The effects of switching costs on relational outcomes in the insurance industry

Anabela Maria Bello da Silveira Baptista Marcos, Arnaldo Fernandes de Matos Coelho

Abstract


Purpose: This study seeks to propose and test a framework in car insurances for examining the alternative routes through which different types of positive switching costs (social and lost benefits) operate in affecting relational outcomes. Thus, the objective of this paper is to understand the effects of positive switching costs on relational outcomes in the insurance industry.

Design/methodology/approach: This investigation proposes a theoretical model tested using structural equation modelling (SEM). A questionnaire survey was developed to explore the relationships among two positive switching costs (social switching costs and lost benefits costs), relational commitment, loyalty and word-of-mouth (WOM). For this study, 744 valid questionnaires were collected from a sample of Portuguese car insurance holders.

Findings: The results show that lost benefits costs directly influence relational commitment, loyalty and WOM. However, social switching costs only directly influence relational commitment. In turn, relational commitment increases loyalty and word-of-mouth. Finally, loyalty is a determinant of word-of-mouth.

Originality/Value: In order to address gaps in the literature, the present study developed an integrative model through which two types of positive switching costs operate in directly affecting loyalty and WOM and indirectly, via relational commitment. Research on the downstream effects of different types of switching costs is lacking. Therefore, this investigation examines the partial mediating role of relational commitment in the relationship between two positive switching costs and loyalty and WOM, in a relational perspective.

 

Keywords: switching costs; relational outcomes; insurance industry.

 


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