Uppsala universitet

TANGIBLE
DOMINANT
INTANGIBLE
DOMINANT
credit savings warranty bank investment life pension homeowner commercial
card account insurance loan fund insurance plan insurance insurance
Figure 2.
The financial service continuum.
(Source: Derived and modified from Cowell, 1984, p. 34.)
The more intangible the service the more important the management of relationships, a factor
which has to be stressed in the insurance business. Even though all financial services have an
intangible dominant, they vary in their degree of tangibility in terms of the consumer’s ability to
grasp the particular service mentally — to comprehend the service rendered. For example, a
credit card is very palpable, lying in the wallet awaiting an increase in the propensity to spend,

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connected with the knowledge of the card as a symbol either of money in an account or the
ability to get credit. Somewhere halfway down the scale is a bank loan. Money is needed in
order to buy a house, the bank is contacted, a contract is signed and the loan is a fact, paired
with the knowledge that it has to be paid back, together with interest on the borrowed money.
This is not particularly complex to understand, at least not the main thrust of it concerning the
financial ability to buy a house. Commercial insurance, however, is at the intangibility extreme.
Here we find a service product providing a corporate manager with cover for almost any loss,
expected or unexpected. This kind of insurance entails numerous contracts, agreements, and
clauses, which are generally only studied when there is an acute need to do so (i.e. when the
customer has suffered a loss). The service for which the insurance premium is paid is risk
reduction, something that is difficult to comprehend until a loss is experienced and the
information is gathered on how the insurance company will compensate the loss.
Insurance services may be considered as more intangible than, for instance, a bank
service entailing immediate withdrawal of money, as there is no instant result from the
transaction of money concluding a contract, except for the very contract signed. In the matrix
below, we show three common kinds of insurance services. These are compared in relation to
the tangibility, complexity, and comprehensibility of the affecting variables. The relative degree
of each variable was assessed and allocated a mark ranging from 1 to 5, where 5 signifies the
most weight for the variable in question (See Table 1).