Improving service quality a case of bao viet insuarance corporation

RESEARCH PROJECT (BMBR 5103) IMPROVING SERVICE QUALITY A CASE OF BAO VIET INSURANCE CORPORATION STUDENT’S FULL NAME : NGUYEN THI NGOC BICH STUDENT ID : CGS00018496 INTAKE : SEPTEMBER, 2014 ADVISOR’S NAME & TITLE : ASSOC.PROF.DR.PHAN DINH NGUYEN December, 2015 ADVISOR’S ASSESSMENT Advisor’s signature ABSTRACT Insurance is an arrangement or agreement that protects the financial well-being of an individual, company or other entity in the case of unexpected loss It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss Today, the insurance sector plays an important role in the development of financial markets in the economy Competition in the business, as we know it, is dynamic and challenging According to insurance market in Viet Nam, many insurance enterprises are mainly competing by reducing premium or increasing commission, but they lack of service quality improving strategies However, because the market competition develops rapidly, those advantages are no longer reliable decisive factor in competition for the insurance enterprises They realize that they cannot compete with each other solely on price, but need to focus on their valued customers Therefore, service quality is an optimal factor and it becomes more and more important for customers to select and use a service of the company In line with the market trend, Bao Viet Insurance Corporation has considered for improving insurance service quality to meet customer satisfaction as the priority task of company ACKNOWLEDGEMENTS First of all, I express my deep gratitude to Mr.Phan Dinh Nguyen, my supervisor I would like to say thank for his guidelines and help for identifying problems without which this work could not have seen the light of day Another thank you goes to my classmates, friends that give me support and good comments about how I could improve my thesis Their help have been very important for motivating me to complete the thesis Finally I would also like to direct a special thank you to parents and other family members who give me inspiration and support to work hard TABLE OF CONTENT ABSTRACT ACKNOWLEDGEMENTS CHAPTER ONE: INTRODUCTION 1.1 Problem statement 1.2 Objective of the study 1.3 Ressearch questions 1.4 Scope and methodology of study 1.5 Significance of study 1.6 Structure of thesis CHAPTER TWO : LITERATURE REVIEW 11 2.1 Service and characteristic of service 11 2.1.1 Concept of service 11 2.1.2 Characteristics of service 11 2.1.2.1 Characteristic of intangibility 12 2.1.2.2 Characteristic of inseparability 12 2.1.2.3 Characteristic of heterogeneity 12 2.1.2.4 Characteristic of perishability 13 2.2 Concept of quality 13 2.3 Service quality and formation of service quality 13 2.3.1 Concept of service quality 13 2.3.1.1 Customers‟ Expectation of Service Quality 14 2.3.1.2 Customers‟ Perception of Service Quality 14 2.3.2 Formation of service quality 14 2.4 Service quality measurement 17 2.4.1 The model originally provided a list of ten determinants of service quality: 19 2.4.2 The model provided a list of determinants of service quality: 19 2.4.2.1 Tangibles 20 2.4.2.2 Responsiveness 20 2.4.2.3 Assurance 20 2.4.2.4 Reliability 20 2.4.2.5 Empathy 20 2.5 Assessing Service Quality 21 2.6 Important of service quality dimensions 21 2.7 Methods to improve service quality 22 2.8 Nature and characteristics of insurance business 23 2.8.1 Nature of insurance business 23 2.8.2 Characteristics of Insurance business 24 2.9 Features of non-life insurance service 25 CHAPTER THREE: RESEARCH METHODOLOGY 26 3.1 Qualitative research 26 3.1.1 Design qualitative research 26 3.1.2 Result of qualitative research 26 3.1.2.1 Measuring quality of product 26 3.1.2.2 Measuring quality of premium 27 3.1.2.3 Measuring quality of employees/ agents 27 3.1.2.4 Measuring quality of claim process and indemnity activities 28 3.1.2.5 Measuring quality of customer service 28 3.1.2.6 Measuring quality of distribution system 29 3.1.2.7 Measuring quality of advertising activities 30 3.1.3 Research model and scale of measurement 30 3.1.3.1 Research model 30 3.1.3.2 Scale of insurance service measurement 31 3.2 Quantitative research 32 3.2.1 Design quantitative research 32 3.2.1.1 Research subject and Sample 32 3.2.1.2 Questionnaire design 32 3.2.2 Method of data analysis 33 CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS 34 4.1 Overview of Bao Viet Insurance Corporation 34 4.1.1 History and Development: 35 4.1.2 Network 36 4.2 Overview of insurance business 37 4.2.1 Insurance market 37 4.2.2 Non-life insurance 37 4.3 Summary of quantitative research result 38 4.3.1 Sample description 38 4.3.1.1 Gender 39 4.3.1.2 Age band 39 4.3.1.3 Education level 40 4.3.1.4 Type of insurance sector 40 4.3.2 Result of measurement scale testing 41 4.3.2.1 Cronbach‟s alpha 41 4.3.2.2 EFA factor analysis 41 4.3.2.3 Correlations analysis 44 4.3.2.4 Multiple linear regression 45 4.4 Analyzing the status of actual service quality at Bao Viet Insurance Corporation 47 4.4.1 Reliability of insurance service 47 4.4.2 Service capacity of insurance company 49 4.4.3 Responsiveness of insurance company 52 4.4.4 Attractiveness of the insurance company 55 CHAPTER FIVE : SOLUTIONS AND RECOMMENDATIONS 57 5.1 Solutions: 57 5.1.1 Improving reliability of insurance service 57 5.1.2 Improving the service capacity of insurance company 59 5.1.3 Improving the responsiveness of insurance company 59 5.1.4 Improving the attractiveness of the insurance company 60 5.2 Recommendations 60 5.2.1 Recommendation for Insurance Supervisory Authority – Ministry of Finance 60 5.2.2 Recommendation for Vietnam Insurance Association (VIA) 61 REFERENCE 62 APPENDIX 64 APPENDIX 1: DISCUSSION CONTENT (QUANTITATIVE RESEARCH) 64 APPENDIX 2: QUESTIONNAIRE FOR CUSTOMERS 65 APPENDIX 3: TABLE OF VARIABLES WERE ENCODED 69 APPENDIX 4: CRONBACH ‘S ALPHA 70 APPENDIX 5: EFA FACTOR ANALYSIS 72 APPENDIX 6A: MULTI LINEAR REGRESSION RESULT 75 APPENDIX 6B : MULTI LINEAR REGRESSION RESULT (WITHOUT THE CONVENIENT FACTOR) 79 CHAPTER ONE: INTRODUCTION 1.1 Problem statement Non-life insurance market in Vietnam has dramatically developed in recent years In Viet Nam, there are 29 non-life insurers on market and the dynamic foreign insurance enterprises which contribute to increase competitiveness in the insurance market The sinking position of the Bao Viet Insurance Corporation in the insurance market needs to be concerned These problems arise as a result of the corporation has been identified as not meeting customers „s demands and failing to reach service quality such as poor returns on premiums, delays in processing claims and confusing policy details It is common to hear people complaining about the late delivery of policy documents, renewal notices or even undue delay in responding to customers‟ requests Moreover, customers also complain about counseling products by the sale persons who lack of expert knowledge about insurance products or insurance sectors These problems often expose in conflict as people are lured into buying insurance policies that they not properly understand With increasingly severe competition in market, the company needs to consider its customer demands more than ever because the efficiency of insurance sector depends upon how best it can deliver services to its target customers and how far expectations of customers are met In order to survive in this competitive environment and provide continual customer satisfaction, Bao Viet Insurance Corporation‟s insurance services are now required to persistently improve the quality of services Therefore, improving service quality to meet customer satisfaction which has become the priority goal of Bao Viet Insurance Corporation on the market 1.2 Objective of the study The general objective of the study seeks:  Measure and evaluate insurance service quality of BaoViet Insurance Corporation  Suggest solutions and recommendations to improve service quality of Bao Viet Insurance Corporation 1.3 Ressearch questions The research will seek to provide answers to the following questions:  What is the current status of service quality of Bao Viet Insurance Corporation?  What solutions and recommendations Bao Viet Insurance Corporation need to for improving service quality? 1.4 Scope and methodology of study 2.3.1 Scope of study - The study researches the assessment of customer about service quality of Bao Viet Insurance Corporation - Data collected is through conducting survey with clients in Ho Chi Minh city Time of survey is in 2015 2.3.2 Methodology of the study Utilizing the theoretical model of service quality combined with specific analysis of insurance service, from which forming the research model to evaluate the insurance „s service quality The process of research including:  Preliminary research is implemented through qualitative method with technical discussions in group or duel This research will be used to establish preliminary scale of measurement of nonlife insurance „s service quality  Formal research: is done by quantitative method Using the questionnaire to investigate the assessment of clients of insurance service quality of Bao Viet Insurance Corporation This study aims to adjust and test the draft scale to establish official scale about insurance service quality Scale is assessed by Cronbach alpha, EFA factor analysis , multi linear regression This process can explore what are factors of service quality? After testing the scale will be used to analyze actual insurance service of Bao Viet Insurance Corporation through descriptive statistic This step aims to answer Agent/broker networks are enough quantity and skills to adapt and serve customer „s requires ADVERTISING ACTIVITIES Band name of Bao Viet Insurance Corporation creates an belief for customers when joining insurance Financial status of Bao Viet Corporation is strong Kind of advertising is various and attractive CUSTOMER SATISFACTION OF SERVICE QUALITY You satisfy with service quality of Bao Viet Insurance Corporation Bao Viet Insurance Corporation is an optimal choice for you when joining insurance You still continue to participate in Bao Viet Insurance Corporation in the future Thank you for taking time to complete this questionnaire! 68 APPENDIX 3: TABLE OF VARIABLES WERE ENCODED Variable name PRODUCT PRODUCT Variable content The diversity of insurance product Provision of insurance PRODUCT Scope of insurance PRODUCT PREMIUM PREMIUM EMPLOYEE/AGENT EMPLOYEE/AGENT EMPLOYEE/AGENT Form of insurance contract The competitiveness of premium The flexibility of premium Qualification and skill of employee / agent Working experience of employee / agent Service attitude of employee / agent EMPLOYEE/AGENT EMPLOYEE/AGENT EMPLOYEE/AGENT CLAIM CLAIM CLAIM CUSTOMER SERVICE CUSTOMER SERVICE DISTRIBUTION DISTRIBUTION DISTRIBUTION ADVERTISING ADVERTISING ADVERTISING SERVICE QULAITY SERVICE QULAITY SERVICE QULAITY Spiritual working of employee / agent Working style of employee / agent Ethic of employee / agent Claim procedures Time of claim settlement Indemnity activities Customer care Promotional policy Network of office Size and facilities of office The quantity of agent/broker network Brand reputation of the insurance company Financial position of the insurance company Form of advertising Customers satisfy with service quality Bao Viet is an optimal choice for customers Customers still continue to participate in BaoViet company 69 APPENDIX 4: CRONBACH ‘S ALPHA Reliability Statistics Cronbach's N of Alpha Items 953 23 Item Statistics Mean Std Deviation PRODUCT 3.53 744 PRODUCT 3.14 759 PRODUCT 3.52 673 PRODUCT 3.29 679 PREMIUM 3.07 837 PREMIUM 3.40 793 EMPLOYEE/AGENT 3.53 634 EMPLOYEE/AGENT 3.41 716 EMPLOYEE/AGENT 3.23 893 EMPLOYEE/AGENT 3.57 742 EMPLOYEE/AGENT 3.54 721 EMPLOYEE/AGENT 3.59 794 CLAIM PROCESS 3.16 860 CLAIM PROCESS 3.19 823 CLAIM PROCESS 3.48 686 CUSTOMER SERVICE 3.54 732 CUSTOMER SERVICE 3.18 745 DISTRIBUTION 3.82 673 DISTRIBUTION 3.43 786 DISTRIBUTION 3.54 634 ADVERTISING 3.68 724 ADVERTISING 3.88 681 ADVERTISING 3.31 896 70 N 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 PRODUCT PRODUCT PRODUCT PRODUCT PREMIUM PREMIUM EMPLOYEE/AGENT EMPLOYEE/AGENT EMPLOYEE/AGENT EMPLOYEE/AGENT EMPLOYEE/AGENT EMPLOYEE/AGENT CLAIM PROCESS CLAIM PROCESS CLAIM PROCESS CUSTOMER SERVICE CUSTOMER SERVICE DISTRIBUTION DISTRIBUTION DISTRIBUTION ADVERTISING ADVERTISING ADVERTISING Scale Statistics Mean Varianc e 79.02 146.975 Item-Total Statistics Scale Scale Corrected Cronbach's Mean if Variance if Item-Total Alpha if Item Item Deleted Correlation Item Deleted Deleted 75.48 133.647 743 950 75.88 133.808 717 950 75.50 137.160 593 952 75.73 136.621 624 951 75.95 133.241 674 951 75.62 134.608 638 951 75.48 137.832 587 952 75.61 136.039 624 951 75.79 130.452 771 949 75.45 135.729 619 951 75.48 134.873 692 950 75.43 132.851 737 950 75.86 131.568 744 950 75.83 132.616 722 950 75.54 135.864 666 951 75.48 134.655 693 950 75.83 134.056 717 950 75.20 136.027 668 951 75.58 133.338 717 950 75.48 136.739 664 951 75.34 135.689 638 951 75.14 138.845 478 953 75.71 133.234 625 952 Std Deviation 12.123 N of Items 23 71 APPENDIX 5: EFA FACTOR ANALYSIS KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Approx Chi-Square df Sig .894 1814.34 190 000 Communalities Initial Extraction PRODUCT 1.000 815 PRODUCT 1.000 791 PRODUCT 1.000 800 PREMIUM 1.000 660 EMPLOYEE/AGENT 1.000 657 EMPLOYEE/AGENT 1.000 668 EMPLOYEE/AGENT 1.000 698 EMPLOYEE/AGENT 1.000 623 EMPLOYEE/AGENT 1.000 691 EMPLOYEE/AGENT 1.000 754 CLAIM PROCESS 1.000 819 CLAIM PROCESS 1.000 815 CLAIM PROCESS 1.000 749 CUSTOMER SERVICE 1.000 830 DISTRIBUTION 1.000 845 DISTRIBUTION 1.000 850 DISTRIBUTION 1.000 670 ADVERTISING 1.000 840 ADVERTISING 1.000 775 ADVERTISING 1.000 712 Extraction Method: Principal Component Analysis 72 Component Matrixa Component 792 777 772 758 757 740 736 728 720 705 704 693 674 671 662 657 647 646 614 EMPLOYEE/AGENT CLAIM PROCESS EMPLOYEE/AGENT DISTRIBUTION CLAIM PROCESS PRODUCT CUSTOMER SERVICE EMPLOYEE/AGENT DISTRIBUTION DISTRIBUTION CLAIM PROCESS ADVERTISING PRODUCT PREMIUM ADVERTISING EMPLOYEE/AGENT PRODUCT EMPLOYEE/AGENT EMPLOYEE/AGENT ADVERTISING Extraction Method: Principal Component Analysis a components extracted 73 664 Rotated Component Matrixa Component CLAIM PROCESS 806 CLAIM PROCESS 792 CLAIM PROCESS 770 EMPLOYEE/AGENT 691 EMPLOYEE/AGENT 605 EMPLOYEE/AGENT 731 PREMIUM 726 EMPLOYEE/AGENT 692 EMPLOYEE/AGENT 659 EMPLOYEE/AGENT 605 PRODUCT 829 ADVERTISING 826 DISTRIBUTION 810 ADVERTISING ADVERTISING CUSTOMER SERVICE PRODUCT DISTRIBUTION PRODUCT DISTRIBUTION Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations 790 702 671 612 Component Transformation Matrix Compone nt 534 499 447 379 350 -.339 -.486 706 -.068 382 -.608 158 -.134 765 045 -.409 572 -.120 -.494 497 250 -.404 -.519 150 694 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization 74 751 747 601 APPENDIX 6A: MULTI LINEAR REGRESSION RESULT Regression Descriptive Statistics Mean Std Deviation SATISFACTION 3.4417 74744 RELIABILITY 3.3917 66731 CAPACITY 3.4267 60080 CONVENIENT 3.6694 63877 RESPONSIVENESS 3.3771 63758 ATTRACTIVENESS 3.4222 62880 75 N 120 120 120 120 120 120 Variables Entered/Removeda Mode Variables Entered Variables Method l Removed ATTRACTIVENESS , RESPONSIVENESS, Enter CONVENIENT, RELIABILITY, CAPACITYb a Dependent Variable: SATISFACTION b All requested variables entered Model Sum of Squares ANOVAa df Mean Square F Sig Regressio 55.100 11.020 110.387 000b n Residual 11.381 114 100 Total 66.481 119 a Dependent Variable: SATISFACTION b Predictors: (Constant), ATTRACTIVENESS, RESPONSIVENESS, CONVENIENT, RELIABILITY, CAPACITY 76 Residuals Statisticsa Minimu Maximu Mean m m 1.5201 4.3968 3.4417 -.68280 92759 00000 Predicted Value Residual Std Predicted -2.824 1.404 000 Value Std Residual -2.161 2.936 000 a Dependent Variable: SATISFACTION 77 Std Deviation 68046 30925 N 120 120 1.000 120 979 120 78 APPENDIX 6B : MULTI LINEAR REGRESSION RESULT (WITHOUT THE CONVENIENT FACTOR) Regression Descriptive Statistics Mean Std Deviation SATISFACTIO 3.4417 74744 N RELIABILITY 3.3917 66731 CAPACITY 3.4267 60080 RESPONSIVEN 3.3771 63758 ESS ATTRACTIVE 3.4222 62880 NESS 79 N 120 120 120 120 120 Model Sum of Squares ANOVAa df Mean Square F Sig Regressio 54.922 13.731 136.613 000b n Residual 11.558 115 101 Total 66.481 119 a Dependent Variable: SATISFACTION b Predictors: (Constant), ATTRACTIVENESS, RESPONSIVENESS, RELIABILITY, CAPACITY 80 Residuals Statisticsa Minimu Maximu Mean m m 1.5569 4.4457 3.4417 -.68975 86806 00000 Predicted Value Residual Std Predicted -2.774 1.478 000 Value Std Residual -2.176 2.738 000 a Dependent Variable: SATISFACTION 81 Std Deviation 67936 31165 N 120 120 1.000 120 983 120 82 [...]... experience  Gap1: Customers‟ expectations versus management perceptions: as a result of the lack of a marketing research orientation, inadequate upward communication and too many layers of management  Gap 2: Management perceptions versus service specifications: as a result of inadequate Commitment to service quality, a perception of unfeasibility, inadequate task standardisation and an absence of goal setting... expectations and experience (Kandampully, 1998) 2.3.2 Formation of service quality The traditional models of service quality that assess the client's awareness about service quality based on a number of factors or aspects,as service includes a complex mixture of explicit and implicit attributes Service quality is not be viewed as a discrete structure but a combination of several factors or aspects that... The gap model of service quality: The gap model (also known as the "5 gaps model") of service quality is an important customer-satisfaction framework In "A conceptual model of service quality and its implications for future research" (The Journal of Marketing, 1985), A Parasuraman, VA Zeitham and LL Berry identify five major gaps that face organizations seeking to meet customer's expectations of the... evident that quality is also related to the value of an offer, which could evoke satisfaction or dissatisfaction on the part of the user 2.3 Service quality and formation of service quality 2.3.1 Concept of service quality Kasper and Gabbott (2006) define Service quality is a complex and ephemeral concept which refers to some attribute of what is offered, provided whereas satisfaction or dissatisfaction... revenue.Baoviet Insurance boasts a network of 67 branches and nearly 300 customer support offices across Vietnam, and more than 3,000 qualified employees This, coupled with its strong financial capacity, effective business management and claim settlement, enabled Baoviet Insurance to meet all insurance needs and handle claims of customers in a prompt, timely and professional manner.Baoviet Insurance‟s... research question: “What is the current status of service quality of Bao Viet Insurance Corporation? ” Based on the study results, I suggest solutions and recommendations to improve service quality of BaoViet Insurance Corporation in the future This process answers the question: “What solutions and recommendations do Bao Viet Insurance Corporation need to do for improving service quality? ” 1.5 Significance... (Baoviet Insurance) is a wholly-owned subsidiary of Baoviet Holdings The chartered capital of Baoviet Insurance increased to VND1,800 billion in 2012 from VND1,500 billion in 2011; and reached VND2,000 billion in early 2013 On 27 March 2013, the Ministry of Finance granted the Approval of capital increase that allows Baoviet Insurance to rise its chartered capital to VND2,000 billion This capital increase... delivery of service, interpersonal interaction, performance or customer‟s experience of service 2.6 Important of service quality dimensions The measurement of service quality relies upon an understanding of attributes which contribute to consumer expectations and perceptions of service quality These attributes are assessed by customers and contribute meaningfully to a quality based evaluation of the service. .. information of the customer  Part 2: Questions involve in factors affecting insurance service quality (The questionnaire is presented in appendix 2) 32 3.2.2 Method of data analysis I use software SPSS 20.0 and Excel 2010 for data processing and analysis To make it easier for data input, analysis and presentation, variables were encoded (as presented in appendix 3) Before conducting the analysis and evaluation... assessment, reliability of measurement scale was tested by the main tool –Cronbach‟s alpha, EFA factor analysis, Multi linear regression: Cronbach‟s alpha reliability coefficient was used to remove the wasted variable and test the internal consistency of variable in measurement scale Variables with correlation coefficients and the total are less than 0.3 will be disqualified Close degree of the scale ... assessment of clients of insurance service quality of Bao Viet Insurance Corporation This study aims to adjust and test the draft scale to establish official scale about insurance service quality. .. company's service quality Regarding service capacity, Bao Viet has been generally well assessed by customer with 42.66% of respondents agree that service capacity of Bao Viet adequate; 40.4% have... goal of Bao Viet Insurance Corporation on the market 1.2 Objective of the study The general objective of the study seeks:  Measure and evaluate insurance service quality of BaoViet Insurance Corporation