bala (2012) considered perceived service quality as the customers overall perception of the

superiority of a particular service in comparison to other available services and products. Bitner

(1990) defined service quality as an overall impression considering inferiority verses superiority

and this overall impression shapes customer attitude.

Characteristics. Perceived service quality is interpreted as an overall appraisal of

service, a judgment on the inferiority or superiority of a product or service, and Bitner and

Hubert (1994) maintain that perceived service quality is found at varying levels within an

organization.

According to Groonroos (1990) outcome quality refers to “what” the customer truly

received and process quality as the “delivery” of the service, and both outcome and process
 40

quality shape customer attitude. Beloucif et al. (2004) found that service quality is comprised of

two fundamental elements, the technical quality, the core service “what” and the functional

quality “how” a service is provided.

Sureshchandar et al. (2001) asserted that from a customer perspective, there are five key

facets of service quality for products and services: 1) core; 2) human element of service delivery;

3) non-human element of service delivery; 4) tangibles; and 5) social responsibility. Zeithaml,

Parasuraman, Berry (1990) asserted the basic characteristics of service quality from the

customers’ viewpoint to include: 1) reliability; 2) readiness; 3) trustworthiness; 4) empathy; and

5) the material elements of a service.

According to Insurance Business (2015) there are seven insurance industry elements of

service: 1) product; 2) price; 3) physical distribution; 4) promotion and advertising; 5) people; 6)

processes; and 7) physical evidence.

For automobile insurance policyholders, perceived service quality includes an insurance

company’s execution of their promise to indemnify, putting you in a similar state, as if the peril,

loss, a claim had never occurred. Other perceived service quality traits for an insurance company

include trustworthiness, honesty, and truthfulness. In addition, insurance companies and agents

must be empathetic, possessing the ability to understand and share the concerns of policyholders,

all considerations when policyholders evaluate perceived service quality.

Past Studies. Ampaw (2019) suggested that policyholders’ perceptions of insurance

companies’ identity, trust, and satisfaction are influenced by service quality and service quality

improvements provide a halo effect. Ampaw (2019) emphasized that pre and post purchase

policyholder decisions are significantly influenced by the degree of belief and confidence in an

insurance company.
 41

Doerpinghaus (1991) shared results that suggested automobile insurers have cross-firm

service quality differences, but both independent agencies and direct writers provide a similar

quality of service.

Secure customer relationships develop with the assessment of perceived elevated service

quality (Zeithmal, 1996) and to this end, Vanniarajan (2008) considered the factors of 1)

distribution networks; 2) products; 3) responsiveness; 4) reliability; 5) customer relationship

management; 6) empathy; 7) brand-building; 8) promotion; and 9) tangibility most important to

achieve higher levels of perceived service quality.

Barrese et al’s (1995) supported prior research that the independent agency system

provides better-quality service, although the service differential drops off due to insurance

company size. The reasons for this disparity are higher expense ratios incurred by the

independent agency system and the persistency of the system are, at least, partly responsible for

superior customer service.

Relationship between Perceived Service Quality and Continuance Intention

Continuance intention is the definitive dependent variable of consequence and has been

intently scrutinized in consumer behavior studies (Jackson et al., 1997; Chow & Leitch, 1997; Yi

& La, 2004; Zeithaml et al., 1996). From a practical perspective and based on their definitions

and characteristics presented earlier, it can be argued that one would not continue a service if the

quality was not as expected. Service quality has been considered, ‘‘a global judgment or attitude

relating to the superiority of a service’’ (Parasuraman et al. 1985). Service quality is a key

predictor of continuance intention, and this phenomenon has occurred empirically, numerous

times in environments other than the automobile insurance industry (Almahamid & Rub, 2011;
 42

Chen et al., 2010; Hu et al., 2009; Kumar et al., 2012; Shao et al., 2020; Wang et al., 2019;

Zeithaml et al., 1996). Therefore, it is hypothesized that:

(H1) Perceived Service Quality has a significant positive effect on Continuance

Intention.

Customer satisfaction is the mediating variable in the study. To follow is information on

its history, definitions, characteristics, and past studies.

Customer Satisfaction

Customer Satisfaction is the mediating variable in this study. To follow is a review of the

history, definitions, characteristics, and past studies.

History. There are two central theories that illuminate customer satisfaction: 1)

Expectancy-Value Concept; and 2) Disconfirmation Paradigm. Expectancy-value theory states

that customers tend to prejudge products, their benefits, and probable results of using the

product. Disconfirmation theory suggest that customers contrast new experiences with expected

experiences. These beliefs determine how well it measures up to the expected standard. The

theory posits that customers make buying decisions based on attitudes, expectations, and

intentions (Oliver 1980).

There are two main academic assessments of customer satisfaction. The first, from the

early 1990s, is transaction-specific (Yi, 1990; Oliver, 1997). The second, from the 1990s, is

cumulative customer satisfaction (Johnson & Fornell, 1991; Johnson et al. 1995).

Definitions. There are many definitions of customer satisfaction (Szymanski & Henard,

2001) found in literature. Churchill and Surprenant (1982) defined customer satisfaction as a

resultant conclusion based on a comparison of pre-purchase expectation, perceived actual

performance, and cost.

 43

Customer Satisfaction is the result of a comparison between what the customers expect

and what they get from goods and services used (Oliver et al. 1997; Koenig-Lewis and Palmer

2014). Ha and Park (2013) defined customer satisfaction as the cumulative affective response

that resulted from using products and services.

Oliver (1997) and Yi (1990) defined transaction-specific customer satisfaction as an

evaluation of experience with products and services and was the dominate thought during the

early 1990’s. Two studies (Johnson & Fornell, 1991; Johnson et al., 1995) defined the

cumulative customer satisfaction as customer overall assessment of products and services.

Characteristics. Oliver (1997) considered transaction-specific customer satisfaction as a

multifaceted psychological response to the performance of products and services for a given

period, along with providing a way to trace differences in performance that resulted from internal

change or quality improvement.

On the other hand, cumulative satisfaction considers the entire experience when assessing

products and services for determining continuance intention. An advantage of cumulative

evaluation when determining customer satisfaction is that it allows for a better evaluation of

customer behavior and intention (Johnson & Fornell, 1991; Johnson et al., 1995).

With the growing prominence of cumulative satisfaction, this indicates a concerted

effort to understand the customer’s evaluation over longer periods (Mittal et al, 1999;

Garbarino & Johnson, 1999; Mittal & Kamakura, 200l). Johnson et al., (1995) stated that time

is needed for quality changes to impact cumulative evaluations.

There are three shared components of customer satisfaction: 1) response – cognitive or

emotional; 2) a certain focus – consumption experience, expectations, products; and 3) certain

time – after consumption experience, after expectations, after choice (Giese & Cote, 2000).
 44

Many organizations realize elevated usage levels of products and services with an

increase in customer satisfaction, thus, customer satisfaction is a driver of revenue, along with

increased customer loyalty (Anderson et al, 1994). As such, customer satisfaction is an important

source of revenue because a satisfied customer tends to have a higher usage level than a

dissatisfied customer, leading to increased customer loyalty, a leading indicator of continuance

intention (Anderson & Srinivasan, 2003; Oliver, 1999; Yang & Peterson, 2004; Zeithaml, Berry,

& Parasuraman, 1996).

The relationship that links customer satisfaction and loyalty is contingent on existing

levels of competition (Jones, 1996); therefore, the exceedingly competitive automobile insurance

marketplace may see that policyholder satisfaction improves loyalty.

Past Studies. Nwankwo (2013) drew the attention of insurance practitioners to

interrelationships that exist among customer relationship management and customer retention

and value creation. This research that evaluated the relationship that exist between customer

relationship management and customer retention, determined that value creation is extended to

insureds. Furthermore, according to Pooser and Browne (2018) satisfied insureds will renew

insurance policies leading to reduced customer acquisition cost and increased profitability.

Lajdziak (2018) referenced the record-high insured satisfaction index and the factors that lead

the way include attempts to meet expectations for digital channels and services providing easy-

to-use online insurance services.

Ampaw (2019) stated as a matter of necessity, management should make certain

customer satisfaction is continuously sustained due to its persuasive influence on loyalty.

Customers are only disposed to being ‘apostles’ and loyal to a brand that is exceedingly

satisfying. Chege (2021) found that customer satisfaction is influenced by service reliability at the
 45

customer level. A priority for today’s insurance companies is to achieve a higher level of

customer satisfaction, thus building an ability to survive in today’s competitive financial services

sector. To underscore the importance of customer satisfaction, a study by Klynveld et al. (2016)

shared that over 80 percent of insurance companies in a certain region considered their customer

service lacking and 10 percent with the belief of below-average customer care. In addition, 49

percent of insurance companies found customer satisfaction their biggest challenge.

Parasuraman (1988), Hamilton (1991), Yuen, and Chan, (2010), Prabha, (2012), Omar

(2015), and Amani, (2017) all found that the reliability of service significantly affects customer

satisfaction. The hallmark characteristics of service reliability include, but are not limited to

keeping promises, sincere and dependable staff, service error “free”, accurate record keeping,

timely claims and benefit payments, and insurance companies understanding and meeting

customer needs. For insurance companies to realize higher levels of customer satisfaction, an

insured needs to feel they can rely on their insurance company.

Anderson and Mansi (2009) found that companies in the service sector are not as successful

when offering lower levels of customer satisfaction. Conversely, companies providing improved

customer satisfaction enjoy stable cash flows due to future sales through renewals. Anderson and

Mansi (2009) state that customers experiencing increased customer satisfaction have greater

price tolerances. It follows that the insurance companies providing superior customer satisfaction

will increase their profits and renew more policies than insurance companies hampered with low

customer service ratings.

When applied to the insurance industry, policyholder satisfaction is influenced by

premiums, claims adjudication, and personal interaction with company and agency

representatives, to name a few, all of which can influence the way in which an insured feels
 46

toward a company’s business practices and products (Pooser & Browne, 2018). It has been

identified that for the automobile insurance marketplace, the three facets of 1) satisfaction with

functional services; 2) satisfaction with insurance staff; 3) satisfaction with the “whole” of the

insurance company are the key elements of customer satisfaction (Siddiqui & Sharma, 2010).

Relationship between Perceived Service Quality and Customer Satisfaction

Based on their definitions and the characteristics previously presented for perceived

service quality and customer satisfaction, it can be argued that they are naturally related. Due to

the innate nature of capitalistic, free enterprise systems around the world, concentrated empirical

and theoretical research have been accomplished and continue on the topics of perceived service

quality and customer satisfaction (Buttle, 1996; Asubonteng et al., 1996). Service quality and

customer satisfaction are core marketing theory concepts (Spreng & Mackoy, 1996).

A Ramamoorthy et al. (2018) study considered the interactions of service quality,

customer satisfaction, and behavioral intentions, including if service quality positively influenced

customer satisfaction; if technical quality positively influenced customer satisfaction; if price

influenced customer satisfaction; and if customer satisfaction positively influenced customer

continuance intention. This study’s analysis confirmed that customer satisfaction played a lead

role in bolstering customers’ continuance intention. It was found that perceived service quality

and customer satisfaction have direct commonality with perceived service quality, specifically

focused, and customer satisfaction having a broader, more general view of the delivery of goods

and services. Furthermore, the findings of other researchers (Anderson & Sullivan, 1993;

Fornell, 1992; Hartono & Raharjo, 2015; Parasuraman et al., 1988) confirmed the of this study’s

interaction of perceived service quality, customer satisfaction, and continuance intention.

 47

There has been extensive debate surrounding the direction of the causal relationship

between perceived service quality and customer satisfaction. Parasuraman et al. (1988) thought

that, overtime, customer satisfaction leads to perceived service quality. Others have concluded

that perceived service quality is a leading indicator of customer satisfaction. Cronin and Taylor

(1992) showed significance for all coefficients in the service quality to customer satisfaction to

continuance intention path but the customer satisfaction to service quality to continuance

intention path was not significant. The preeminent thought is that service quality is an antecedent

of customer satisfaction and this path influences customer continuance intention.

In general, empirical research has demonstrated that there is agreement of a direct

relationship between perceived service quality and customer satisfaction (Dabholkar, 1995;

Shemwell et al., 1998) and therefore, based on the aforementioned, it is hypothesized that:

(H2) Perceived Service Quality has a positive significant effect on Customer

Satisfaction.

To follow is an explanation of the mediating effect of customer satisfaction.

Mediating Effect of Customer Satisfaction between the relationship of Perceived Service

Quality and Continuance Intention

In the 1970s, customer satisfaction was gauged by an increase in services (Coyles &

Gokey, 2002) and in the 1980s, customer satisfaction research surveys measured performance

and resource allocation (Bolton, 1998) along with a continued examination of customer

satisfaction (Swan & Trawick, 1981; Churchill & Surprenant, 1982; Bearden & Teel, 1983). By

the 1990s, researchers included continuance intention in their studies of customer satisfaction.

The mediating influence of customer satisfaction has been demonstrated as a critical

determinant of continuance intention (Rust & Zahorik, 1993; Zeithaml et al, 1996) and both
 48

provide improved profits (Reichheld, 1996). In a study by Radic & Dado (2013) investigating the

service quality, customer satisfaction and continuance intention in the retail space, it included if

service quality had a positive influence on continuance intention; if satisfaction had a positive

influence on continuance intention; and if service quality had a positive influence on customer

satisfaction. The study determined that customer satisfaction mediates the relationship of

perceived service quality and continuance intention (Rajic & Dado, 2013) and due to the

importance of customer satisfaction and based on the aforementioned, it is hypothesized that:

(H3) Customer Satisfaction mediates the effect between Perceived Service Quality

and Continuance Intention.

Perceived switching costs is a moderating variable in the study. To follow is information

on its history, definitions, characteristics, and past studies.

To follow is an explanation of the construct, perceived switching costs, a moderator.

Perceived Switching Costs

Perceived Switching Costs is the moderating construct in the model under investigation.

Its use has been historically linked to models relating to continuance intention.

History. Keaveney (1995) was one of the first researchers to assess switching costs as an

influence of customer continuance intention. Thereafter, Gremler and Brown (1996) created a

model that considered switching costs as an antecedent of customer loyalty. In their study, some

examples of switching costs included contractual, learning, continuity, inertia, habit, setup, and

search costs. Other researchers, including Lee et al. (2001), Bansal and Taylor (1999) have

established and verified this positive influence of switching costs on continuance intention.
 49

The body of study on perceived switching costs has provided findings on the central

factors for improved relations with customers, relationship marketing, and customer past

experiences provide clearer signals to understand the motivations to stay or leave relationships.

Vaughan and Vaughan, (2003) stated that switching cost are considerable in the life

insurance sector compared to the property casualty sector due to the longer length of policy

terms and the need to prove insurability on the part of the insured when purchasing a new life

insurance policy or reinstating a lapsed life insurance policy. For the non-life insurance sectors,

for example, the automobile insurance sector, switching costs are less restrictive due to shorter

policy periods and the ease of entering these non-life insurance policies, such as securing an

automobile insurance policy.

Definitions. An examination of literature leads to the conclusion that there are an array of

definitions for perceived switching costs. Blut et al. (2016) defined switching costs as the

customer's idea of the necessary compulsory additional costs to make a change from one supplier

to another supplier.

Perceived Switching Costs is any disutility, be it monetary, psychological, effort-based,

or time-based a customer would experience from switching service providers (Chen and Hitt,

2002). Switching costs are incurred when changing service providers (Porter, 1998) and include

economic, physical and psychological costs (Jackson, 1985). These suffered costs discourage

policyholders from switching to a rival insurance company.

Honka (2014) defined two aspects of switching cost incurred by customers: 1) search

costs – the cost incurred by consumers of conducting a search; 2) switching costs – the cost

consumers incur upon switching insurance providers after the completion of a search. Even
 50

though search and switching cost were defined separately in Honka, in this study, search and

switching costs are both considered “switching” costs.

Characteristics. In this study, perceived switching costs are considered non-financial,

internal factors, in so much, an individual policyholders’ psychological perceptions are their

own.

Switching costs are a substantive consideration for customers contemplating a change.

Perceived switching costs include perceived, anticipated, and experiences of customers

substituting a product or service for another product or service (Pick & Eisend, 2013; Burnham et

al. 2003; Jones et al. 2002) coupled with Burnham et al’s. (2003) conclusion that perceived

switching costs are subjective observations and/or evaluations of experiences.

Switching costs encompass different types of costs, such as financial, procedural,

relational, as well as combinations of these costs (Burnham et al. 2003). Fullerton (2005)

identified a positive influence of switching cost, Bansal et al. (2005) found no correlation, but the

majority of research suggests that switching costs diminishes switching (Heide and Weiss 1995;

Morgan and Hunt 1994; Wathne et al. 2001).

Switching costs are customer-specific in that each policyholder not only measures their

effort from a monetary perspective, but from a psychological aspect of moving to a new service

provider, along with their time and effort. Jacoby and Olson (1977) considered the objective

price as the tangible price and the perceived price is the price converted by the customer

(Zeithmal, 1988).

Switching cost is partly consumer-specific (Shy, 2002) and (Klemperer, 1995; Kim et al,

2003) concur that switching costs include not only those that can be measured in monetary terms
 51

but also the psychological effect of becoming a customer of a new firm, and the time and effort

involved in buying a new brand.

There are increased switching costs for services verses products, providing more

protection for organizations that offer services verses products. Moreover, for B2C insurers,

switching costs are more easily manipulated in contrast to the B2B marketplace (Pick & Eisend,

2013). Thus, for the United States personal automobile insurance industry, a B2C interaction, for

policyholders valuing service, especially with a homogenous personal automobile insurance

policy, the product, it follows that insurance companies possessing an understanding of

switching costs will be encouraged with their ability to increase switching costs, leading to

continuance intention, the renewal of automobile insurance policies by policyholders.

Past Studies. Azar (2011) affirmed that price preferences, with price preferences as an

aspect of perceived switching costs, are a consideration of product and service purchases and a

central aspect of competition and Boom (2011) stated that customers consider price differences

during the decision-making process.

Both (U.S. Auto Claims Satisfaction Study, 2022; Pooser & Browne, 2018) stated that

price is critical to automobile insurance customer satisfaction and shared that increases in price

that are not related to driving experience lead to decreases in customer satisfaction.

Matzler (2006) referred to the belief of a favorable price as price confidence and Rama

(2017) found that customer loyalty diminishes with the perception of an unfavorable price. Thus,

Lichtenstein (1993) concluded that the notion of “fair” is the acceptability of a product or service

by customers and Xia et al. (2004) found that “fairness” is the rational validation of price by a

customer.
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Chen (2017) shared that along with competitors’ current pricing, the cost of past

purchases are weighed and customers are sensitive to these concerns. Moreover, customer

satisfaction and continuance intention are affected by perceptions of comparable prices (Varki &

Colgate, 2001). Moreover, Pick and Eisend (2013) found alternatives and competition are the

two most compelling influences on switching costs.

Moderating Effect of Perceived Switching Costs between the relationship of Customer

Satisfaction and Continuance Intention

Studies consider switching cost a moderator for continuance intention (Aydin, et al.

2005). Switching costs are considered to include the cost of a search and the perceived,

anticipated, and experience of customers substituting a product or service for another product or

service along with the subjective observation and an evaluation of experience (Honka, 2014; Pick

& Eisend, 2013; Burnham et al. 2003; Jones et al. 2002; Burnham et al. 2003).

Customers choosing from homogenous brands and faced with the cost associated with

switching will be inclined to demonstrate continuance intention (Klemperer, 1987). The

relationship linking customer satisfaction and continuance intention is influenced by varied

components such as the kind of industry, switching cost, and homogeneity of the products or

services in a category (Fornell, 1992). Reinchheld and Schefter (2000) contended that the

development of switching costs are a foremost underpinning of success. Colgate and Lang

(2001) found that when the perceived switching costs are higher – changing suppliers, compared

to staying with the original supplier, continuance intention is the result. Studies have considered

the influence of switching costs on continuance intention (Lam, et al., 2004) along with other

studies supporting a positive relationship between switching costs and continuance intention

(Chang & Chen, 2008; Deng et al., 2010; Liu, 2008).

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Schlesinger and Schulenburg (1991) stated that incumbent insurance companies, the

present insurer for a policyholder, enjoy a monopolistic advantage because of the high switching

costs incurred by policyholders. Therefore, it is hypothesized that:

(H4) Perceived Switching Costs moderates the effect between Customer Satisfaction

and Continuance Intention.

Price sensitivity is the other moderating variable in the study. To follow is and

explanation of its history, definitions, characteristics, and past studies.

Price Sensitivity

History. For the insurance industry, price sensitivity to the policy premium is a buying

decision consideration for policyholders (Barroso and Picon, 2012; Alok and Srivastava (2013).

The law of demand maintains that an increase in the relative price of a product or service will

bring about a decrease in the demand for the said product or service. Hence, the law of demand

reflects that as personal automobile insurance premiums increase, the demand for personal

automobile insurance policies will decrease. Historically, businesses attempt to set prices at the

equilibrium point, a particular point where demand and supply yield optimal revenue (Kagan,

2021).

Definitions. Price sensitivity refers to how consumers perceive and react to varied prices

of goods and services and this price change influences decisions of continuance intention.

(Monroe, 1973; Wakefield and Inman, 1993; Bucklin et al., 1995).

Price sensitivity reflects how consumers feel about paying a certain price for a product

(Goldsmith & Newell, 1997) and according to Verschuren (2022) since changes in premium

influence policyholder demand, insurance companies will want to measure this indirect effect to

maximize profits. This measurement is the consequence of rate changes on a policyholders’

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response, or a policyholders’ price sensitivity. Hsieh and Chang (2004) defined price sensitivity

as the level of a customer’s response when incurring price increases in a regularly procured

product or service.

Characteristics. In this study, price sensitivity is considered an insurance

company/external factor, in so much, an individual policyholder has no say in the determined

premium of a personal automobile insurance policy by an insurance company.

Price sensitivity varies from one degree to another degree based on purchasing criteria. A

lower price verses quality is one purchasing consideration. For instance, one insurance company

may have an excellent reputation for claims service, but due to limited resources, a personal

automobile insurance policy purchaser may be willing to settle for a lower priced automobile

insurance policy, giving up service quality for an opportunity the purchase a lower priced

insurance policy. In general, policyholders seeking a higher quality insurance policy may not be

as price sensitive as a bargain hunter. Each individual policyholder has their own degree of price

sensitivity.

For insurance companies, price sensitivity posits a premium on understanding their

competition, the homogenous or heterogenous nature of their automobile insurance policy, along

with the buying process, itself. The personal automobile insurance policy marketplace is highly

regulated, with each state in the United States having their own insurance commissioner and

“insurance bureau”.

The personal automobile insurance marketplace is highly competitive with numerous

insurance companies plying for the premium dollars of policyholders. This study provides

understanding towards the willingness of policyholders to endure premium increases,

policyholder price sensitivity.

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With a high degree of regulation at the state level, for many policyholders, automobile

insurance policies are viewed as homogenous products, with almost no difference from insurance

company to insurance company. With this said, many policyholders have been with the same

insurance company for many years and view their automobile insurance policy as a superior,

heterogenous product when compared to other automobile insurance policies.

Regarding the buying process itself, the insurance industry employs avenues for shopping

customers to find and purchase personal automobile insurance policies including direct

marketing, captive agents, exclusive agents/agencies, and the independent insurance agent/broker

system.

An example of an insurance company using direct marketing, bypassing an agent/broker,

would be GEICO Insurance Company. You can simply go online and price a personal

automobile insurance policy. Insurance companies using captive agents, insurance agents

employed by a specific insurance company include Allstate and AAA. An exclusive

agent/agency would be associated with State Farm, and numerous companies enjoy the

independent agency/brokerage system. Independent agents will normally represent many

insurance companies allowing them the opportunity to gain pricing from all their represented

insurance companies. In general, the more sophisticated your insurance shopping needs the more

policyholders will call on the expertise of independent insurance agents. As forementioned, for

policyholders viewing their insurance policy in a general homogenous nature along with the

highly regulated marketplace for personal automobile insurance policies, an insurance shopper

may be perfectly content with online shopping verses the policyholder that has renewed their

insurance policy with the same insurer, year after year, viewing their insurance policy as more of
 56

a heterogenous product. To this end, the buying process itself may be determined by the price

sensitivity of individuals.

Another tactic used to lower price sensitivity by policyholders is the bundling of policies,

price discounts for insuring other insurance policies with the same insurance company. For

example, if your automobile and home insurance is with the same insurance company, the

insurance company is likely to provide a price discount on both the automobile and home

insurance policy. The bundling pricing structure employed by insurance companies attempts to

desensitize policyholders to price increases. If an insured has their automobile, home, boat, travel

trailer, cottage, and life insurance with the same insurance company, the effort involved to move

all these policies due to a price increase in just one policy, the automobile insurance policy, may

lower an insureds price sensitivity.

Past Studies. Nagle and Holden (1987) stated that a common research technique for

estimating an uncontrolled environment is the use of a consumer response survey for measuring

intention or preference of price sensitivity. As in their study, this study also employs a consumer

response survey. In Verschuren (2022) the study indicated price sensitivity to even small

increases in premium, reducing continuance intention, which supports the common pricing

strategy by insurance companies to not drastically change premiums and thus avoiding a chance

of policyholder awareness of increasing premiums.

Khudhair et al. (2019) found that high price sensitivity decreases the attributes of superior

service quality and lower price sensitivity increases the attributes of superior service quality.

Some various determinates of individual price sensitivity are competition, emotions, needs, and

perceptions. Graham et al., (1983) stated that a significantly increased price will reduce the

demand for products and services.

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Price sensitivity is an influencer, a contributor in the evaluation process of goods and

services (Erdem et al., 2002). Due to today’s advance technologies and the proliferation of

advertising, customers are much more aware of competitor substitutes, and consumer price

sensitivity in recent years is on the rise (Bucklin et al., 1995; Wakefield and Inman, 2003). Also,

when loyal customers consider themselves entitled to preferential treatment, there is an

inclination towards greater price sensitivity (Lee and Fay, 2017).

Wakefield and Inman (1993) found that consumers are not as price sensitive to hedonic

verses functional products. Since insurance policies are functional in nature, there is a tendency

for policyholders to be more price sensitive. However, for consumers with overall low levels of

price sensitivity, these consumers are insensitive to both functional and hedonic products and

services. With this said, Wakefield and Inman (1993) also stated that if there is a rise in price

sensitivity, the differences between hedonic and functional price sensitivity are noteworthy.

According to Hamilton and Cherney (2013) individual customer factors, for instance,

price image and the psychological style of processing information of each individual customer

along with a customer’s familiarity of market pricing may be a factor in determining price

sensitivity.

Dominique-Ferreira et al. (2016) shared that price sensitivity is in relation to loyalty, in

that, loyal customers place less importance on price then less loyal customers. With that said,

loyal customers can tolerate small price oscillations, but normally still monitor price changes.

Thus, this reinforces the insurance industry pricing strategy of bundling policies for procuring

increased revenue. To further mitigate price sensitivity, Dominique-Ferreira et al. (2016)

suggested testing “anchor products” and bundling combinations, along with the number of

bundled products, for example, two anchor products and a discount on the third insurance policy.
 58

Also, life insurance could be a policy to bundle with a personal automobile insurance policy. The

suggestions of Dominique-Ferreira et al. (2016) are already practiced by some insurance

companies, bundling/discounting automobile, home, and life insurance policies for the same

policyholder insuring all three policies with the same insurance company and all three policies

receiving multipolicy discounts.

Moderating Effect of Price Sensitivity between the relationship of Customer Satisfaction and

Continuance Intention

In several studies, price sensitivity is considered a moderator for continuance intention

(Choi & Lee, 2016; Graciola et al., 2018; Hsu et al., 2017; Kumar & Mohan, 2021).

It has been determined that price sensitivity reflects how consumers feel about paying a

certain price for a product (Goldsmith & Newell, 1997). Since individual customers are not privy

to the decision-making process including, actuarial analyses, data analytics, and underwriting

expertise of rate increases of their personal automobile insurance policies, price sensitivity is

considered an external (environment imposed) factor during the policyholder deliberation of

policy renewal. Therefore, it is hypothesized that:

(H5) Price Sensitivity moderates the effect between Customer Satisfaction and

Continuance Intention.

In the following model under investigation for this study, the constructs of perceived

service quality – independent, customer satisfaction – mediating, perceived switching costs –

moderating, price sensitivity – moderating, and continuance intention – dependent, are analyzed

in determining their application for the personal automobile insurance industry.

Figure 4 visually illustrates the model under investigation including: 1) Continuance

Intention; 2) Price Sensitivity; 3) Perceived Switching Costs; 4) Customer Satisfaction; and 4)

 59

Perceived Service Quality. The Moderated Mediation of Perceived Service Quality on

Continuance Intention for Automobile Insurance is found in figure 4.

Figure 4

Moderated Mediation of Perceived Service Quality on Continuance Intention for Automobile

Insurance

Table 2 is a summary of the research problem, questions, hypotheses, and al theories.

 60

Table 2

Relationship of Research Problem, Question, Hypotheses, Theory

Research Foundational
Research Problem Hypotheses
Questions Theory
1. We are addressing 1. How do (H1) Perceived Service (H1)The
gaps in current individual-level Quality has a significant American
literature associated factors affect positive effect on Customer
with Perceived customer intention Continuance Intention. Satisfaction
Service Quality, of policy renewal? Theory (Fornell
Customer et al., 1996)
Satisfaction and 2. How do external
Continuance (environment (H2) Perceived service (H2)The
Intention; the effects imposed) factors quality has a positive American
of Perceived affect customer significant effect on Customer
Switching Costs and intention of policy customer satisfaction. Satisfaction
Price Sensitivity, renewal? Theory (Fornell
have not been et al., 1996)
factored on these
relationships to date. (H3) Customer (H3)Expectancy
Satisfaction mediates the Confirmation
2. From a practical effect between Perceived Theory (Oliver,
perspective this Service Quality and 1993)
research effort Continuance Intention.
addresses a means to
assess retention (or (H4) Perceived Switching (H4)Expectancy
turnover/churn) of Costs moderates the Confirmation
existing customers in effect between Customer Theory (Oliver,
the automobile Satisfaction and 1993)
insurance industry Continuance Intention.
which causes
economic instability (H5) Price Sensitivity (H5)Expectancy
for insurance moderates the effect Confirmation
companies. between Customer Theory (Oliver,
Satisfaction and 1993)
Continuance Intention.
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Chapter III: Methodology

This study’s research hypotheses are based on the proposed model that outlines how

perceived service quality influences continuance intention, along with the impact of customer

service, perceived switching costs, and price sensitivity. The studied variables influencing the

dependent variable – continuance intention is the independent variable – perceived service

quality, the mediating variable – customer satisfaction, the moderating variable – perceived

switching costs, and the other moderating variable – price sensitivity.

It was posited that increased perceived service quality satisfaction increased customer

satisfaction leading to continuance intention. In addition, with increased perceived switching

costs, policyholders would be more likely to avoid perceived switching costs and renew existing

automobile insurance policies, thus leading to continuance intention. In contrast, increased price

sensitivity will decrease continuance intention, indicating a negative relationship between price

sensitivity and continuance intention.

To test the proposed hypotheses, data was collected through online surveys distributed to

automobile insurance policyholders in the U.S.A. In this quantitative study, (PLS-SEM) partial

least squares structural equation modeling was used to analyze the data. Procedures and methods

used to identify, select, manage, and evaluate information were all part of a study’s research

methodology for this specific topic. In this study, the methodology allowed for critical evaluation

of reliability and validity. Methodology considers how the data is collected and analyzed

(Research Support: Research Methodology, 2021).

Research Design

A cross-sectional, web-based survey based on convenience sampling was applied. A

cross-sectional study design was germane for assessing attitudinal prospective, including
 62

prevalence and associations (Wang and Cheng, 2020). Web-based surveys utilizing the internet

provide researchers superior speed and efficacy of data collection along with ease of screening

and monitoring the targeted control variables (Setia, 2016). In addition, the perceptions of

respondents can be more easily assessed using convenience sampling (Voxco, 2021).

Population and Sample

The population of interest were individuals paying for their personal automobile

insurance policy, known as policyholders. The population included personal automobile

insurance policyholders living in the United States of America.

The sample for this study was obtained from QuestionPro. This sample was ensured to be

demonstrative of the population through the use of control variable questions and Likert survey

questions.

To assess the sample size, G*Power software was utilized which calculated the statistical

power, based on the number of structural relationships of the variables in the model. G*Power

has the ability to calculate F-tests, chi-square-tests, and more. Tailored for this study, the Test

family was the F-test for effect size and statistical significance. G*Power was configured for

linear multiple regression, fixed model, R2 deviation from zero. The type of power analysis was

A priori; compute required sample size – given α, power, and effect size. The input parameters

were: 1) effect size of .15 – a medium effect; 2) error of probability of .05, the α level, p-value

for statical significance ≤ .05; 3) Power (1 minus error probability) at .95 – meaning a 95%

confidence that the findings were true; 4) predictor variables are 4. The minimum indicated

sample size was 129 respondents. Of note, for this study, and in accordance with Trident

University International dissertation guidelines, the minimum sample size was 200. The
 63

G*Power R2 Deviation from Zero is found in figure 5, and the Total Sample Size Indicator is

found in figure 6.

Figure 5

G*Power R2 Deviation from Zero

 64

Figure 6

Total Sample Size Indicator

Even though 129 respondents would provide 95% confidence for the findings, by adding

more respondents, in this study’s case 207 respondents, the findings are assured to be at 95%

confidence (Universität Düsseldorf: G*Power, 2021).

Materials and Instrumentality

To measure the variables, previously tested instruments were used, tailored for use with

the population and sample. The definitions of the variables are identified below. The selected

indicators are found in separate appendices.

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Variables and Operational Definitions

To follow is an explanation of the study’s variables and operational definitions.

Continuance Intention

Continuance intention is a customer’s intention to continue using a product or

service in the post-acceptance stage (Bhattacherjee, 2001). The research employs a

reflective approach to analyze continuance intention using a Likert survey questionnaire.

The selected survey for adapting the study’s reflective Likert survey questions is

from Rahman et al. (2014) titled Factors Determining Customers' Repurchase Intention

Healthcare Insurance Products in Malaysia. The original and adapted questions are

found in appendix – appendix B.

Price Sensitivity

Price Sensitivity reflects how consumers feel about paying a certain price for a

product Goldsmith & Newell, (1997). The research employs a reflective approach to

analyze price sensitivity using a 7 scale Likert survey questionnaire. The Likert survey

questions measuring price sensitivity are modified from Kumar, N., & Mohan, D. (2021).

The original and adapted questions are found in appendix – appendix B.

Perceived Switching Costs

Switching costs is a customer's idea of the necessary compulsory additional costs

to make a change from one supplier to another supplier (Blut et al., 2016). The research

employs a reflective approach to analyze perceived switching costs using a 7 scale Likert

survey questionnaire. The Likert survey questions measuring perceived switching costs

are modified from (Li et al., 2018). The original and adapted questions are found in

appendix – appendix B.
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Customer Satisfaction

Customer Satisfaction is a resultant conclusion based on a comparison of pre-

purchase expectation, perceived actual performance, and cost (Churchill & Surprenant,

1982). The research employs a reflective approach to analyze customer satisfaction using

a 7 scale Likert survey questionnaire. The Likert survey questions measuring customer

satisfaction are modified from (Casto et al., 2004). The original and adapted questions are

found in appendix – appendix B.

Perceived Service Quality

Perceived service quality is the customer assessment of overall superiority or

excellence of a service (Zeithaml, 1988). The research employs a reflective approach to

analyze perceived service quality using a 7 scale Likert survey questionnaire. The Likert

survey questions measuring perceived service quality are modified from Zietsman et.al.

(2019). The original and adapted questions are found in appendix – appendix B.

Demographic Control Data

The demographic control data, per appendix B, includes 1) age; 2) gender: 3)

education; 4) income; 5) mandatory automobile insurance; 6) claims; 7) years with

incumbent carrier; 8) shopped automobile insurance; 9) payment of premium; 10)

multiple policy discounts; 11) insureds on automobile policy; and 12) number of

vehicles.

Table 3 lists the variables implemented in this study. In general, variables in a

research study denote a respondent, location, person, place, thing, or happening that is

being measured. This study measured the influences of continuance intention for personal

automobile insurance policyholders.

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Table 3

Table of Variables

Dependent Variable Continuance Intention

Moderating Variable Price Sensitivity
Moderating Variable Perceived Switching Costs
Mediating Variable Customer Satisfaction
Independent Variable Perceived Service Quality
Demographics Age, Gender, Education Level, Income Level

Data Collection and Statistical Analysis

The data collection demographic questions and associated coding are found in appendix

B. The variables to be measured and associated definitions, sources, reliability, and indicators are

found in appendix C. The original and adapted survey questions are found in appendix D. The

complete Likert survey is found in appendix E. The study utilized SmartPLS software for the

data analysis. SmartPLS provided the statistical measurements of each of the study’s hypotheses.

Data Collection

The sample for this study was purchased from and collected by QuestionPro.

QuestionPro posted the study’s questionnaire to its respondents. QuestionPro was paid for the

data collection. The result is a complete data set of over 200 qualified respondents, per the

following eligibility requirements: 1) being a United States citizen; 2) being a personal

automobile policyholder; and 3) the respondent paying for their own automobile insurance.

QuestionPro surveyed as many respondents as necessary to obtain over 200 complete surveys

and a representation of the U.S. general population of personal automobile policyholders, with

respondents being at least 18 years of age.

Utilizing a Likert survey is appropriate for this quantitative, cross-sectional, web-based

survey, based on a convenience sampling research design. The Likert survey instrument included
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demographic questions and Likert survey questions. The appendixes include Appendix A:

Institutional Review Board Approval, Data Collection Instrument, Consent Form, and IRB

Certificate. Appendix B: Demographic Questions. Appendix C: Variable Reliability, Sources,

and Indicators. Appendix D: Original and Adapted Survey Questions. Appendix E: Data

Collection Instrument (Survey Questions).

Statistical Analysis

To follow is an explanation of the study’s data preparation, measurement model, and

structural model.

Data Preparation

The data was tested for excess kurtosis, skewness, and Cramer-von Mises’s p value

(normality). Cases with insufficient data to measure for each of the constructs in the model were

deleted. For cases with missing item values, if more than 15% of item values for a specific

respondent were missing, then the respondent was deleted from the dataset. If less than 15% of

the values for an item were missing, the missing values were replaced without affecting the

statistical analysis outcome (Creswell, 2005). Missing item values replacement in valid cases

was handled though a (-1) replacement designation. The replacement was specifically

accomplished in SPSS. No outliers were identified in the data set.

Measurement Model

The dataset was imported to SmartPLS for statistical analysis. Prior to structural analysis,

SmartPLS analyzed the data set for the descriptive statistics on the variables including mean,

median, and standard deviation.

The rationale for using SmartPLS was that it… “combined state of the art methods (e.g.,

PLS-POS, IPMA, complex bootstrapping routines) with an easy to use and intuitive graphical
 69

user interface" (SmartPLS, 2014). SmartPLS4, released in September of 2022, was used to

evaluate the measurement model.

The assessments of Internal Consistent Reliability included Cronbach’s Alpha,

Composite Reliability, and Indicator Loadings. Cronbach’s Alpha, meaning a measurement of

how closely related a set of items are as a group, with generally range 0.6-0.7 indicated an

acceptable level of reliability, and 0.8 or greater a very good level, but a higher value of 0.95 not

necessarily being good, since this might have indicated redundance (Cronbach, 1951).

Composite Reliability, meaning a measure of internal consistency in scale items, is an indication

that all your items constantly measure the same variable. Composite reliability should be a least

.60. Indicator Loadings, indicating acceptable factor loadings for the respective latent variable

meeting a thresholds of > .50 for newly developed items and > .60 for established items (Werts

et al., 1974).

A measurement for Convergent Validity is Average Variance Extracted, meaning the

average percentage of variation by the measuring items for a latent construct. A measurement

of > .5 is required for each construct (Henseler et al., 2014). Discriminate Validity is measured

with Cross Loadings, Fornell-Larcker Criterion, and (HTMT). Cross Loadings were examined to

identify those items that have high loadings on the same construct and higher loadings on

multiple constructs, with the latter being troublesome (Chin, 1998). Fornell-Larcker Criterion

necessitates that a latent variable share more variance with its attributed indicators than with any

other latent variable. Therefore, other latent variables ought to be greater than the latent variables

highest squared correlation for other latent variables (Fornell & Larcker, 1981).
 70

HTMT (Heterotrait-Monotrait Ratio of Correlations) measures the similarity of one latent

variable to another. Discriminant validity is established when the HTMT is less than one

(Henseler et al., 2016).

Structural Model

The structural model enabled assessment of relationships between constructs to validate

the hypothesis. Bivariate relationships are significant if there is a p value < 0.05. Path

coefficients, effect size, and the overall model coefficient of determination (R Square) were used

to describe the nature of the relationship, if significant.

Mediation was assessed by evaluation of the specific indirect effects of the mediated

relationship and comparison of the unmediated to the mediated relationship between the

independent variable and the dependent variable using the path coefficient and total indirect

effect tables.

Moderation was assessed by evaluating the specific indirect effects of the moderated

relationships and comparison of the unmoderated to the moderated relationships between the

mediating variable and the dependent variable using the path coefficient and total indirect effect

tables. Also, multigroup analysis was conducted to determine, if significant, differences in

modeled relationships that exist based on demographics such as age or gender.

For completeness the study also reported Explained Variance (R2) which measures the

discrepancy of the model and actual data, it is the model’s total variance explained by factors

that are present and not because of error variance (Keith, 2019). Effect Size (f 2) was also

reported which is a measure of the strength of the relationship between two variables. Values of

.02, .15, .35 indicate the predictor variable’s low, medium, or large effect (Cohen, 1988; Chin,

1998).
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The hypotheses was validated using p-value and path coefficients. The p value indicates

if research findings are statistically significant; that they are unlikely to have appeared by

chance. A p-value of < .05 is significant. Again, path coefficients measure the direct or indirect

influence of independent variables on a dependent variable, and is known as a cause-and-effect

relationship (Sullivan & Feinn, (2012). Table 4 list the study’s model tests and benchmarks.

Table 4

Measurement and Structural Model Tests/Benchmarks

Measurement
Test Purpose Acceptable values
Model
Unidimensionality / 0.7 or higher
Factor loadings Indicator Validity
indicator reliability 0.4 - 0.7 if AVE >0.5
Cronbach's alpha
Internal consistency
(CA) or Composite Scale Reliability 0.07 or higher
reliability
reliability (CR)
Convergent Average variance
Construct Validity 0.5 or higher
reliability extracted (AVE)
AVE of each construct
Discriminant Fornell-Larker Measure does not correlate should be higher than the
validity criterion with another construct squared correlation with any
other construct
Hetertrait-mono
Discriminant ratio of Measure does not correlate
< 0.9
validity correlations with another construct
(HTMT)
Structural Model Test Purpose Acceptable values
Probability of the observed
Probability (p
Significance relationship occurring by < 0.05
value)
chance
small (>0.02)
Indicates the slope and
Direct Effects Path Coefficient medium (>0.15)
strength of the relationship
large (>0.35)
Squared Variance in the DV substantial (>0.67)
Explained variance coefficient of explained by the net effects moderate (>0.33)
determination (R2) of all predictors weak (>0.19)
Predictive Q2 via
Relevance Blindfolding Good predictive Relevance >0.0
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Chapter IV: Data Analysis and Results

The purpose for this study was to analyze personal automobile insurance policyholders’

continuance intention. To test the proposed hypotheses, data was collected through online

surveys distributed to automobile insurance policyholders in the U.S.A. This quantitative study

employed (PLS-SEM) partial least squares structural equation modeling.

Data Screening

The data was first downloaded into SPSS, where the dataset was cleaned to remove

invalid cases and treat any missing data in the valid cases. Cases with insufficient data to

measure for each of the constructs in the model were deleted. For cases with missing item values,

if more than 15% of item values for a respondent were missing, then the respondent was deleted

from the dataset. If less than 15% of the values for a respondent were missing, the missing values

were replaced without affecting the statistical analysis outcome (Creswell, 2005). Missing item

values replacement in valid cases was handled with the designation of (-1). The missing item

values replacement was specifically accomplished in SPSS.

The last step in data preparation was to save the cleaned file for uploading from SPSS to

SmartPLS.

Sample Descriptives

The final respondents where those that confirmed they were a citizen of the United

States, confirmed personal automobile insurance was mandatory, and paid for their own

automobile insurance policy. The number of respondents that met the criteria was 207. The

following tables provide the demographics and controls variables of the respondents of the

study’s survey. Tables 5 to 14 are the samples frequency distributions for gender, age, education,
 73

income, claims, renewals, shopped insurance, multipolicy discount applied, insureds, and

vehicles.

Gender

The sample consisted of 114 (53.6%) male and 101 (47.4%) female respondents (N=207).

Table 5

Frequency Distribution for Gender

Gender Frequency Percent

1 111 53.6
2 96 47.4

Age

The sample was divided into represented age groupings of 18-24 (10.6%), 25-34 (17.9%),

35-44 (21.7%), 45-54 (20.8%), and 55 or older (29.0%) (N=207).

Table 6

Frequency Distribution for Age

Age Frequency Percentage

18-24 22 10.6
25-34 37 17.9
35-44 45 21.7
45-54 43 20.8
55 or older 60 29.0

Education

The sample was divided into represented education groupings of Did Not Graduate

(2.4%), High School (34.8%), Associates (24.2%), Bachelors (26.1%), Masters (12.1%),

Doctorate (5%) (N=207).

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Table 7

Frequency Distribution for Education

Education Frequency Percentage

Did Not Graduate 5 2.4
High School 72 34.8
Associates 50 24.2
Bachelors 54 26.1
Masters 25 12.1
Doctorate 1 .005

Income

The sample was divided into represented income groupings of $0-$25,000 (1.9%), $

25,001-$50,000 (39.1%), $50,001-$75,000 (26.6%), $75,001-$100,000 (16.4%), 100,001-

$150,000 (12.1%), $150,001 or more (3.9%) (N=207).

Table 8

Frequency Distribution for Income

Income Frequency Percentage

$0-$25,000 4 1.9
$25,001-$50,000 81 39.1
$50,001-$75,000 55 26.6
$75,001-$100,000 34 16.4
$100,001-$150,000 25 12.1
$150,001 or more 8 3.9

Claims

The sample consisted of 112 (51.2%) that had and 103 (48.8%) that had not filed a claim

with their current insurance company (N=207).

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Table 9

Frequency Distribution for Claims

Claim Frequency Percentage

Yes 106 51.2%
No 101 48.8%

Renewals

The sample was divided into represented renewal groupings of in first policy period

(8.7%), renewed once (23.2%), renewed twice (15.5%), renewed three or more times (52.7%).

Table 10

Frequency Distribution of Renewals

Renewals Frequency Percentage

1st policy period 18 8.7
renewed once 48 23.2
renewed twice 32 15.5
renewed three or more times 109 52.7

Shopped Insurance

The sample was divided into represented groupings for the last time the respondent

shopped for different automobile insurance reporting 6 months or less (14.5%), 7 months to 1

year (15.9%), 1-2 years (21.7%), 2-3 years (14%), over 3 years (33.8%) (N=207).

Table 11

Frequency Distribution of Shopped Insurance

Shopped Insurance Frequency Percentage

6 months or less 30 14.5
7 months to 1 year 33 15.9
1-2 years 45 21.7
2-3 years 29 14
over 3 years 70 33.8
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Multipolicy Discount Applied

The sample consisted of 129 (59.9%) that has and 86 (40.1%) that does not have a

multipolicy discount applied to their personal automobile insurance policy (N=207).

Table 12

Frequency Distribution of Multipolicy Discount Applied

Multipolicy
Discount
Applied Frequency Percentage
Yes 124 59.9
No 83 40.1

Number of Insureds on Policy

The sample was divided into represented groupings of the number of persons on their

personal automobile insurance policy consisting of the respondent only (43.5%), the respondent

and 1 other person (40.6%), the respondent and 2 other people (9.7%), the respondent and 3

other people (5.8%), the respondent and 4 other people or more (5%) (N=207).

Table 13

Frequency Distribution of the Number of Insureds on the Policy

Insureds Frequency Percentage

You only 90 43.5
You +1 84 40.6
You +2 20 9.7
You +3 12 5.8
You + 4 or more 1 .005
 77

Vehicles

The sample was divided into represented groupings based on the number of vehicles in

the households for the respondents. Per the table, the groupings consisted of; 1 (46.4%), 2

(38.6%), 3 (10.6%), 4 (2.9%), 5 or more (1.4%) (N=207).

Table 14

Frequency Distribution for the Number of Vehicles in Household

Vehicles Frequency Percentage

1 vehicle 96 46.4
2 vehicles 80 38.6
3 vehicles 22 10.6
4 vehicles 6 2.9
5 or more vehicles 3 1.4

Measurement Model Analysis

The measurement model’s validity was evaluated by assessing Indicator Reliability,

Internal Consistency Reliability, Convergent Validity, and Discriminant Validity. Indicator

reliability was assessed via indicator loadings, with acceptable indicator loadings meeting a

thresholds of > .50 for newly developed items and > .60 for established items (Werts et al.,

1974). Table 15 shows that all indicator loadings for indicator reliability are above the generally

accepted criteria of .60.

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Table 15

Indicator Reliability (Indicator Loadings)

Items CI PS PSC PSQ S

CI1 0.865
CI2 0.916
CI3 0.905
PS1 0.891
PS2 0.847
PS3 0.821
PSC1 0.915
PSC2 0.749
PSC4 0.831
PSQ1 0.915
PSQ2 0.922
PSQ3 0.919
S1 0.839
S3 0.847
S4 0.739
S5 0.865
S7 0.827
S8 0.900

Internal Consistent Reliability included Cronbach’s Alpha, Composite Reliability.

Cronbach’s Alpha, meaning a measurement of how closely related a set of items are as a group,

with generally range 0.6-0.7 indicating an acceptable level of reliability, and 0.8 or greater a very

good level, but a higher value of 0.95 may not be good, since this might indicate redundance

(Cronbach, 1951). Composite Reliability, meaning a measure of internal consistency in scale

items, is an indication that all your items constantly measured the same variable. Composite

reliability should be a least .60. Table 16 are the indicators for Cronbach Alpha and Composite

Reliability, and all were above the generally accepted 0.8, meaning a very good level.
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Table 16

Internal Consistency Reliability

Cronbach's Composite reliability

Item alpha (rho_a) Composite reliability (rho_c)
CI 0.876 0.881 0.924
PS 0.828 0.945 0.89
PSC 0.808 0.976 0.872
PSQ 0.908 0.912 0.942
S 0.914 0.922 0.934

A measurement for Convergent Validity is Average Variance Extracted, meaning the

average percentage of variation by the measuring items for a latent construct. A measurement

of > .5 is required for each construct (Henseler et al., 2014). Table 17, convergent validity

(AVE), shows that all indicators are above the generally accepted criteria of > .5.

Table 17

Convergent Validity (AVE - Average Variance Extracted)

Items Average variance extracted (AVE)

CI 0.802
PS 0.729
PSC 0.696
PSQ 0.844
S 0.701

Discriminate Validity was measured using Fornell-Larcker Criterion, Collinearity

Statistics (VIF), and (HTMT) Heterotrait-Monotrait Ratio of Correlations. Fornell-Larcker

Criterion necessitated that a latent variable share more variance with its attributed indicators than

with any other latent variable. Therefore, other latent variables ought to be greater than the latent

variables highest squared correlation for other latent variables (Fornell & Larcker, 1981). Table

18 shows that all latent variables for discriminate validity (Fornell-Larcker) shared more
 80

variance with its attributed indicators than with any other latent variable, per the generally

accepted criteria.

Table 18

Discriminate Validity (Fornell-Larcker)

CI PS PSC PSQ S
CI 0.895
PS 0.242 0.854
PSC 0.27 -0.013 0.834
PSQ 0.627 0.077 0.221 0.919
S 0.651 0.111 0.29 0.841 0.837

Collinearity Statistics (VIF) known as variance inflation factor quantifies the severity of

multicollinearity in an ordinary least squares regression analysis. It is a ratio of the variance of

estimating some parameter in the study model that includes multiple other terms by the variance

of a study model constructed using only one term (Snee, 1981). If VIF above 4 or tolerance

below 0.25 indicates that multicollinearity might exist, and further investigation is required.

When VIF is higher than 10 or tolerance is lower than 0.1, there is significant multicollinearity

that would need to be corrected (Corporate Finance Institute, 2020). Table 19 shows that all

discriminate validity (HTMT) indicators were above and below the generally accepted criteria

between 4 and 0.25.

Table 19

Discriminate Validity (HTMT)

CI PS PSC PSQ S
CI
PS 0.259
PSC 0.265 0.069
PSQ 0.697 0.089 0.246
S 0.718 0.11 0.312 0.915
 81

In summary, all the measurement model areas were successfully demonstrated for this

sample.

Prior to structural analysis, SmartPLS analyzed the data set for the descriptive statistics

on the variables including mean, median, standard deviation, skewness, and kurtosis. Hair et al.

(2010) and Bryne (2010) stated that data is normal if skewness is between ‐2 to +2 and kurtosis

is between ‐7 to +7. Table 20, collinearity statistics (VIF), show all indicators were within the

generally accepted criteria of -2 to + 2 and -7 to +7 for skewness and kurtosis, respectively.

Table 20

Collinearity Statistics (VIF)

Item VIF
CI1 2.078
CI2 2.954
CI3 2.542
PS1 1.581
PS2 2.506
PS3 2.222
PSC1 1.619
PSC2 1.863
PSC4 1.862
PSQ1 2.717
PSQ2 3.339
PSQ3 3.065
S1 2.428
S3 2.575
S4 1.831
S5 2.884
S7 2.374
S8 3.393

HTMT (Heterotrait-Monotrait Ratio of Correlations) measured the similarity of one latent

variable to another. Discriminant validity is established when the HTMT is less than one
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(Henseler et al., 2016). Table 21, construct and variable descriptives and normality, show all

indicators were less than the generally accepted criteria of <1.

Table 21

Construct and Variable Descriptives and Normality

Std.
Variable N Minimum Maximum Mean Deviation Skewness Kurtosis
CI 207 3.00 21.00 17.6522 2.9502 -1.283 2.920
PSQ 207 -3.00 21.00 17.1884 3.7827 -1.936 6.743
S 207 17.00 42.00 34.9034 5.4435 -0.852 0.425
PSC 207 3.00 21.00 14.0531 3.8820 -0.314 -0.060
PS 207 3.00 21.00 16.9275 3.6068 -1.475 2.707

Figure 7 depicts the results of the measurement model, including the factor loading

results.

Figure 7

Measurement Model Results

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Structural Model Analysis

The structural model analyses employed SmartPLS to assess the relationships between

constructs to validate the hypotheses. Bivariate relationships were significant at the p value <

0.05. For the structural model, explained variance (R2), effect size, path coefficients, and p-

values to describe the nature of the relationships were as follows in the study.

Mediation was assessed by evaluating the specific indirect effect of the mediated

relationship and comparison of the unmediated to the mediated relationship between the

independent variable and the dependent variable using the path coefficient and total indirect

effect tables.

Moderation was assessed by evaluating the specific indirect effects of the moderated

relationships and comparison of the unmoderated to the moderated relationships between the

mediating variable and the dependent variable using the path coefficient and total indirect effect

tables.

The hypotheses were validated using p-value and path coefficients. The p-value indicated

if research findings were statistically significant and the path coefficients measured the direct or

indirect influence of variables on a dependent variable; known as the cause-and-effect

relationships (Sullivan & Feinn, (2012).

Figure 8 depicts the results of the structural model including the path coefficients, p-

values, and R2 results.

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Figure 8

Structural Model Results

Explained Variance

Explain Variance (R2) demonstrated how much change in a given variable is due to other

variables that have a direct influence. Chin (1998) considered values of approximately .670

large, values around .333 moderate, and values of .190 and lower, weak. Table 22 depicts the

explained variance for the variables in the model and all indicators were above the generally

accepted criteria of .333 indicating at least a moderate direct influence.

Table 22

Explained Variance

Items R-square Influence Level

CI 0.516 Moderate
S 0.708 Large

Effect Size Analysis

Effect Size (f 2) measured the strength of the relationship between variables at the

structural level. Values of .02, .15, .35 indicated the predictor variable’s low, medium, or large
 85

effect (Cohen, 1988; Chin, 1998). The f2 effect size showed how much an exogenous latent

variable contributed to an endogenous latent variables R2 value (PLS-SEM Glossary, 2022).

Table 23, effect size f2 value results revealed the effect size from PS to CI was 0.069, the effect

size from PSC to CI was 0.023, the effect size from PSQ to CI was 0.063, and the effect size

from S to CI was 0.039. The f2 values for the exogenous constructs were over zero, hence,

predictive relevance was established.

Table 23

Effect Size (f Square)

Items CI S
PS 0.069
PSC 0.023
PSQ 0.063 2.423
S 0.039

Q Square is a metric used to assess a model’s predictive power, with values greater than

zero indicating that the PLS-SEM estimation beats the naïve benchmark in terms of prediction

(PLS-SEM Glossary, 2022). Q2 established the predictive relevance of the endogenous

constructs with values of .26, .13, .02 indicating substantial, moderate, and weak (Cohen, 1988).

Table 24 shows the Q2 values for the endogenous constructs were over zero, hence, predictive

relevance was established.

Table 24

Q Squared

Items Q Square Level

CI 0.445 Substantial
S 0.701 Substantial
 86

Path Coefficients and p-values are a measure of predictive ability. Values of between

.020 and .150, between .150 and .350, and exceeding .350 representing small, medium, and large

values of predictive ability (Wen Hai Chih & Li-Chun, Dah 2017). Table 25 depicts the direct

effect Path Coefficients and p-values for the relationships in the model.

Table 25

Direct Effect Path Coefficients and P-Values

Relationship Path Coefficients P values Level

PSQ -> CI 0.326 0.009 Medium
PSQ -> S 0.841 0.000 Large
S -> CI 0.269 0.030 Medium

Bivariate Analysis

This section provides a narrative result of the bivariate hypotheses from the total effects

table in SmartPLS. The R2 values represent the combined effect of all predictors on the

dependent variable.

(H1) Perceived Service Quality has a significant positive effect on Continuance Intention.

Statistical analysis results indicated a significant positive relationship between Perceived

Service Quality (IV) and Continuance Intention (DV) (p value < 0.05). A path coefficient of

0.326 indicated a one unit increase in the value of Perceived Service Quality (IV) was related to

a 0.326 increase in the value of Continuance Intention (DV), which is considered a medium

effect. Overall, the model predicted 51.6% of the variance in Continuance Intention (DV) (R2 =

0.516). H1 was supported. The null hypothesis was ejected.

(H2) Perceived Service Quality has a positive significant effect on Customer Satisfaction.

Statistical analysis results indicated a significant positive relationship between Perceived

Service Quality (IV) and Satisfaction (Mediating) (p value < 0.05). A path coefficient of 0.841
 87

indicated a one unit increase in the value of Perceived Service Quality (IV) was related to a

0.841 increase in the value of Satisfaction (Mediating), which is considered a large effect.

Overall, the model predicted 70.8% of the variance in Satisfaction (mediating) (R2 = 0.708). H2

was supported. The null hypothesis was rejected.

Table 26 shows significance, path coefficient, R2, and findings of the bivariate analysis.

Table 26

Bivariate Analysis

Path
Hypotheses Sig. Coefficient R2 Findings
(H1) Perceived Service Quality has a
positive relationship with Continuance
Intention. < 0.05 0.326 0.516 Supported
(H2) Perceived Service Quality has a
positive relationship with Customer
Satisfaction. < 0.05 0.841 0.708 Supported

Multivariate Analysis

To follow is an explanation of hypotheses H3, H4, and H5, the study’s multivariate

relationships.

(H3) Customer Satisfaction mediates the effect between Perceived Service Quality and

Continuance Intention.

Mediation analysis was performed to assess the mediating role of Satisfaction in the

relationship between Perceived Service Quality (IV) and Continuance Intention (DV). The

results revealed a significant indirect effect of Perceived Service Quality (IV) on Continuance

Intention (DV) through Satisfaction (Mediating) (H3: β = .226, t = 1.847, p = .032). The total

effect of Perceived Service Quality on Continuance Intention was significant (β = .553, t =

10.334, p = < .001), with the inclusion of the mediator the effect of Perceived Service Quality on
 88

Continuance Intention was still significant (β = .326, t = 2.366, p = .009). This showed a

complementary-partial mediating role of Satisfaction (mediating) in the relationship between

Perceived Service Quality and Continuance Intention. Hence, H3 was supported. The null

hypothesis was rejected.

Table 27 shows significance, beta value, R2, and findings of the multivariate analysis.

Table 27

Multivariate Analyses – Mediation

Hypothesis Sig. B R2 Findings

(H3) Satisfaction mediates the
relationship between Perceived Supported,
Service Quality and Continuance complementary-
Intention partial
Indirect Effect: S->CI 0.032 0.226 0.516
Total Effect: PSQ->CI Unmediated 0.000 0.553
Direct Effect: PSQ->CI mediated 0.009 0.326

(H4) Perceived Switching Costs moderates the effect between Customer Satisfaction and

Continuance Intention

The study assessed the moderating role of Perceived Switching Costs (moderating) on the

relationship between Satisfaction (mediating) and Continuance Intention (DV). Without the

inclusion of the moderating effect (S*PSC), the R-Sq value for Continuance Intention (DV) was

.446. This showed that 44.6% change in Continuance Intention (DV) was accounted by

Satisfaction (mediating). With the inclusion of the interaction term, the R-Sq increased to 51.6%.

This showed an increase of 7% in variance explained in the dependent variable.

Further, significance of moderating effect was analyzed, the results revealed an

insignificant impact of Perceived Switching Costs (moderating) on the relationship between

 89

Satisfaction (mediating) and Continuance Intention (DV) (b = -0.073, t = 1.255, p = 0.105),

hence, H4 was not supported. The null hypothesis was accepted.

(H5) Price Sensitivity moderates the effect between Customer Satisfaction and Continuance

Intention.

Price Sensitivity (moderating) negatively moderates the positive relationship between

Satisfaction (mediating) and Continuance Intention (DV) such that increased Price Sensitivity

(moderating) weakens the relationship between Satisfaction (mediating) and Continuance

Intention (DV).

The study assessed the moderating role of Price Sensitivity (moderating) on the

relationship between Satisfaction (mediating) and Continuance Intention (DV). Without the

inclusion of the moderating effect (S*PS), the R-Sq value for Continuance Intention (DV) was

.446. This showed that 44.6% change in Continuance Intention (DV) is accounted by Satisfaction

(mediating). With the inclusion of the interaction term, the R-Sq increased to 51.6%. This

showed an increase of 7% in variance explained in the dependent variable.

Further, significance of the moderating effect was analyzed and the results revealed a

negative and significant moderating impact of Price Sensitivity (moderating) on the relationship

between Satisfaction (mediating) and Continuance Intention (DV) (b = -0.137, t = 2.350, p =

.009). H5 was supported. The null hypothesis was rejected.

The H5 showed an increase in Price Sensitivity (moderating) weakening the relationship

between Satisfaction (mediating) and Continuance Intention (DV). Furthermore, slope analysis is

presented to better understand the nature of the moderating effect. As shown in the figure, the

line is much steeper for low Price Sensitivity (moderating), which shows that at a low level of

Price Sensitivity (moderating), the impact of Satisfaction (mediating) and Continuance Intention
 90

(DV) is stronger in comparison to high Price Sensitivity (moderating). However, at higher Price

Sensitivity (moderating), the line tends to straighten, this shows that at higher Price Sensitivity

(moderating), the increase in Satisfaction (mediating) does not lead to a similar change in the

Continuance Intention (DV). In conclusion, higher Price Sensitivity (moderating) weakens the

impact of Satisfaction (mediating) on Continuance Intention.

The price sensitivity analysis is shown in figure 9.

Figure 9

Slope Analysis

Table 28 list the hypotheses results.

Table 28

Hypotheses Results

Hypotheses
H1 was supported. The null hypothesis was ejected.
H2 was supported. The null hypothesis was rejected.
H3 was supported. The null hypothesis was rejected.
H4 was not supported. The null hypothesis was accepted.
H5 was supported. The null hypothesis was rejected.
 91

Table 29, moderation analysis, includes the beta values, significance and results.

Table 29

Moderation Analysis

Relationship Beta Sig. Result

(H4) Moderating Effect PSC x S -> CI -0.073 0.105 Not Supported
(H5) Moderating Effect PS x S -> CI -0.137 0.009 Supported

Correlations

Correlational analysis, utilizing Smart PLS detected the presence and strength of

relationships between renewals and other control variables. Of note, correlation is not considered

a determination of a change in a variable by another variable. The strength of correlation is

determined by the correlation coefficient, which varies between -1 and +1. The strength of

correlation is further categorized as 0.0 < 1.1 none, 0.1 < 0.3 little, 0.3 < 0.5 medium, 0.5 < 0.7

high, 0.7 < 1 very high, with the direction either being positive or negative (Cherry, 2022).

There was a significant positive correlation between Claims and Renewals. There was a

medium, positive correlation between the variables of Age and Renewals. There is a medium,

positive correlation between the variables of Shopped and Renewals.

Table 30 shows the demographics for claim, age, and shopped insurance correlations with

renewals.

Table 30

Demographic Correlations of Claims, Agents, Shopped with Renewals

Items Renewals P value Level

Claims 0.165 <.001 Little
Age 0.385 <.001 Medium
Shopped 0.478 <.001 Medium
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Evaluation of Findings

Hypotheses 1, 2, 3, and 5 were supported. Hypothesis 4 was not supported. Regarding

hypothesis 4, conjecture could lead to a logical inference that Price Sensitivity outweighs and/or

obstructs any significant influence of Perceived Service Costs, reasoning that policyholders are

willing to shop for lower priced insurance policies, even with the existence of Perceived Service

Costs. But, even after excluding Price Sensitivity, Perceived Switching Costs remained

insignificant.

For the control variables, there were three significant correlations with renewals: 1) a

positive correlation between Claims and Renewals; 2) a medium, positive correlation between

the variables Age and Renewals; 3) a medium, positive correlation between the variables

Shopped and Renewals.

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Chapter V: Discussion and Conclusions

This study, from a theoretical perspective, addressed gaps in current literature associated

with Perceived Service Quality, Customer Satisfaction and Continuance Intention, along with the

effects of Perceived Switching Costs and Price Sensitivity, which had not yet been factored to

date, towards application in the personal automobile insurance industry. From a practical

perspective, the problem this research effort addressed was a means to assess retention (or

turnover/churn) of existing customers in the automobile insurance industry which causes

economic instability for insurance companies.

The purpose for this study was to study the impact of Perceived Service Quality, Customer

Satisfaction, Perceived Switching Costs and Price Sensitivity of personal automobile insurance

policyholders on Continuance Intention. To test the proposed hypotheses, data was collected

through online surveys distributed to automobile insurance policyholders in the U.S.A. This

quantitative study employed (PLS-SEM) partial least squares structural equation modeling,

specifically SmartPLS to analyze the data. The procedures and methods used to identify, select,

manage, and evaluate information were all part of a study’s research methodology.

To focus the research problem, two broad research questions were proposed: 1) how do

individual-level factors affect customer intention of policy renewal; 2) how do external

(environment imposed) factors affect customer intention of policy renewal?

Interpretation of Results

Statistical analysis results indicated a significant positive relationship between Perceived

Service Quality and Continuance Intention with 51.6% of the variance in Continuance Intention

influenced by Perceived Service Quality, which is considered a medium effect.

 94

Statistical analysis results indicated a significant positive relationship between Perceived

Service Quality and Satisfaction with 70.8% of the variance in Satisfaction, which is considered

a large effect.

Statistical analysis results indicated a complimentary-partial mediation of Satisfaction

between Perceived Service Quality and Continuance Intention.

In addition, the study assessed the moderating role of Perceived Switching Costs on the

relationship between Satisfaction and Continuance Intention. The results revealed an

insignificant impact of Perceived Switching Costs on the relationship between Satisfaction and

Continuance Intention.

Lastly, Price Sensitivity negatively moderated the positive relationship between

Satisfaction and Continuance Intention such that increased Price Sensitivity weakened the

relationship between Satisfaction and Continuance Intention.

Research Question 1:

To follow is an analysis of the study’s first research question.

How do individual-level factors affect customer intention of policy renewal?

As anticipated, the study’s included individual factors affecting customer intention,

including Perceived Service Quality and Satisfaction, influenced Continuance Intention.

According to Zeithaml et al. (1988), Perceived Service Quality is the customer assessment of

overall superiority or excellence of a service and it is “the extent of discrepancy between

customers’ expectations or desire and their perceptions” of the actual quality of the service

received (Zeithaml et al., 1990). Furthermore, Perceived Service Quality is a key predictor of

continuance intention, and this phenomenon has occurred empirically, numerous times in

environments other than the automobile insurance industry (Almahamid & Rub, 2011; Chen et
 95

al., 2010; Hu et al., 2009; Kumar et al., 2012; Shao et al., 2020; Wang et al., 2019; Zeithaml et

al., 1996). This study, in accordance with previous studies in other industries, concluded there is

a significant positive relationship between Perceived Service Quality and Continuance Intention

for personal automobile insurance policyholders.

For Customer Satisfaction, there was a significant indirect effect of Perceived Service

Quality on Continuance Intention through the mediation of Satisfaction. Customer Satisfaction is

the resultant conclusion based on a comparison of pre-purchase expectation, perceived actual

performance, and cost (Churchill and Surprenant, 1982). Thus, satisfied insureds renew

insurance policies leading to reduced customer acquisition cost and increased profitability

(Pooser and Browne, 2018). Therefore, this study agrees with Ampaw (2019) that customers are

only disposed to being ‘apostles’ and loyal to a brand that is exceedingly satisfying.

Unexpectedly, Perceived Switching Costs did not have a significant moderating influence

on the relationship between Satisfaction and Continuance Intention.

In search of any significant moderation of Perceived Switching Costs, after analyses, the

“female” sample descriptive provided the only moderating significant relationship. For females,

without the inclusion of the moderating effect (S*PSC), the R-Sq value for Continuance

Intention (DV) was .449. This showed that 44.9% change in Continuance Intention (DV) was

accounted by Satisfaction (mediating). With the inclusion of the interaction term, the R-Sq

increased to 53.3%. This showed an increase of 8.4% in variance explained in the dependent

variable.

Further, significance of moderating effect was analyzed, the results revealed a significant

impact of Perceived Switching Costs (moderating) on the relationship between Satisfaction

 96

(mediating) and Continuance Intention (DV) (b = -0.145, t = 1.937, p = 0.026), hence, H4, for

females was supported. The null hypothesis is rejected.

Perceived switching costs for females is shown in Table 31, including significance, the

path coefficient, and finding.

Table 31:

Perceived Switching Costs for Females

Sig. Path Coefficient Finding

Females 0.026 -0.145 Supported

Research Question 2:

How do external (environment imposed) factors affect customer intention of policy

renewal?

As expected, the study’s included external (environmental imposed) factor of Price

Sensitivity, in that an individual policyholder has no say in the determined premium of a

personal automobile insurance policy by an insurance company, showed that Price Sensitivity

negatively moderated the positive relationship between Satisfaction and Continuance Intention.

Price sensitivity reflects how consumers feel about paying a certain price for a product

(Goldsmith & Newell, 1997). Nagle and Holden (1987) stated that a common research technique

for estimating an uncontrolled environment is the use of a consumer response survey for

measuring intention or preference and this study employed a policyholder response survey. In

Verschuren (2022) that study indicated price sensitivity to even small increases in premium,

reducing continuance intention, which supports the common pricing strategy by insurance

companies to not drastically change premiums and thus avoiding a chance of policyholder

awareness of increasing premiums.

 97

Correlations

With the study’s dependent variable, continuance intention, and the control variable of

renewals serving as a measurement of how many times a policyholder had renewed their

personal automobile insurance policy with their current insurance company, it was of interest to

complete correlation analyses of renewals with the studies other control variables. The

correlation analysis concluded that there were three significant correlations: 1) a positive

correlation between Claims and Renewals; 2) a medium, positive correlation between the

variables Age and Renewals, and 3) a medium, positive correlation between the variables

Shopped and Renewals.

Implications for Theory

Expectancies of perceived service quality has been identified as the key antecedents to

customer satisfaction (Hussain et al. 2014). From a policyholder’s perspective, perceived service

quality indicates the evaluation of the varied aspects of an insurance company’s products or

services, thus, representing an insurance company’s personal automobile policy and the servicing

of said policy. Quality is often evaluated in terms of customization, which is the extent an

insurance company’s product or service meets the policyholders needs, and the reliability of the

insurance company. This studied verified that increases in perceived service quality increase

both satisfaction and continuance intention.

From a policyholder’s perspective, a satisfied policyholder will renew their insurance

policies, leading to reduced customer acquisition cost and increased profitability. Many

organizations realize elevated usage levels of products and services with an increase in customer

satisfaction, thus, customer satisfaction is a driver of revenue, along with increased customer
 98

loyalty (Anderson et al, 1994). This study verified the positive influence of policyholder

satisfaction on policyholder continuance intention.

Pick and Eisend (2013) found alternatives and competition are the two most compelling

influences on switching costs. Colgate and Lang (2001) found that when the perceived switching

costs are higher, continuance intention is the result. Unforeseen was the result that there was not

a significant moderating relationship of perceived switching costs influencing policyholder

continuance intention.

Verschuren (2022) indicated price sensitivity to even small increases in premium,

reduced continuance intention, which supported the common pricing strategy by insurance

companies to not drastically change premiums and thus avoiding a chance of policyholder

awareness of increasing premiums. This held true in the study with increased price sensitivity

negatively allowing the ability of insurance companies to retain their insureds from policy period

to policy period.

All said, this research effort extends existing foundational theories on continuance

intention factors into a domain that had limited empirical research. It was proposed that

perceived service quality, as validated in the study, should not be underestimated as a vital

determinant of continuance intention. Also, perceived service quality meaningfully determined

satisfaction, and satisfaction mediated the relationship between perceived service quality and

continuance intention. Furthermore, price sensitivity negatively influenced an insured’s

continuance intention. It is hoped that these findings motivate subsequent research towards a

greater understanding of the importance and effects of perceived service quality, satisfaction,

perceived service costs, and Price Sensitivity.

 99

Implications for Practice

For insurance companies, it is important to register the implications of Continuance

Intention towards its financial health as determined by many factors, including Perceived Service

Quality, Satisfaction, and Price Sensitivity.

Perceived service quality may originate from experiences with prior insurance companies

to a referral of a friend, promising her/his insurance company is excellent, from a service and/or

price comparison. It is vital, in an effort to retain insureds, that the preconceived service quality

match or exceed the current perceived service quality for an insurance company policyholder.

According to The American Customer Satisfaction core of ideas, differentiated products

yield an increase in customer satisfaction, and quality service positively influences customer

satisfaction. If the service performance outcome meets the policyholders’ expectations, the

policyholder is likely to be satisfied. If the outcome is markedly higher than expected, the

policyholder is likely to be thrilled. A satisfied or thrilled policyholder will most likely

repurchase a good or service, in this case, an insurance policy and be a loyal insured. (Seiders et

al. 2005).

Insurance companies should take note that policyholders are price sensitive. Graham et

al., (1983) stated that a significantly increased price will reduce the demand for products and

services. Also, Wakefield and Inman (1993) found that functional products, such as insurance

policies, incur a greater degree of price sensitivity on the part of policyholders.

Chiu and Won (2016) concluded that commitment to a brand reinforces continuance

intention and brand loyalty and customer satisfaction reinforces customer investment of a

brand. Per this study’s results, it is concluded that personal automobile policyholders are

influenced by affirming perceived service quality, which in and of itself enhances continuance
 100

intention. Furthermore, policyholders giving perceived service quality high marks also reflect

increased policyholder satisfaction, and these two constructs, in combination, provide

improved policyholder continuance intention.

Implications for Research

This study analyzed how Perceived Service Quality, Satisfaction, Perceived Service

Costs, and Price Sensitivity impacted Continuance Intention. This is one of the first empirical

studies to investigate the personal automobile insurance industry.

SmartPLS4 was an effective analysis tool for both the measurement model and the

structural model. Also of help, the newly published YouTube instructional videos for

SmartPLS4, which was released last month. The G*Power calculation stated a sample of at least

129 respondents, but this study sample size included 207 respondents. Three hundred and fifteen

original respondents were discarded, due to not meeting the 15 percent rule, “for cases with

missing item values, if more than 15% of item values for a specific respondent were missing,

then the respondent was deleted from the dataset”. Missing item values replacement in valid

cases were handled though a (-1) replacement designation in which there were 7 item

replacements. The data provider was QuestionPro. With this said, QuestionPro did provide over

200 completed surveys, per the request. The following questions were removed: Satisfaction,

questions 2 and 6, Perceived Service Quality, question 3, and Price Sensitivity, question 4.

Future research could include other constructs towards the prediction of Continuance

Intention for personal automobile insurance and for other insurance industry personal and

commercial insurance policies. Furthermore, the model in this study could afford other industries

an appropriate application towards the study of continuance intention.

 101

Limitations

A perceived limitation of the study is that it was conducted in the United States of

America which limits its generalizability to other countries as cultural differences may create

distinctions for establishing Continuance Intention. Also, the study was focused on personal

automobile insurance which is but one coverage type in the insurance industry as Continuance

Intention for other insurance policy types were not included in the study.

Assessment of Continuance Intention in this study was based upon the antecedents

identified from the extant literature and authors’ discretion. However, the list of antecedents is

not inclusive, which means that chances of other culture and industry specific Continuance

Intention predictors exist which have not been included in this study.

Conclusions

For insurance companies, retaining insureds not only provides for insurance company

profit, but also helps offset new customer recruitment, advertising, and marketing cost. The loss

of insureds for an insurance company is the biggest threat to survival. This study has provided a

model for assisting researchers in the determination of continuance intention for personal

automobile insurance policyholders.

 102

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 125

Appendix A

Figure 10 is the institutional review board approval.

Figure 10

Institutional Review Board Approval

Figure 11 is the protecting human participants online certificate of completion.

 126

Figure 11

(PHRP) Protecting Human Research Participants Online Certificate of Completion

 127

Appendix B

Table 32 are the demographic questions.

Table 32

Demographic Questions

Questions Coding
What is your age? Integer
What is your gender? 0 = Male
1 = Female
What is your highest level of education? 1 = Did Not Graduate
2 = High School
3 = Associates Degree
4 = Bachelors
5 = Masters
6 = PHD or J.D.
What is your income level? 1 = 0 to $25,000
2 = $25,001 to $50,000
3 = $50,001 to $75,000
4 = $75,001 to $100,000
5 = $100,001 to $150,000
6 = $150,001 or more
With your current automobile insurance company, 0 = Yes
have you had an automobile insurance claim? 1 = No
How long have you been with your current 1 = In the 1st policy period
insurance company? 2 = In the 2nd policy period
3 = In the 3rd
4 = In the 4th or more policy period
When was the last time you shopped for different 1 = 6 months or less
automobile insurance? 2 = 7 months to 1 Year
3 = 1 Year to 2 years
4 = 2 Years to 3 Years
5 = Over 3 Years Ago
Is there a multiple policy discount applied to your 0 = Yes
automobile insurance policy? (example: auto and 1 = No
home insurance with the same company)
How many people are on your automobile 1 = You Only
insurance policy? 2 = You and one other person
3 = You and two other people
4 = You and three other people
5 = You and 4 other people or more
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How many vehicles are in your household? 1 = 1 Vehicle

2 = 2 Vehicles
3 = 3 Vehicles
4 = 4 Vehicles
5 = 5 Vehicles or more
 129

Appendix C

Table 33 shows the construct, variable reliability, sources, and indicators.

Table 33

Construct, Variable Reliability, Sources, and Indicators

Prior
Construct Reliability Reference Likert Scale Questions
Please indicate the level of your
agreement or disagreement with
respect to your own feelings on each
statement. (1 = strongly disagree, 7 =
strongly agree.)
Continuance Cronbach’s Rahman et.al. 1. I intend to continue to renew my
Intention Alpha .871 (2014) personal automobile insurance policy.

2. With all my considerations, I will

likely renew my personal automobile
insurance policy.

3. If I have the chance, I will continue to

renew my personal automobile
insurance policy.

1. When renewing my personal

Price Cronbach's Kumar & Mohan automobile insurance policy, I pay
Sensitivity Alpha .738 (2021) attention to the price.
2. I collect a lot of price related
information to access the best buy.
3. I always compare price before
finalizing my personal automobile
insurance policy renewal purchase.
4. At the renewal of my personal
automobile insurance policy, it is worth
it to shop different insurance companies
to have control over price.
Perceived Cronbach’s Li, et. al. (2018) 1. Switching to a new automobile
Switching Alpha .806 insurance company would involve some
Costs hassle.
 130

2. Some problems may occur when I

switch to another automobile insurance
company.
3. Switching to a new automobile
insurance policy is complicated.

4. I will waste a lot of the effort that I

have already exerted if I stop using my
current personal automobile insurance
company.

Customer Cronbach’s Castro et.al. (2004) 1. I am very satisfied with my current

Satisfaction Alpha .9261 automobile insurance company.

2. My personal automobile insurance

policy satisfies my needs.
3. Compared to other automobile
insurance companies, my automobile
insurance company is as good or better.

4. My personal automobile insurance

policy complaints/problems are always
addressed in a fair manner.
5. My personal automobile insurance
company is very reliable.

6. I like the service staff of my personal

automobile insurance policy.

7. My automobile insurance company

provides the service I expect.

8. Overall, my experience with my

insurance company is positive.

Perceived Cronbach’s Zietsman et. al. 1. The overall quality of the service
Service Alpha > .70 (2019) provided by my insurance company is
Quality excellent.

2. The quality of service provided by

my insurance company is impressive.
 131

3. The service provided by my insurance

company is of a high standard.
 132

Appendix D

Table 34 shows the original and adapted survey questions.

Table 34

Original and Adapted Survey Questions

Variable Cronbach
Name Source Original Question Alpha Modified Question
Continuance Rahman et.al. 1. I intend to 0.871 1. I intend to
Intention (2014) continue to continue to renew
(Dependent purchase, at least the my personal
Variable) same health care automobile
insurance policy insurance policy.
over the next 12
months.
2. With all my 2. With all my
considered, I would considerations, I
likely to actually will likely renew my
purchase, at least the personal automobile
same policy, of insurance policy.
health care
insurance over the
next 12 months
3. If I had the 3. If I have the
chances I will chance, I will
continue to continue to renew
purchase, at least the my personal
same Healthcare automobile
insurance, over the insurance policy.
next 12 months.
Price Kumar, N., & 1. I pay attention to 0.738 1. When renewing
Sensitivity Mohan, D. (2021). the attached price my personal
(Moderating while purchasing automobile
Variable) eco-friendly apparel. insurance policy, I
pay attention to the
price.
2. I use to collect a 2. I collect a lot of
lot of price related price related
information to have information to
the best buy. access the best buy.
 133

3. I always compare 3. I always compare

price before price before
finalizing the finalizing my
apparel purchase. personal automobile
insurance policy
renewal purchase.
4. It is worth to 4. At the renewal of
move in different my personal
stores to have automobile
control over price. insurance policy, it
is worth it to shop
different insurance
companies to have
control over price.
Perceived Li, et. al. (2018) 1. Switching to a 0.806 1. Switching to a
Switching new retailer would new automobile
Costs involve some hassle. insurance company
(Moderating would involve some
Variable) hassle.
2. Some problems 2. Some problems
may occur when I may occur when I
switch to another switch to another
retailer. automobile
insurance company.
3. It is complex for 3. Switching to a
me to change new automobile
retailers. insurance policy is
complicated.

4. If I stop using this 4. I will waste a lot

retailer, I will waste
a lot of the effort
that I have already
exerted in this
retailer.
of the effort that I
have already exerted
if I stop using my
current personal
automobile
insurance company.

Customer Castro et.al. 1. I am very 0.9261 1. I am very

Satisfaction (2004) satisfied with my satisfied with my
(Mediating branch. current automobile
Variable) insurance company.
 134

2. My branch 2. My personal
satisfies my needs. automobile
insurance policy
satisfies my needs.
3. Compared to 3. Compared to
other branches, my other automobile
branch is as good or insurance
better. companies, my
automobile
insurance company
is as good or better.
4. My 4. My personal
complaints/problems automobile
are always insurance policy
addressed in a fair complaints/problems
manner. are always
addressed in a fair
manner.
5. My branch is very 5. My personal
reliable. automobile
insurance company
is very reliable.

6. I like the people 6. I like the service

at my branch.
7. My branch gives
me the service I
expect.
8. Overall, my
experience with my
bank is positive.
staff of my personal
automobile
insurance policy.
7. My automobile
insurance company
provides the service
I expect.
8. Overall, my
experience with my
insurance company
is positive.

Perceived Zietsman et. al. 1. The overall 0.95 1. The overall

Service (2019) quality of the quality of the
Quality service provided by service provided by
(Independent this bank is my insurance
Variable) excellent. company is
excellent.
 135

2. The quality of 2. The quality of

service provided at service provided by
this bank is my insurance
impressive. company is
impressive.

3. The service 3. The service

provided by this provided by my
bank is of a high insurance company
standard. is of a high standard.
 136

Appendix E

Consent to Participate in Research

Dear Survey Participant,

You are invited to participate in a research study led by Michael L. Burkhardt, a doctoral
candidate in the Ph.D. Program in Business Administration at Trident University International,
5757 Plaza Drive, Suite 100, Cypress, California 90630. The survey results will be part of Mr.
Burkhardt’s doctoral dissertation.
SELECTION CRITERIA
You are a potential participant in this study if you are18 years or older, reside in the United
States of America, currently pay insurance premiums for your personal automobile insurance
policy, and personal automobile insurance is mandatory in your state of residence.
PURPOSE OF THE STUDY
This research attempts to study personal automobile insurance policyholders’ continuance
intention.
PROCEDURES
If you are qualified to take the survey and decide to participate in this study, you will be asked to
complete 35 online survey questions.

POTENTIAL BENEFITS TO SUBJECT AND/OR SOCIETY

Your participation will support the development of useful tools for predicting automobile
policyholder continuance intention and provide insight for future development of policyholder
retention techniques.
No payment, monetary or otherwise, will be received for participation in this study.

CONFIDENTIALITY
Any information that is obtained in connection with this study and that can be identified with you
will remain confidential and will be disclosed only with your permission or as required by law.

PARTICIPATION AND WITHDRAWAL

You can choose whether to be in this study or not. If you agree to be in this study, you
may withdraw at any time without consequences of any kind. Participation or nonparticipation
will not affect your medical status or any other personal consideration or right you usually
expect. You may also decline to answer any questions you don’t want to answer and still
continue in the study. The investigator may withdraw you from this research if conditions arise
which in the opinion of the researcher permit doing so.
 137

POTENTIAL RISK AND DISCOMFORT

There are no anticipatable risks connected with participation in this study.

IDENTIFICATION OF INVESTIGATORS

If you have any questions about the study, please contact the principal researcher institution with
your name and your email address. If you have questions about your rights as a human research
subject please contact the Trident University Institutional Review Board at 5757Plaza Drive,
Suite 100, Cypress, CA 90630. Phone: (714) 816-0366 ext. 2518 Fax: (714) 226-9844.

INFORMED CONSENT STATEMENT OF CONSENT

By clicking the link below, I confirm that I have read this form and decided to participatein the
project described above. Its general purposes, the particulars of involvement, and possible risks
and inconveniences have been explained to my satisfaction. I understand that I can discontinue
participation at any time. My consent also indicates that I am at least 18 years of age.

I have read the informed consent information above and (choose one):

( ) I agree to participate

( ) I do not agree to participate

Survey

1. I am a citizen of the United States of America? 0 = Yes, 1 = No

2. Automobile insurance mandatory in your state? 0 = Yes, 1 = No

3. Do you pay for your own automobile insurance? 0 = Yes, 1 = No

4. What is your age? Integer

5. What is your gender? 0 = Male, 1 = Female

6. What is your highest level of education? Did Not Graduate

High School
Associates Degree
Bachelors
Masters
 138

PHD or JD

7. What is your income level? 0 to $25,000

$25,001 to $50,000
$50,001 to $ 75,000
$75,001 to $100,000
$100,001 to $150,000
$150,000 or more
$151,000 or more

8. With your current automobile insurance company, 0 = Yes, 1 = No

have you had an automobile insurance claim?

9. How long have you been with your current insurance In my 1st policy period
company? Renewed once
Renewed twice
Renewed three or more times

10. When was the last time you shopped for different 6 months or less
automobile insurance? 7 months to 1 Year
1 Year to 2 years
2 Years to 3 Years
Over 3 Years Ago

11. Is there a multiple policy discount applied to your 0 = 1Yes, 1 = No

automobile insurance policy? (example: auto and
home insurance with the same company)

12. How many people are on your automobile You Only

insurance policy? You and 1 other person
You and 2 other people
You and 3 other people
You and 4 other people or
more

13. How many vehicles are in your household? 1 Vehicle

2 Vehicles
3 Vehicles
4 Vehicles
5 Vehicles or more

14. When renewing my personal automobile insurance policy, I pay attention to the price.
 139

15. I collect a lot of price related information to access the best buy.

16. I always compare price before finalizing my personal automobile insurance policy
renewal purchase.

17. At the renewal of my personal automobile insurance policy, it is worth it to shop different
insurance companies to have control over price.

18. I intend to continue to renew my personal automobile insurance policy.

19. With all my considerations, I will likely renew my personal automobile insurance policy.

20. If I have the chance, I will continue to renew my personal automobile insurance policy.

21. Switching to a new automobile insurance company would involve some hassle.

22. Some problems may occur when I switch to another automobile insurance company.

23. Switching to a new automobile insurance policy is complicated.

24. I will waste a lot of the effort that I have already exerted if I stop using my current
personal automobile insurance company.

25. I am very satisfied with my current automobile insurance company.

26. My personal automobile insurance policy satisfies my needs.

27. Compared to other automobile insurance companies, my automobile insurance company

is as good or better.

28. My personal automobile insurance policy complaints/problems are always addressed in a

fair manner.

29. My personal automobile insurance company is very reliable.

30. I like the service staff of my personal automobile insurance company.

31. My automobile insurance company provides the service I expect.

32. Overall, my experience with my insurance company is positive.

33. The overall quality of the service provided by my insurance company is excellent.
 140

34. The quality of service provided by my insurance company is impressive.

35. The service provided by my insurance company is of a high standard.

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