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VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS HOANG NGUYEN SOLUTIONS FOR IMPROVING THE COMPETITIVENESS OF POSTS & TEL JOINT STOCK INSURANCE COMPANY Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: Dr Nguyen Thi Phi Nga HANOI - 2012 TABLE OF CONTENTS ACKNOWLEDGEMENT ABSTRACT TÓM TẮT TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES LIST OF DIAGRAM CHAPTER 1: BASIC ARGUMENTS ON COMPETITIVENESS IN NON-LIFE INSURANCE BUSINESS 1.1 Concept and feature of insurance business activity 1.1.1 Concept on insurance business activity 1.1.2 Feature of insurance business activity 1.2 Non-life insurance business activity 1.2.1 Concept on non-life insurance business 1.2.2 Operation content of non-life insurance enterprise 1.2.3 Criteria for evaluating the product’s competitiveness capacity 1.2.4 Necessity to improve competitiveness capacity of product in international economic integration condition 1.3 Overview of non-life insurance market in 2011 1.4 Competitiveness capacity of non-life insurance enterprise 1.4.1 Competitiveness and competitiveness forms 1.4.2 Competitiveness capacity of non-life insurance enterprise 1.4.3 Factors reflecting competitiveness capacity of non-life insurance enterprise 1.4.4 Some factors affecting to competitiveness capacity of non-life insurance enterprise CHAPTER 2: REAL SITUATION OF COMPETITIVENESS CAPACITY OF POSTS & TEL JOINT - STOCK INSURANCE COMPANY (PTI) 2.1 Introduction about Posts & Tel Joint - Stock Insurance Company (PTI) 2.1.1 Introduction about the Company 2.1.2 Apparatus organization of PTI 2.2 Some features on competitiveness situation in non-life insurance market in Vietnam at present 2.2.1 Number of insurance enterprises: 2.2.2 Market share of non-life insurance enterprises 2.2.3 Insurance products to be deployed 2.2.4 Distribution system of non-life insurance enterprises 2.2.5 Financial resources of enterprise Source: Summarized by VNDIRECT 2.3 Real situation on competitiveness capacity of PTI 2.3.1 Financial capacity 2.3.2 Product of PTI 2.3.3 Distribution system 2.3.4 Commercial partner 2.3.5 Human resources 2.3.6 Product price, assessment quality and compensation settlement 2.4 Operation result, position of PTI in the market 2.4.1 Result 2.4.2 Market share of PTI over the years CHAPTER 3: SOME SOLUTIONS AIMED AT IMPROVING COMPETITIVENESS CAPACITY OF PTI NON-LIFE INSURANCE ENTERPRISE 3.1 Some recommendations for the State to improve the competitiveness capacity on non-life insurance enterprises 3.2 Solution for PTI insurance enterprise aimed at improving competitiveness capacity in the market 3.2.1 Constructing and developing the trade name 3.2.2 Developing and improving insurance product quality 3.2.3 Implementing statistic and costing work suitably 3.2.4 Strengthening the advertisement, communication activities: 3.2.5 Expanding distribution channel 3.2.6 Increasing financial potential of the enterprise 3.2.7 Completing apparatus organization and training human resources 3.2.8 Modernizing by application of information technology 3.2.9 Active in improving efficiency of capital investment activity CONCLUSION REFERENCES SOLUTIONS FOR IMPROVING THE COMPETITIVENESS CAPACITY OF POSTS & TEL JOINT STOCK INSURANCE COMPANY (PTI) Hoang Nguyen MBA Candidate 2007-2009 Vietnam National University, Hanoi School of Business Supervisor: Dr Nguyen Thi Phi Nga INTRODUCTION 1.1 Necessity of the thesis Insurance market is considered as promising market that attracks most financial investment co-operation Revenue from non-life premiums increased over the years, and accounted for a large proportion of the total revenue of insurance in the entire market Besides, insurance products are easy to copy The market for non-life insurance is a promised land which the companies are directing towards Therefore, it can be seen that each year the companies entering the non-life insurance market are increasing in number The increasing number of insurance companies will lead to the risk of reducing the market shares of the insurance companies, non-life insurance market of Vietnam will compete more and more severely and violently This matter will require every business need to form a specific business strategy suitable with each specific period, to enhance their capacity in the market, as well as in front of the competitors, to not be “moved” out of the non-life insurance market which is very eventful at present In order to develop stably and gain the expected market share, PTI should strengthen their competitive capacity Within the contend of this thesis, the author propose a number of recommendations in order to increase PTI competitive capacity 1.2 Research aims and objectives The aim of this thesis is to create a competitive plan for PTI with a numbers of recommendations in order to enhance the competitive capacity of PTI in non-life insurance market The ulitmate aim of this thesis is to make PTI become more competitive in term of more efficiency of using finance resource, human resource, brand name exploited and so on In order to achieve that target, there are some objectives that should be reached:  Throughly research current theories of competitive theory including: Non-life insurance activities, competitiveness capacity of non-life insurance company, competitiveness forms and the necessity to improve competitive capacity  Analysis the real situation of competitiveness capacity of PTI and point out the position of the company in the market  Recommendations to PTI aimed at improving competitiveness capacitiy of PTI’s non-life insurance company 1.3 Research questions In order to give recommendations to improve PTI competitiveness capacity, the thesis should finding answers for the following questions:  Why PTI need to improve their competitiveness capacity?  How to improve PTI’s competitiveness capacity?  What are solutions for PTI to improve their competitiveness capacity? 1.4 Research methodology In the thesis, the author adopts statistic and analytical methods to identify the most suitable solution for PTI for improving their effectiveness in administrative and business activities in order to improve competitiveness capacity Both primary and secondary data used in this thesis to analyze current situation of competitiveness capacity of PTI Based on the theories of PTI and the author’s own judment, the author presents the operation result and the position of PTI in the market and gives suggestions to improve PTI’s competitiveness capacity 1.5 Scope of the research The thesis aims to find solutions to improve competitiveness capacity of PIT The thesis focus on:  Study the PTI business result in field of capital, investement activities and the main business activities in non-life insurance  Give suggestions to improve PTI’s competitiveness capacity 1.6 Significant of the research The thesis has both theoretical and realistic significance The thesis provides a review of competitive theories that cover many aspects of business activities including: cost management, human resource administration, finance management and communication The thesis also provides the recommendations that are applicable to the curren competitive activities of PTI CHAPTER 1: BASIC ARGUMENTS ON COMPETITION IN NON-LIFE INSURANCE BUSINESS 1.1 Concept of insurance business activity It can be understood that insurance business is the activity of the insurance company aimed at revenue-earning, thereby insurance company accepts the risk of the insurance buyer on the basis that the buyer pays the premium so that the company pays the insured amount to the beneficiary or compensates the insurance buyer as happening the insured events 1.2 Non-life insurance business activity 1.2.1 Concept on non-life insurance business Non-life insurance is still used as a general concept with the significance containing all operations of damage insurance (property insurance, civil liability insurance) and human insurance operations not belonging to the life insurance (accident insurance, disease and illness insurance…) According to the law on insurance business of Vietnam, the term of non-life insurance is explained as follows: “Non-life insurance is the type of insurance operations for property, civil liability and other insurance operations not belonging to life insurance” 1.2.2Reinsurance business Reinsurance is the operations which the insurer use to transfer a liability part accepted with the person insured for one any many other insurers on the basis of transferring to that person a part of the premium Reinsurance is a very important activity and always goes abreast with the original insurance business; it is considered as the shield for the operation of each insurance company, a form which the insurance company insures for itself after receiving all risks of the customers At the same time, the reinsurance activity also helps the company have more revenue source, thus, this activity is attached special importance Reinsurance business includes the activity of agreeing the reinsurance and activity of transferring the reinsurance 1.2.3 Assessment, compensation and claim to third person Assessment is the activity implemented directly by insurance company or through a company or other assessment agent to implement the reason determination and loss level aimed at serving the compensation settlement and payment of insured amount to customer Compensation or payment of insured amount means the insurance company implements the commitment in the insurance contract to pay the person insured a certain amount of money as the insured event happens Claim to third person is the activity implemented directly by insurance company or through a company or another intermediate agent to require the third person compensating for the loss due to the fault of such third person after the insurance company compensated and accepted right transfer from the person insured 1.2.4 Investment activity Besides the original insurance business activity of the Company, the investment activity also brings a relatively great income source for the company The profit source from the investment activity helps the company improve its financial capacity considerably; therefore, all insurance companies in the world place the investment activity parallel with the insurance business activity, and these two activities have assistant and supplementary relation to each other 1.3 Overview of non-life insurance market in 2011 Non-life insurance market in 2011 attained the revenue of 20,497 billion VNĐ, growing 17.56%, the insurance companies with foreign capital attained the revenue of 2,013 billion Vietnam dongs, growing 55.23% All operations grew in which agriculture insurance increased 193%, credit and financial risk insurance increased 87%, transport goods insurance increased 43%, business damage insurance increased 37%, human heath and accident insurance increased 34% Leading the first is mechanical vehicle attaining 6,134 billion Vietnam dongs, growing13%, property and equipment insurance attained 5,034 billion Vietnam dongs, growing 24%, health insurance attained 3,323 billion Vietnam dongs, growing 34%, ship insurance attained 1,850 billion Vietnam dongs, growing 1%, transport goods insurance attained 1,783 billion Vietnam dongs, growing 43% Leading the first on revenue from original insurance exploitation was Bao Viet with 4,900 billion Vietnam dongs, PVI 4,228 billion Vietnam dongs, Bao Minh 2,140 billion Vietnam dongs, PJICO 1,852 billion Vietnam dongs, PTI 1,095 billion Vietnam dongs The companies grew with high revenue were Samsung Vina 105%, Groupama 93%, Xuan Thanh 79%, PTI 61%, Fubon 53%, Hung Vuong 52% 1.4 Competition capacity of non-life insurance company 1.4.1 Competition definition Most of the countries in the world recognize competition and consider competition as the environment and the driving force of the socio-economic development Therefore, competition can be understood as follows: “Competition is the race, the severe, drastic struggle between opponents in the market in attracting customers, occupying the market, thereby, consuming much goods and gaining high profit” 1.4.2 Competition forms a Competition by product quality To exist and stand stably in the market, the company has to determine that quality is the objective with strategic significance, and it is the basic means to ensure that the social-economic development is in correct direction, solid and attains high efficiency, satisfies the demand of consumers in the market Therefore, each company needs attach special importance to this issue b Competition on product price The competitive strategy by price helps the company protect and increase their market shares, and it is also the barrier preventing the joining of the potential opponents who not comply with the orientation of the Government, and reduces the danger from the products having replacement ability c Competition on guarantee and after sales services As the quality of goods and service products is similar, the selling price is similar; the competitive and winning factor is the quality of after sales service such as: warranty, after sales service Especially, for the companies trading in intangible service product, this matter has greater significance CHAPTER 2: REAL SITUATION OF COMPETITION CAPACITY OF POSTS & TEL JOINT - STOCK INSURANCE COMPANY 2.1 Introduction about Posts & Tel Joint - Stock Insurance Company (PTI) 2.1.1 Introduction about the Company Posts & Tel Joint - Stock Insurance Company (hereinafter referred to as PTI) was issued a certificate of eligibility and conditions of operating the insurance business No 10TC/GCN dated 18/6/1998 by the Ministry of Finance and issued the establishment license No 3633/GP-UP dated 01/08/1998 by the People’s Committee of Hanoi city Posts & Tel Joint - Stock Insurance Company officially went into operation on 01/09/1998 The main activity of PTI is the business on non-life insurance and reinsurance domestically and internationally The company has 07 founding members including Vietnam Post and Telecommunications Corporation (VNPT), Hanoi Construction Corporation (HACC), Vietnam Construction Import & Export Joint Stock Corporation (VINACONEX); Vietnam National Reinsurance Joint Stock Corporation (VINARE), Vietnam International Joint Stock Commercial Bank (VIBank), Bao Minh Joint Stock Corporation (BAOMINH) Business lines:  Original insurance business: Health insurance and human accident insurance; Techniques asset insurance; Insurance for cargo transported by road, seaway, waterway, railway and airway; Joint liability insurance; Mechanical vehicle insurance; Fire and explosion insurance; Business damage insurance; Satellite insurance; Aviation insurance; Ship insurance  Reinsurance business: Agreeing and transferring reinsurance for all non-life insurance operations  Loss assessment: Assessing, investigating, calculating, distributing loss, loss assessment agent, claim third person to compensate  Implementing the investment activity in the following fields: Buying government bond; Buying share, company bond; Trading in real estate; Contributing capital into other companies; Lending in accordance with the regulations of credit organization law; Depositing money at credit organizations 2.2 Real situation on competition capacity of PTI 2.2.1 Financial capacity 2.2.1.1 Capital ability: Posts & Tel Joint - Stock Insurance Company was incorporated in 1998 with the list of shareholders and capital contribution level as follows: Table 6: List of shareholder of PTI (Unit: Million VND) 70,000 Charter capital I Legal shareholder 48,300 Vietnam Posts and Telecommunications Group (VNPT) 28,700 Bao Minh Joint Stock Corporation 7,000 Vietnam National Reinsurance Joint Stock Corporation - Vinare 5,600 Vietnam International Joint Stock Commercial Bank - VIB 2,800 Hanoi Construction Corporation Vietnam Construction Import & Export Joint Stock 1,400 1,400 Corporation - Vinaconex Posts and Communication Trading JSC., - Cokyvina 1,400 II Natural shareholder 21,700 Source: http://pti.com.vn Over the past time, the insurance companies continuously increased their charter capital and owner’s capital resources; the purpose is to increase the financial capacity, business capacity of the Company Over the past time, charter capital and owner’s capital resources of PTI increased continuously The charter capital of PTI in 2002 was 70 billion VND, to 2007, it increased to 150 billion VND, in 2008, it was 150 billion VND To 2010, it reached 450 billion VND Although the capital level of PTI increased relatively, but when comparing with some other non-life insurance companies such as Bao Viet Bao Minh, Pjico, PTI at present has capital level belonging to average type of the market 2.2.1.2 Reservation Insurance has reverse business cycle; that means as the contract is signed, the customers will have to pay to the company an amount of money namely premium (it is called as price of insurance product), and insurance company will undertake to pay or compensate them as the insured event occurs as agreed in the contract Like this, insurance company will always have in their hands a very great idle and relatively stable capital resource, a big part will be appropriated to become a fund called operations provident fund and the company is allowed to use this capital resource to invest for earnings Table 7: Total provident fund of PTI (period 2009 - 2011) (Unit: billion VND) Unit: billion VND Content 31/12/2009 31/12/2010 31/12/2011 Provision for compensation 74,513 107,686 245,767 Provision fee not enjoyed 131,168 182,270 132,127 Provision for major fluctuation 114,938 126,166 130,227 provident 320,619 416,122 508,121 Total operations Source: fundConsolidated auditing statement in 2010 and consolidated financial statement in 2011 The reservation as above supplemented into the annual provident fund of PTI with nearly 25 billion VND To 2011, the operations provident fund of the Company reached above 508 billion VND, thereby, ensured the high safety in the activity of insurance business and created big idle capital resources for the financial investment activity of PTI This is the important financial factor creating favorable condition for PTI in the next years 2.2.2 Product of PTI After 14 years of operation, at present, PTI had nearly 70 non-life insurance products being divided into main operations group, namely: Assets - Technique Insurance, Cargo insurance and non-marine insurance Among the insurance operations deployed by PTI, the operations of assets techniques insurance are always the advantage of the Company; the following is the revenue structure under the operations of PTI over some years: Table 8: Revenue structure of PTI under operations (period of 2007- 2011) 2007 Revenue Operations (bil VND) Assets 2008 Pro (%) Revenue (bil VND) 2009 Pro (%) Revenue (bil VND) 2010 Pro (%) Revenue (bil VND) 2011 Pro (%) Revenue (bil VND) Pro (%) - Technique 112 37.28 148 32.52 172 29.91 169 19.44 220 17.37 25 8.37 8.57 7.82 63 7.25 4.97 156 51.66 241 52.96 360 62.6 687 79.05 970 76.61 2.69 5.93 6.6 50 5.75 5.52 301 100.0 455 Marine 39 45 63 Non-marine Agreeing reinsurance 27 38 70 Total 100.0 575 100.0 869 100.0 1266 Source: Posts & Tel Joint - Stock Insurance Company 2.2.3 Distribution system The head office of the Company is located in Hanoi; it is the place with crowded population, means of transport, companies; therefore, there will be many advantages in the exploitation and management In 2011, the original insurance revenue of the Company was 1266 billion VND, in which Hanoi branch accounted for 24%, Ho Chi Minh city accounted for 33% Da Nang accounted for 6%, Hai Phong accounted for 5%, Can Tho accounted for 4%, Dak Lak accounted for5% Like this, the biggest 10 100.0 revenue belonged to big cities namely Hanoi and Ho Chi Minh city which accounted for 50% of the revenue of the company At present, PTI ranks the fourth on branch network with 22 directly under units spreading over the country At present, the Company is using the spacious agent and general agent system to support the sales activity The Company constructed the system of 360 general agents and 3900 agents all over the country 2.2.4 Commercial partner PTI was founded with big shareholders, in which the shareholder with the biggest equity capital is Vietnam Post and Telecommunications Corporation -VNPT Group with the initial equity capital of 28.7 billion VND, and as at 31/12/2011, the equity capital of the Groups increased to 162.72 billion VND (accounting 36.16% of the charter capital of PTI insurance company) 2.2.5 Human resources The following is the labor source structure of PTI insurance company (in Hanoi) under the knowledge level: Table 10: Labor structure under knowledge level Type of labor Quantity Rate % Postgraduate 10 1.82 Graduate 395 71.82 Junior college 98 17.82 Unskilled laborers 47 8.54 Total 550 100 Source: Post & Tel Joint - Stock Insurance Company) 2.2.6 Product price, assessment quality and compensation settlement PTI did not use price competitive strategy, which means that price of insurance products of the company is not lower than that of other non-life insurance companies in the market Product quality of insurance service is presented through the stage of assessment, compensation of loss of each insurance company At present, PTI is in shortage of officers working at loss assessment stage, especially big loss with complicated 11 nature; therefore the time for settling the compensation is slow, it affects to service product quality of the Company 2.3 Operation result, position of PTI in the market 2.3.1 Result Operation result and position of PTI insurance company is specific expression of competition capacity of the company 2.3.1.1 Original insurance revenue Original premium revenue of the Company in the following years increased higher than the previous years, especially in 2008 with the highest growth rate of 51.16% Original premium revenue in 2007 increased but very little, with the lowest increase level (9.21%) Total original premium revenue stopped short in 2009, and in 2010, it caught up with absolute increase level of 120 billion VND, attaining the growth rate approximately 10%, and then reaching the figure 397 billion in 2011 Premium revenue of each insurance operations increased but not evenly The premium revenue of strong point product being Assets - Technique group, although it accounted for great proportion, the increase volume was inconsiderable In some recent years, the premium revenue of the non-marine insurance operations increased greatly and exceeded the revenue of strong point product of the company 2.3.1.2 Result of reinsurance agreeing activity Table 13: Revenue from agreeing reinsurance over the years (period 2007-2011) Target 2007 2008 2009 2010 2011 27 38 50 70 21 11 12 20 Uninterrupted increase speed (%) 66 262 40.7 31.6 40 Proportion in premium revenue (%) 2.65 5.93 6.6 5.75 5.52 Premium revenue from agreeing reinsurance (Billion VND) Uninterrupted increase volume (billion VND) Source: Posts & Tel Joint - Stock Insurance Company 12 Reinsurance revenue increased evenly over the years; however, the increase speed was not high and was maintained at the level from 30-40%/year Among the product which PTI agrees the reinsurance, the main products were human insurance and fire insurance, in which reinsurance revenue from fire insurance product always accounted for about 50% of the total reinsurance agreement revenue The revenue proportion of reinsurance agreement in total premium revenue of PTI did not account for high rate and it reduced much in some recent years In 2011, most of the insurance operations which PTI agreed the reinsurance reduced much in comparison to 2010 Starting from 2010, PTI did not agree the reinsurance operations for mechanical vehicle… Therefore, revenue proportion from agreeing reinsurance in total premium revenue reduced from 4.11% in 2010 to 2.69% in 2011 2.3.1.3 Investment activity To maintain the high liquidity and develop the insurance services through network system of the banks, the investment activity of the company is mainly focused on the deposit at credit organizations To the end of 2011, total amount of money which the Company used for investment activity was bout 1168 billion VND, real estate investment was 437 billion VND, and capital contribution into other companies was 126 billion VND Table 14: Total investment value of PTI over the years Unit: Billion VND 2007 Total investment 217 2008 2009 2010 2011 615 667 866 1168 53 61 79 118 value Profit from 29 investment Source: Financial Statement of PTI 2011 Over the past years, revenue from investment activity of Posts & Tel Joint - Stock Insurance Company continuously increased, it contributed considerably into total revenue of the entire company The profit from this activity always accounts for 13 extremely high proportion in total revenue, helps the company have more income sources to cover the costs, salary payment, bonus for personnel… 2.3.2 Market share of PTI over the years Table 15: Market share of PTI in Vietnam insurance market (period 2007 - 2011) Year Market share (%) 2007 4.1 2008 3.9 2009 2010 2011 3.5 3.3 3.6 Source: Vietnam Insurance Market In the period 2009 - 2011, the market share of PTI increased but it was inconsiderable In the two recent years, as our country started to enter the integration, the market share of the company had tendency of decreasing compared with 2007 In general, over the past years, PTI non-life insurance company always relatively small proportion of revenue in the market, it was approximately 4% Although the market share of PTI ranked the 5th in the non-life insurance market after Bao Viet Vietnam, PVi, Bao Minh and Pjico, the distance for these companies was very great; the market share of PTI in the market was very modest, it was because in the past years, PTI focuses too much on providing the insurance services in Posts and Telecommunications sector and some other shareholders, the exploitation outside the sector was very modest Therefore, after 10 years of operation, the market share of PTI does not change much and it does not actually create the prestige in the market 14 CHAPTER 3: SOME SOLUTIONS AIMED AT IMPROVING COMPETITION CAPACITY OF PTI NON-LIFE INSURANCE COMPANY 3.1 Some recommendations for the State to improve the competition capacity on non-life insurance companies - Completing the legal framework: In the context of the market with many changes, the competition is more and more severe; the State needs to consider carefully in order to have legal amendments suitable with the development objectives and orientation of the market, the legal documents are required to create the equality among the companies so that the competition is healthy -The State also needs to complete more the legal system by simplifying the administrative procedures in general and procedures in insurance business in particular such as business registration, license issuance… to facilitate the insurance companies -Implementing the close checking, supervision of the insurance business activities in the market: The State needs to check closely the legal implementation of the insurance Companies, apart from the promulgation of general regulations on operations provision and liquidity, the State also needs to supervise the execution of these regulations of the companies It is necessary to construct the financial target system and way of determining the financial targets to facilitate for the checking to be the closest and the most accurate Thereby, it is possible to discover soon the cases having danger of default in order to timely intervene and adjust -The State implements in accordance with the signed commitments as joining the World Trade Organization, and steps up the cooperation, exchange relations with international organizations, thereby take full advantage of technological support, exchange experience and information, and facilitate the personnel to go for training on insurance in advanced countries 3.2 Solution for PTI insurance company aimed at improving competition capacity in the market 3.2.1 Constructing and developing the trade name 15 To improve the image of the company, first, the company must care about improving the business efficiency with all stages: product supply, contract exploitation and after exploitation… The company supplies for customers with best products and best serving attitude, attaches special importance to the stage of customer care, guides the customers to select suitable products, answers every question of the customers after signing the contract Also, the company regularly cares, creates good relation with customers, maybe through phone calls or sending postcard on the occasion of festival or New Year, and guides the customers about the best way to prevent the risk The company must regularly renovate in the stage of claim and compensation settlement, this stage is often the big care for customers, the settlement which is quick and easy to understand will be the great reason for customers to renew the contract with the Company To construct the best image of the Company in the eyes of customers, the company must care about the construction of staff working professionally The staff in the Company should have separate uniform; besides, it is necessary to construct the working culture in the company, working strictly and the most whole-hearted serving attitude to customers In addition, marketing activities are also a big strategy of the company to help the company popularize its name Nowadays, information technology is developed, so this work is more significant to an company to help the image as well as product of the company come nearer to the inhabitants 3.2.2 Developing and improving insurance product quality To improve and consolidate its position in the market, each company needs to regularly care and renovate its products Currently, PTI has nearly 50 non-life insurance products, first of all, the company needs to complete the existing products in the market, and then continue to develop additionally new products on the basis of the requirement of the market That means the company needs to study carefully the demand on product of the market, then it designs suitable products, it should not base on its subjective opinions 16 PTI also needs to attach special importance to its strong point which is technique insurance to exploit the most absolutely Besides, the company should have development direction for products having big potential such as human insurance or fire insurance - compulsory insurance operations, therefore, the revenue may be very high; PTI must grasp this opportunity 3.2.3 Implementing statistic and costing work suitably Premium is considered as the price of insurance product; therefore, the costing is also very important, affects to decision of buying goods of customer If the fee level is too high, it cannot attract the customer in buying insurance product, and if it is low, the company has danger of falling into default situation Therefore, to implement well the reasonable costing, the insurance Companies in general need to total up all related data: participation situation, number of loss cases, life and death situation… and parameters on economic situation As costing, it is necessary to care about the parameters on interest rate, inflation… in order to have reasonable adjustment At present, the costing work of PTI is very passive; thus, the Company needs to invite good expert to give professional advice to the Company on costing the most reasonably and accurately 3.2.4 Strengthening the advertisement, communication activities: At present, the information technology is more and more developed; the mass media is more and more diversified If the insurance Companies in general and PTI in particular wants to sell many products, it is necessary to introduce them to many people The most effective way may be advertisement, it is possible to stick poster, pamphlet… Deploying PR activities to create “two-way information” relation, to have feedback information from the customer, thereby, the company may have suitable changes and strategies, meeting better the demand of customer 3.2.5 Expanding distribution channel VNPT is a big shareholder of Posts & Tel Joint - Stock Insurance Company; therefore, PTI should expand and develop the product distribution channel through post office network of VNPT The post office network of VNPT is very big; it covers all provinces and cities of the entire country, the product distribution through post 17 offices will help PTI be able to deploy many contracts in many different regions, and exploitation cost will be saved This issue has great significance for the business strategy of the insurance company, thus PTI needs attach more importance to this distribution form The Company needs regularly open the training programs for agents and sales staff so that they will operate professionally and have more responsibilities At the same times, it is necessary to construct the complementation and reward regime to encourage the agent to work more effectively 3.2.6 Increasing financial potential of the company To improve the financial potential, first of all, the company needs increasing its charter capital resources; the initial objective is to reach the legal capital level stipulated by the State Posts and Tel Joint - Stock Insurance Company may take some measures aimed at increasing its capital by: -Calling the additional equity capital from shareholders: PTI was incorporated from big shareholders; therefore their financial potential is rather high, in order to increase the capital resources of the Company, first of all, it should call the equity capital from this shareholders -Issuing shares to the market to mobilize the capital: this capital resource is gathered from small idle capital resources of resident levels to form a big capital resource for the company, help the company improve its financial ability This mode of capital mobilization proves to be a very effective mode which many companies are using at present -The company can also increase its capital resources by supplementing from the profit source of the company: monthly, the company will have interest accounts from business operation of the company In stead of being divided this profit source into shareholders, the Company will retain (maybe a big part) to supplement into the capital resources of the company This profit source also contributes to increasing the financial potential for company -In addition, the Company can pay dividend by share: instead of paying in cash, the Company can issue some shares to pay dividend, and the amount of money which 18 should have paid for dividend will be retained to supplement into the capital resources of the company 3.2.7 Completing apparatus organization and training human resources -Company needs complete the organizational apparatus: Management apparatus of the company needs organizing simply but most fully, ensuring the clearance on rights and obligations of divisions, and it is also needed to have relation between function divisions -Attaching special importance to the training of human resources: PTI needs to have training programs in concentration; however, training must be in accordance with different directions for each object For the management division, training the knowledge on management activity, creation excitation, independent working at work For the exploitation division, it is necessary to train on professional knowledge and skills on behaving, replying… Besides, the Company should also appoint some staff to go for studying abroad to improve the career skill -Regularly monitoring closely the organizational apparatus to learn about the situation of human resource shortage and surplus of each division for recruitment 3.2.8 Modernizing by application of information technology -Application in management stage: +It is necessary to build internal website to provide information to divisions in the Company and create the attachment relation among the divisions in the Company This matter also helps the information to be transmitted quickly and accurately but does not take much time and effort +The management of human resources and document in computer is very convenient; the user can look up and search necessary information the most quickly +It is possible to use some useful computer software such as: modern informatics software for the statistics of risk and loss in the insurance operations +The Company should also use the application of working staff management at the office: it is automatic installation system requiring enter and exit card, thus it is possible to manage the staff entering and existing the office, and guarantee the safety for assets of the Company 19 3.2.9 Active in improving efficiency of capital investment activity - The company needs to consider which branch is strong enough and has sufficient capacity can be authorized, delivered a certain capital amount so that branch will implement the profitable investment -The company needs construct reasonable portfolio: The capital resources the company uses for investment activity are very big; therefore, it is necessary to study carefully the investment form so that it ensures the safety and has high profit rate -Constructing the risk evaluation program of the investment project: Before implementing the investment, the Company should have programs on evaluating the risk level of the project strictly and carefully, thereby have strict decision on whether investing or not, if investing, how much the capital amount is, so that it is possible to avoid the loss in investment activity of the company -Professional training for personnel of Department of Planning - Investment: professional knowledge of officer implementing the investment decides the efficiency of the investment activity; therefore, the Company needs proficient officers having a thorough knowledge of investment, regulations, international habits on investment activity… -The Company also needs monitor closely the investment situation in the market in order to have suitable adjustment in each period, for example the fluctuations on interest rate or inflation also make the company change its investment strategy in order to help the company select the most reasonable investment forms in each period to increase the efficiency of the investment activity 20 CONCLUSION Over the past years, Posts & Tel Joint - Stock Insurance Company achieved much success in the field of non-life insurance Currently, PTI ranks the 5th position in the market in the insurance field being traded, apart from promoting the strong point being technique insurance operations (always accounting for great proportion in total revenue of the market), PTI insurance company also developed some other insurance operations and gained very high revenue level However, PTI insurance company has not actually created the belief from the customer; many inhabitants still feel new as hearing about the name of this company Furthermore, in the background of our country which is integrating strongly into the market, there are many insurance companies joining in non-life insurance market; the danger of being narrowing the market share is possible to happen As a result, the improvement of its competitiveness in the market is an object which the company needs to direct towards To improve its competitiveness in the market, especially in the integration period at present, PTI needs to form a specific business strategy Over the past time, the company implemented some measures to improve its competition capacity in the insurance market such as: increasing the financial potential, completing the organization of management apparatus, improving the quality of service product, expanding, diversifying the distribution channel… However, the efficiency is not high As a result, in the next time, PTI needs to attach more importance to its business strategy in order to have suitable competition strategy, affirm its position and image and stand steady in insurance market of Vietnam which is extremely eventful at present 21 REFERENCES Nguyen Van Dinh, Insurance economics textbook, National Economics University Nguyen Van Dinh, Insurance Business Administration textbook, National Economics University Vietnam Insurance Association 2010, 2011 Insurance Review in 2010 and 2011 Insurance business law David Bland, Principle and practice insurance Financial Statements of PTI in 2009, 2010, 2011 Annual report of PTI in 2009, 2010, 2011 Websites: http://Baohiemvn.net http://pti.com.vn 22 ... feature of insurance business activity 1.1.1 Concept on insurance business activity 1.1.2 Feature of insurance business activity 1.2 Non-life insurance business activity 1.2.1 Concept on non-life insurance... capacity 1.2.4 Necessity to improve competitiveness capacity of product in international economic integration condition 1.3 Overview of non-life insurance market in 2011 1.4 Competitiveness capacity... competitiveness capacity of non-life insurance company, competitiveness forms and the necessity to improve competitive capacity  Analysis the real situation of competitiveness capacity of PTI and point