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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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The insurance industry in Malaysia is parallel of the industry in Britain. Local insurance market has been dominated by foreign insurer\'s from earlier till the year of 1995. But, after Malaysia achieved independence in 1957, domestic insurance companies have been introduced by government widely. The country shows the establishment of a few life insurance companies by early year of 1960. However, it retreat due lack of professional business expertise and insufficient technical background.  Government followed the Insurance Act 1963 to regulate the insurance industry. In 2015, Malaysia Insurance Institute (MII) assumes that insurance industry will boost up within 3% to 4% in early 2016 due to the demand of insurance's products particularly in health and life insurance product though the economic growth slowdown. Due to that, this research was conducted to study the effectiveness of leadership in dealing insurance transaction ensuring strong customer satisfaction. Effectiveness of leadership in dealing insurance transaction is the main key for the company to achieve successful competition among insurance company by attracting customer towards the products offer by each company. Researcher use the previous research to collect data as the method in fulfils the research findings. Result shows that effectiveness of leadership in dealing insurance transaction influence strong customer satisfaction. Customer satisfaction is important in order to increase the sales of insurance product because satisfied customers will repurchase either product or service again.

As the human being, we are exposed to uncertainties in our life. Man's live in a world where those are continually exposed to perils. A peril is a cost of loss. Typical perils include fire, sickness, flood and premature death. Normally, when a peril occurs, property maybe destroyed or loss and lives injured or killed.  Because of that, insurance play as significant roles to provide safety and security in human life. In Malaysia, there are many either insurance company or Takaful Company which they are competing together in selling and offering the same products to the customer.

General insurance companies show a positive growth which is increase to 87.9% yearly in gross direct premium in September. By looking at the data from the General Insurance Council, it notify that private insurer involve higher premium as compared to public sector insurance companies. Huge growth may occur in insurance company such as ECGC and AIC due to crop insurance.

Hence, the effectiveness of leadership in dealing insurance transactions is the main key for the company to achieve successful competition among them by attracting customer towards the product offer by each company. Effectiveness of leadership will help company to have a positive growth by presenting the good employee's performance in handling his/her job. This reason has motivated researcher to study the effectiveness of leadership in dealing insurance transaction ensuring strong customer satisfaction.

According to BERNAMA, on 15 August 2016, Malaysia has awakened to the issues of price war and stiff competition among insurance firms. It is occur due to the liberalisation of motor and fire tariffs starting July 1, 2017. Not all insurance companies capable to face this issue. Just only insurance companies that have strong capital would be able to face the price war because they had enough capability and profits to cover their deposits. There are a few of insurance companies have prepared to catch up the market share. In addition, this issue of liberalisation in insurance industry have their prons and cons towards the firm. Sometimes, it would encourage developing new insurance products and attract new customers but would also create competition among them. stiff competition should be avoid in early stage to save market from destructive like occur in India and China, it went bust when liberalisation been started. Hence, this issue could be saved by implementing the effectiveness of leadership in dealing insurance transaction thus strengthens customer satisfaction toward the products or services offer by the company.

In random viewed, the effectiveness of leadership in insurance company will create happy working environment without pressure and less mistakes. Good working environments develop a closed and good relationship between employers and employees thus will attract them to compete showing the best performance in achieving company's goal. This culture guides employees to deal with customer happily. (Hiss and Hill, 2001) showed that employees motivation and organizational learning are positively related to perceived service quality. Higher service quality will achieve if the employees are motivated.  (Mac Kelloway and Weiss, 2002), also showed that motivating employees to improve performance through learning is necessary for the organization in order to develop individual performance. In this regard, the research of (Lee Paine et al, 2004) showed that learning motivation is positively associated with learning function.

Furthermore, the findings on this research could help companies in handling insurance transaction effectively to ensure strong customer satisfaction. Therefore, this research stated that the effectiveness of leadership in organization will create employee's job satisfaction thus producing quality product and best services performance and at the end achieve the customer satisfaction.

This research has come out with the objective that shows the clear understating in doing research.

The objective of the study can be described as follow:

1. To study the effectiveness of leadership in dealing insurance transaction that influence strong customer satisfaction.

The awareness of insurance has grown rapidly over the world. Insurance has become an essential source of earning in the global ( Li, Moshirian, Nguyen & Wee, 2007 ). The higher level of awareness on insurance product among people, motivated insurance industry to exposed all the insurance's product in the worldwide as attracting the customer towards the products offer. Due to that, leadership in organization of each company should play a role to implement the best strategy on selling it. Effective leadership in dealing insurance transaction may ensure strong customer satisfaction just because the best performance present by the employees in the organization.

Effective leadership focuses primarily on people, based on an inherent assumption that the capability of the team is the most critical point of effectiveness in producing quality outcomes, significant change or in meeting urgent organizational needs (Posner, 1987; Tannenbaum and Schmidt, 1958). It is generally accepted in theory that effective leaders need to build a compelling, shared vision of the future; they ensure a deep understanding of the purpose of the organization, and articulate a clear set of values that are embedded in their behaviors (Posner, 1998). Stakeholder consideration, influence, and expectation management are also critical to effective leadership because effective realization of organizational objectives requires “the development of a clear and complete system of expectations in order to identify, evoke and use the strengths of all resources in the organization, the most important of which is people” (Batten, 1991, pp. 35, 134). Effective leadership is the ability to get things done through others while winning their respect, confidence, loyalty, willing cooperation and commitment (Verma and Wideman, 1994; Bennis).

Leadership emerges out of a complex performance domain and necessitates a broad response repertoire from which to draw as well as the ability to learn to respond to a variety of everyday interpersonal and organisational problems (Hedlund et al., 2003). Such an approach integrates major parts of cognitivist (Bruner, 1977; Piaget, 1926), humanist (Maslow, 1968), behaviourist (Skinner, 1973) and social constructionist (Lave and Wenger, 1991) theories, studying learning on a continuum ranging from individual to inter-personal located within relationships between people and environments. Leadership is seen as the primary role, but one that typically requires managerial support if it is to be effective (Gill, 2003; Graetz, 2000; Kotter, 1995; Nadler and Tushman,1990;Sadler,1997;WalderseeandEagleson,2002).

Management science reveals that leadership efficiently integrates and coordinates division of labor across the organization through influencing employee attitudes and behaviors (Ford and Randolph, 1992). Leadership is proven to have a significant impact on employee satisfaction that ultimately affects employees' performance and turnover intention (Kumara and Koichi, 1989; Savery, 1994; Arnold, Barling and Kelloway, 2001).

A number of studies have found a positive correlation between customer satisfaction and employee job satisfaction (Casida & Pinto-Zipp, 2008; Zheng & Ricardo, 2009). Higher level of job satisfaction based on the effective leadership implementation among employees will effect customer satisfaction.

Philip Kotler defines satisfaction as follows “Pleasant or unpleasant feelings of an individual which emerge by comparison of the goods in comparison with consumer expectations”. In this definition, customer satisfaction is a function of product performance and consumer's expectations. If the product performance is less than the expectations, the customer will be dissatisfied and if the product is as good as the consumer's expectations, the customer will be satisfied and if the product is better than the consumer's expectations, the customer will be extremely satisfied.

Customer satisfaction can also be considered as a response to expectations and final results after consumption (Tese and Wilton 1988) or an emotional reaction which is caused by purchasing with prechosen standards (Hall Steer, Hartmann and skimmer, 1994). It can also be considered as a psychological sense of inconsistent customer expectations which are caused by his/her initial expectations (Oliver, 1981) which leads to creation, development and maintaining customer satisfaction by adding other available features to other experienced emotions after purchasing (Oliver, 1992) and the judgment that is created during consumption of a product or service (Oliver 1996).  Fully satisfied customers repurchase six times more than satisfied customers over a period of one to two years in customer-oriented organizations (Shahidi, 2010).

This paper will determine the effectiveness of leadership in dealing insurance transaction ensuring strong customer satisfaction. It involves two variables which are dependent and independent variable. Customer satisfaction is influence by the effectiveness of leadership in dealing insurance transaction. Hence, the proposed framework is as follow:

From a search in literature, the study discovers researches in insurance industry and focused on the relationship between the effectiveness of leadership in dealing insurance transaction and ensuring strong customer satisfaction. The research on the effective's leadership may affect customer satisfaction is considered important due to the increase the number of insurance company in worldwide. Leadership practices in dealing insurance transaction towards customers is the key point for them as competitor in attracting customer to purchase the product offer by each insurance company nowadays. Generally, insurance company in the worldwide selling and offering the same insurance product. That is why, necessary for them to differentiate leadership's strategy on how to handling insurance transaction by attracting customer and develop customer satisfaction in order to make it different with others.  Since both dependent and independent variables is too significant, the research intends to study the effectiveness of leadership in dealing insurance transaction ensuring customer satisfaction. The importance of effective's leadership in organization has received a lot of attention by researcher to construct this study. In other words, a clearer understanding about the knowledge of effective's leadership and developing customer satisfaction may attract and guide organization to have the best practice on it in order to build strong customer satisfaction towards the product offering, to face the price war issue and to avoid stiff competition among them. The findings would help to better leadership's practices in organization focusing on insurance industry in dealing insurance transaction with customers in order to ensure strong customer satisfaction.

Effectiveness of leadership can be define as the group in organizations achieves it goals, developing teamwork that group members work well together and the group can adapt well to internal and  external changes.  In any business, effective leadership is important for industry to achieve success in running business. As the insurance industry, insurance leaders need to be adaptable and visionary toward the environment. Strong leadership can guide industry toward success, profitability and employee's job satisfaction. Effective leadership helps to develop happy employees. Happy employees should be with his/her job. It definitely shows the interest and positive attitude in handling job especially in handling insurance transaction with customers. Then, it will increase profitability when customers are attracting towards the services offering. It leads to the customer satisfaction because happy employees will treat their customer with best effort. It suddenly exceeds the expectation's level of customer before purchase the product or service.

Gamos logo and Ile Seo, (2009), stated that Transformational leadership affects customer satisfaction and they found out that these two factors have a huge impact on each other.

Customer is people who are making payment, in return either get the product or have a service. Each customer has certainly seen something in provided service or goods which make him/her come to the seller. Here, any kind of encounter between the seller and the customer is considered as an experience for the customer. If this experience is good, it will make the customer come back, otherwise, the customer will not come back again. This is a reality that the seller is the one who is eliminated if the customers spend his/her capital elsewhere.

Customer satisfaction defined as consumer evaluation after use the product or services offer by the company, generally it will compare with earlier consumer's expectations. Customer satisfaction can also be considered as a response to expectations and final results after consumption (Tese and Wilton 1988) or an emotional reaction which is caused by purchasing with prechosen standards (Hall Steer, Hartmann and skimmer, 1994). Customer satisfaction is a marketing term that determines how products or services supplied by a company meet or surpass a customer's expectation. Customer satisfaction is important because it helps marketers and business improving their business operation.

Customer satisfaction is important because it became as a key to increase profitability of insurance company. Satisfied customer will repurchase the product or services again as long as they need it.

In summary, this paper explains the relationship between the effectiveness of leadership in dealing insurance transaction with customer satisfaction. This study gives benefits for insurance company to do a few revision on the leadership skill that have been practicing in the organization as a key competence to compete each order in handling insurance transaction while achieving strong customer satisfaction. It exposed them the real competition in handling insurance transaction on how leadership play a role to manage it in attraction the customers towards the insurance products. After the organization in insurance company realize the importance of leadership in making customer attraction towards the product, they can figure out the alternative in ensuring customer satisfaction while boost up the sales of insurance products. In addition, insurance company can plan and come out new strategies to deal with people in insurance transaction. They can launch some new products to fulfil the public's need based on the customer's demand.

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