Improving service quality the case of united insurance company

VIETNAM NATIONAL UNIVERSITY - HANOI HANOI SCHOOL OF BUSINESS NGUYEN CHIEN THANG IMPROVING SERVICE QUALITY THE CASE OF UNITED INSURNCE COMPANY Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisors: Dr Nguyen Viet Dung Hanoi – 2013 TABLE OF CONTENT CHAPTER I: OVERVIEW OF THESIS 1.1 1.2 1.3 1.3.1 1.3.2 1.4 INTRODUCTION OBJECTIVE OF SUBJECT SCOPE AND METHODOLOGY OF RESEARCH Scope of research Method of research STRUCTURE OF THESIS CHAPTER II: THEORETICAL BASIS OF SERVICE QUALITY AND NON-LIFE INSURANCE BUSINESS 2.1 DEFINITION AND NATURE OF SERVICE 2.1.1 Definition of service 2.1.2 Nature of service 2.2 SERVICE QUALITY AND FACTORS OF SERVICE QUAL 2.2.1.Definition of service quality 2.2.2.Factors of service quality 2.3 SERVICE QUALITY MEASUREMENT 2.4 CHARACTERISTICS OF NON-LIFE INSURANCE BUSIN 2.4.1 Principle of insurance bu 2.4.2.Characteristic of non-life insurance service CHAPTER III: RESEARCH METHODOLOGY AND SOME PRELIMINARY RESULT 3.1 QUALITATIVE RESEARCH 3.1.1 Design qualitative resear 3.1.2.Research model and scale of measurement 3.2 QUANTITATIVE RESEARCH 3.2.1 Design quantitative resea 3.2.2.Method of data analysis CHAPTER IV: ANALYSIS OF INSURANCE SERVICE QUALITY OF UNITED INSURANCE COMPANY 4.1 BUSINESS OVERVIEW OF UNITE INSURANCE COMP 4.1.1 History 4.1.2 Business overview 4.2 SUMMARY OF QUANTITATIVE RESEARCH RESULT 4.2.1 Sample description 4.2.2.Result of measurement scale testing 4.3 ANALYSIS OF ACTUAL SERVICE QUALITY OF UIC 4.3.1.Reliability of insurance service 4.3.2 4.3.3 4.3.4 4.3.5 4.3.6 Responsiveness 43 Service capacity 47 Customer care 50 Convenient service access 53 Overview assessment of service quality of UIC 56 CHAPTER V: SOLUTIONS AND RECOMMENDATIONS TO IMPROVE SERVICE QUALITY OF UNITED INSURANCE COMPANY 60 5.1 OBJECTIVE AND DIRECTIONS OF DEVELOPMENT OF UIC 60 5.2 SOLUTIONS TO IMPROVE SERVICE QUALITY OF UIC 61 5.2.1 Improving favorable service access for customer 61 5.2.2 Improving responsiveness 64 5.2.3 Improving service capacity 68 5.2.4 Improving customer care 70 5.3 RECOMMENDATION 73 5.3.1 Recommendation for Insurance Supervisory Authority – Ministry of Finance 73 5.3.2 Recommendation for Vietnam Insurance Association (VIA) 73 CONCLUSION 76 APPENDIX 80 LIST OF FIGURE FIGURE 2.1: HIERARCHICAL OF SERVICE QUALITY BY BRAD AND CONIN FIGURE 2.2: A COMPREHENSIVE FRAMEWORK FOR SERVICE QUALITY BY DABHOLKAR AND COAUTHORS 10 FIGURE 2.3: SERVICE QUALITY MODEL BY PARASURAMAN, ZEITHAML, AND BERRY (1985) 12 FIGURE 2.4: DIMENSIONS OF SERVICE QUALITY PERCEIVED BY CUSTOMERS OF PARASURAMAN AND COAUTHORS 14 FIGURE 3.1: RESEARCH MODEL OF INSURANCE SERVICE QUALITY FACTORS 26 FIGURE 4.1: ORGANIZATIONAL STRUCTURE OF UIC 33 FIGURE 5.1: COOPERATION MODEL WITH BANKS 63 FIGURE 5.2: RISK PREVENTION SUPPORT PROCESS 72 LIST OF CHART CHART 4.1: PROPORTION OF PREMIUM REVENUE OF UIC BY INSURANCE CLASS (2012) 35 CHART 4.2: MARKET SHARE OF UIC COMPARISON WITH THE MAIN COMPETITORS 35 CHART 4.3: PREMIUM REVENUE OF UIC COMPARED WITH DIRECT COMPETITORS 36 CHART 4.4: REVENUE GROWTH RATE COMPARISON OF UIC AND AVERAGE OF MAKET 36 CHART 4.5: BUSINESS TYPE OF SURVEYED CUSTOMER 38 CHART 4.6: HUMAN SCALE OF SURVEYED CUSTOMER 39 CHART 4.7: INSURANCE CLASSES 39 CHART 4.8: EVALUATION RATIO OF RELIABILITY OF INSURANCE SERVICE 41 CHART 4.9: EVALUATION RATIO OF RESPONSIVENESS OF UIC 44 CHART 4.10: EVALUATION RATIO OF RESPONSIVENESS OF UIC 48 CHART 4.11: EVALUATION RATIO OF CUSTOMER CARE OF UIC .51 CHART 4.12: EVALUATION RATIO OF CONVENIENT SERVICE ACCESS OF UIC 54 CHART 4.13: EVALUATION RATIO OF SATISFACTION OF UIC INSURANCE SERVICE QUALITY 57 CHART 4.14: SERVICE QUALITY EVALUATION CLASSIFIED BY HUMAN SCALE OF CUSTOMER 57 CHART 4.15: SERVICE QUALITY EVALUATION CLASSIFIED BY INSURANCE CLASS 58 LIST OF TABLE TABLE 4.1: PREMIUM REVENUE OF UIC BY INSURANCE CLASS (2012) 34 TABLE 4.2: SUMMARY CUSTOMER EVALUATION OF RELIABILITY OF UIC 42 TABLE 4.3: SUMMARY CUSTOMER EVALUATION OF RESPONSIVENESS OF UIC .44 TABLE 4.4: SUMMARY CUSTOMER EVALUATION OF SERVICE CAPACITY OF UIC .48 TABLE 4.5: SUMMARY CUSTOMER EVALUATION OF CUSTOMER SERVICE OF UIC 51 TABLE 4.6: SUMMARY CUSTOMER EVALUATION OF CONVENIENT SERVICE ACCESS OF UIC 54 ABBREVIATIONS BVTM Bao Viet- Tokio Marine Insurance Company NKSJ Nipponkoa –Sompo Japan Samsung Vina SVI Insurance Company Vietnam Insurance VIA Association United Insurance Company UIC CHAPTER 1: OVERVIEW OF THESIS 1.1 Introduction After 18 year of market opening, non-life insurance market of Vietnam has dramatically developed; average growth rate of premium for the period of 2006-2012 is about 23.6% In 2012, Premium of non-life insurance market is more than VND 22,316 billion accounted for 0.9% (compared with 0.6% in 2006) At the end of 2012, there are 29 non-life insurers on market including 16 joint-stock companies and 10 foreigner joint venture and foreigner owned companies The dynamic of foreigner companies helped to increase competitiveness of market With increasingly severe competition in market, price-driven competition will not bring sustainable growth for insurance companies Therefore, improving service quality has become the goal of many insurance companies on the market After years working in United Insurance Company, I see that improving service quality is important and priority task of company Therefore, I chose the subject “Improving service quality: the case of United Insurance Company” as my master thesis 1.2 Objective of subject UIC was established in 1997, with 16 years old UIC is one of most mature insurer in Vietnamese insurance market According to business characteristic of company, UIC mainly focus on servicing Japanese client and most of them is longtime client, hence for many years, service quality has not been assessed and negatively affected In result, company has become more dependent on client, passive in client service, slow adoption to change and competitiveness of market UIC has very small market share and especially the growth rate of Vietnamese client is rather low compared with competitors Therefore, company need to find the answer for the question “whether clients are satisfied with service quality of company or not? How much is satisfactory degree?” The objectives of subject are: - Defining a model to measure and evaluate non-life insurance service quality - Measure and evaluate insurance service quality of UIC - Propose solutions and recommendations to improve service quality of UIC 1.3 Scope and methodology of research 1.3.1 Scope of research In this subject, I research assessment of customer about UIC service Data collected is through conducting survey with client in some provinces of in the North of Vietnam Time of survey is in 2013 1.3.2 Method of research Utilized measuring model is based on SERVQUAL model adjusted by particulars of insurance service The process of research is shown as below: Preliminary research: is implemented through qualitative methods with technical discussions in group or duel This research will be used SERVQUAL model to establish preliminary scale of measurement of non-life insurance Formal research: is done by quantitative methods I used a questionnaire to investigate the assessment of client of insurance Service quality of UIC This study aims to adjust and test the draft scale to form official scale about insurance service quality Scale was assessed by Cronbach alpha, EFA factor analysis, multi linear regression After this step, I can explore what are factors of service quality After testing, the scale will be used to analyze actual insurance service quality of UIC through descriptive statistic After this step, I can explore what is the current status of service quality of UIC Based on study results, I propose solutions and recommendations to improve service quality in the near future This process can answer the questions: What solutions should be made to improve insurance service quality of UIC? 1.4 Structure of thesis The thesis includes 05 chapters: Chapter 1: Overview of research subject; Chapter 2: Theoretical basis of service quality; Chapter 3: Research methodology and some preliminary result; Chapter 4: Analysis of the actual service quality of UIC; Chapter 5: The solutions and recommendations to improve the service quality of UIC in; and the conclusion outlined the major findings of the project Component Matrix Implementation commitments Ethics of staff / insurance agent Brand reputation of the insurance company Diversity of insurance products Content of insurance terms Form of insurance contract Information and advises about insurance products Promotions Qualified staff Number of staff and agent network Working experience Behavior of staff Servicing spirit of staff Time of handling request/claim of client Risk prevention support for customer Flexibility of insurance premium Procedures regulated Offices and service network Office facility Extraction Method: Principal Component Analysis a components extracted a 96 Rotated Component Matrix Implementation commitments Ethics of staff / insurance agent Brand reputation of the insurance company Diversity of insurance products Content of insurance terms Form of insurance contract Information and advises about insurance products Promotions Qualified staff Number of staff and agent network Working experience Behavior of staff Servicing spirit of staff Time of handling request/claim of client Risk prevention support for customer Flexibility of insurance premium Procedures regulated Offices and service network Office facility Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in 10 iterations a 97 Component Transformation Matrix Comp onent Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization Component Score Coefficient Matrix Implementation commitments Ethics of staff / insurance agent Brand reputation of the insurance company Diversity of insurance products Content of insurance terms Form of insurance contract Information and advises about insurance products Promotions Qualified staff Number of staff and agent network Working experience Behavior of staff Servicing spirit of staff Time of handling request/claim of client Risk prevention support for customer Flexibility of insurance premium Procedures regulated Offices and service network Office facility Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization Component Scores Component Score Coefficient Matrix Implementation commitments Ethics of staff / insurance agent Brand reputation of the insurance company Diversity of insurance products Content of insurance terms Form of insurance contract Information and advises about insurance products Promotions Qualified staff Number of staff and agent network Working experience Behavior of staff Servicing spirit of staff Time of handling request/claim of client Risk prevention support for customer Flexibility of insurance premium Procedures regulated Offices and service network Office facility Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization Component Scores 99 Appendix 8: MULTI LINEAR REGRESSION RESULT Correlations Satisfaction Pearson degree of service quality Correlation Sig (2tailed) N RELIABILITY Pearson Correlation Sig (2tailed) N REPONSIVENES Pearson S Correlation Sig (2tailed) N CAPACITY Pearson Correlation Sig (2tailed) N CUSTOMER Pearson CARE Correlation Sig (2tailed) N CONVENIENT Pearson ACCESS Correlation Sig (2tailed) N 100 Correlations Satisfaction Pearson degree of service quality Correlation Sig (2tailed) N RELIABILITY Pearson Correlation Sig (2tailed) N REPONSIVENES Pearson S Correlation Sig (2tailed) N CAPACITY Pearson Correlation Sig (2tailed) N CUSTOMER Pearson CARE Correlation Sig (2tailed) N CONVENIENT Pearson ACCESS Correlation Sig (2tailed) N ** Correlation is significant at the 0.01 level (2-tailed) 101 Model Summary Model R a 862 a Predictors: (Constant), CONVENIENT ACCESS, CUSTOMER CARE, CAPACITY, REPONSIVENESS, RELIABILITY Model Regression Residual Total a Predictors: (Constant), CONVENIENT ACCESS, CUSTOMER CARE, CAPACITY, REPONSIVENESS, RELIABILITY b Dependent Variable: Satisfaction degree of service quality Coefficients a Model (Constant) RELIABILITY REPONSIVENESS CAPACITY CUSTOMER CARE CONVENIENT ACCESS a Dependent Variable: Satisfaction degree of service quality 102 103 ... Gronroos opinion of the technical quality (the results of the service) and functional quality (quality of transaction) The third dimension is the physical environment of the service Each of these dimensions... from the preliminary study, from which I build the model of insurance service quality as follow: Reliability of insurance service Responsiveness of insurance company Insurance service quality Service. .. regarding services and the nature of the service; points out the different views about service quality, service quality factors and measurement of service quality, stated the particulars non-life insurance