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 INTRODUCTION 1.2 OBJECTIVE OF SUBJECT 1.3 SCOPE AND METHODOLOGY OF RESEARCH 1.3.1 Scope of research 1.3.2 Method of research 1.4 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 QUALITY 2.2.1 Definition of service quality 2.2.2 Factors of service quality 2.3 SERVICE QUALITY MEASUREMENT 11 2.4 CHARACTERISTICS OF NON-LIFE INSURANCE BUSINESS 15 2.4.1 Principle of insurance business 16 2.4.2 Characteristic of non-life insurance service 17 CHAPTER III: RESEARCH METHODOLOGY AND SOME PRELIMINARY RESULT 21 3.1 QUALITATIVE RESEARCH 21 3.1.1 Design qualitative research 21 3.1.2 Research model and scale of measurement 25 3.2 QUANTITATIVE RESEARCH 27 3.2.1 Design quantitative research 27 3.2.2 Method of data analysis 29 CHAPTER IV: ANALYSIS OF INSURANCE SERVICE QUALITY OF UNITED INSURANCE COMPANY 31 4.1 BUSINESS OVERVIEW OF UNITE INSURANCE COMPANY 31 4.1.1 History 31 4.1.2 Business overview 32 4.2 SUMMARY OF QUANTITATIVE RESEARCH RESULT 37 4.2.1 Sample description 37 4.2.2 Result of measurement scale testing 39 4.3 ANALYSIS OF ACTUAL SERVICE QUALITY OF UIC 41 4.3.1 Reliability of insurance service 41 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 SVI Samsung Vina Insurance Company VIA Vietnam Insurance Association UIC United Insurance Company 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 ... distinctiveness of the service Accordingly, the implementation of the service varies depending on how the service is provided, location of service, targeted customer of service or time of service This... 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 (communication,... 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