With the rapid growth and development of the Korean Shipping Industry both in external quantum and internal complexity, the marine insurance industry has accordingly expanded with it. Third party liabilities, requiring insurance by the P&I industry, is a necessity for ship-owning and operating and it has significantly expanded thanks to the emergence of animated chartering activities brought on by the worldwide shipping boom. However, recent trend and development of anti-shipping regimes along with the outcomes of various international conventions and legal precedents are adding the burden on both the shipping and the P&I Industry.
In the past 10 years or so, the P&I Insurance premium has soared three fold and eventfully became a heavier burden on the basic shipping operation costs. These recent developments around the shipping industry has led the ship-owners to pay more attention to P&I insurance with a goal to achieve more competitive P&I costs and receive more satisfaction in P&I service quality.
Traditionally, P&I Clubs have been operated in a rather exclusive manner within their Cartel over their 150 year history. This Cartel remained too strong for other marine insurance markets to produce any similar liability insurance to compete with the P&I Clubs. This also restricted ship-owners comparing which P&I Club would provide them with the best service quality and the most competitive price in P&I insurance as virtually no mutual competition formed within the industry.
With this kind of open policy on P&I Insurance inevitably being adopted by P&I Clubs and ship-owners, a concept of the service quality to produce customer satisfaction is highlighted on the surface for the competition as the needs of the ship-owners have become more serious on the choice and shifting of the P&I Clubs.
The competitiveness in regard to customer satisfaction and quality of service in the P&I industry has not been studied deeply and there exists a demand for such a study from P&I Clubs and ship-owners.
This empirical study analyzes the quality factors of the Insurance and P&I Services using 5 factors of quality measures with 22 questions regarding the effect on customer satisfaction by the services offered by the P&I Clubs.
A total of 254 usable questionnaires were gathered from Korean ship-owners and P&I insurance brokers and were studied to prove the effects of determinants of the P&I Service Quality on customer satisfaction such as repurchasing intentions etc. The Study is expected to provide P&I Clubs with management tactics for customer satisfaction and the subsequent continued patronage supported by their members through the enhancement of the service quality. This study also provides direction for ship-owners and the members of the P&I Clubs in finding the most efficient service provider as well as in proposing competitive prices of the P&I insurance premium as their management tactic.
In conclusion, the determinants of the P&I service quality would positively influence the variables affecting customer satisfaction and the subsequent intention and/or decision to repurchase(re-contracting) arising from the satisfaction. Due to unknown factors in responses of the questionnaires, attempts to prove customer satisfaction's direct role and effect on positive recommendation of a P&I Club to other associated personnel in the shipping industry failed.
Therefore, it is suggested that continued research must follow for further analysis in other areas of P&I Insurance as well as in the field of Service Quality which have not been researched thoroughly by this study as the significance of the P&I Industry and their impact on the ship-owners' operational costs would continue to grow further in the future.