Evaluating customer satisfaction with motor vehicle insurance services in hung vuong assurance corporation

The specific objectives of the study include the examination of customer expectation, assessment of customer satisfaction levels, assessment of service quality impact on satisfaction, ev

IN HUNG VUONG ASSURANCE CORPORATION

ADVISOR’S NAME & TITLE : ASSOC.PROF.DR PHAN DINH NGUYEN

December, 2015

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Advisor’s assessment

Advisor’s signature

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Declaration

I hereby declare that this submission is my own work towards the MBA and that, to the best of my knowledge, it contains no material previously published by another person nor material which has been accepted for the award

of any other degree of the University, except where due acknowledgment has been made in the text

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ABSTRACT

This is a descriptive study that assessed the expectations of customers of their insurers and the level of satisfaction that their insurers have been able to provide them The general objective of the study was to examine customer satisfaction levels among clients’ of insurance companies and the strategies companies have in place to achieve customer satisfaction

The specific objectives of the study include the examination of customer expectation, assessment of customer satisfaction levels, assessment of service quality impact on satisfaction, evaluation of insurance companies’ customer satisfaction strategies and identification of challenges confronting insurance companies in their bid to satisfy their customers

The study showed that customers’ expectations have not been adequately met Customers expect a high level of service delivery from insurance companies The challenges of internal bottlenecks and inadequate resources have been identified by insurance companies as accounting for their inability to deliver the kind of service that will satisfy their customers

Recommendation offered by the study is that insurance companies should aim at building durable teams Various units and departments of the organizations should work as a team with a focus to satisfy customers Companies should automate their processes to shorten the time that clients spend trying to purchase insurance or make claims

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ACKNOWLEDGEMENTS

At the first of my thesis, I would like to thank all those people who made this thesis possible and an unforgettable experience for my studying

Foremost, I would like to express my sincere gratitude to my supervisor,

Dr Nguyen Phan, for the continuous support of my study, for her patience, motivation, enthusiasm, and immense knowledge Her guidance helped me in all the time of research and writing of this thesis

Besides my supervisor, I would like to thank Hung Vuong Assurance Corporation for their encouragement, and their insightful comments Moreover,

I also wish to acknowledge customers and respondents in who filled out the questionnaire of this study These findings made the research completely and reliable

Last but not the least; I also wish thank all those people who spent through their time and generous support made this thesis project a dream come true Grateful thanks to them who have encouraged me, not only within this dissertation but my entire academic life as well

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Contents

ABBREVIATION 9

LIST OF FIGURES 10

LIST OF TABLES 11

CHAPTER ONE 12

INTRODUCTION 12

1.1 Background of the study 12

1.2 Research Objectives 13

1.2.1 General Objective 13

1.2.2 Specific Objectives 14

1.3 Research questions 14

1.4 Scope of the study 14

1.5 Implications of the study 15

LITERATURE REVIEW 16

2.1 Overview of the Insurance Industry in Vietnam 16

2.2 Definition of relevant concepts 18

2.2.1 Customer 18

2.2.2 Insurance 18

2.2.3 Customer expectations 19

2.3 Assessment of Customer Satisfaction Levels 19

2.4 Customer satisfaction and service quality 20

2.4.1 Definition of Customer Satisfaction 22

2.4.2 Definition of Service Quality 22

2.4.3 Relationship between service quality and customer satisfaction 24

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2.5 Service Quality Models 25

2.6 Customer satisfaction challenges 28

2.7 Conceptual framework 30

2.8 Elements of the service quality 31

2.8.1 Tangibles 32

2.8.2 Service reliability 32

2.8.3 Responsiveness 32

2.8.4 Assurance 32

2.8.5 Empathy 33

CHAPTER THREE 34

RESEARCH METHODOLOGY 34

3.1 The Study Area 34

3.2 Overview about Insurance 36

3.3 Research process 39

3.4 Research model and hypotheses 41

3.5 Data sources 42

3.5.1 Questionnaire Design 42

3.5.2 Sampling Method 43

3.5.3 Sample and Sample Size 43

3.6 Research Method 44

3.7 Data Processing and Analysis 45

CHAPTER FOUR 46

DATA ANALYSIS AND RESULTS 46

4.1 Sample Demographic 46

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4.2 Reliability Analysis 48

4.3 Exploratory Factor Analysis 50

4.4 Descriptive Analysis 57

4.4.1 Tangibles 57

4.4.2 Reliability 57

4.4.3 Responsiveness 58

4.4.4 Assurance 59

4.4.5 Empathy 60

4.5 Correlation Analysis 60

4.6 Multiple Regression Analysis 62

CHAPTER V 66

CONCLUSION AND RECOMMENDATIONS 66

5.1 Main Findings 66

5.2 Recommendations 67

5.2.1 Improve satisfaction through reliability of service provider 67

5.2.2 Improve satisfaction through Responsiveness of service provider 68

5.2.3 Improve satisfaction through Assurance of service provider 69

5.2.4 Improve satisfaction through Tangibles of service provider 70

5.2.5 Improve satisfaction through Empathy of service provider 70

5.3 Limitations and Further Research 70

APPENDICES 74

APPENDIX 1: QUESTIONNAIRE 74

APPENDIX 2: RELIABILITY ANALYSIS 78

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ABBREVIATION

GEN The general satisfaction with service

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LIST OF FIGURES

Figure 1: Model of e-service quality (Santos, 2003) 26

Figure 2 - Model of perceived quality and satisfaction (Spreng and Mackoy, 1996)27 Figure 3 - Determinants of Service quality perceived by customer (Parasuraman et al., 1990) 28

Figure 4 : The relationship between service quality and customer satisfaction 31

Figure 5: BHV’s operating structure 35

Figure 6 : Research process in flow chart 39

Figure 7 : Research model 41

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LIST OF TABLES

Table 1 : Customer Satisfaction Scale 20

Table 2 - Customer characteristics 47

Table 3 - Reliability Analysis of each factor 48

Table 4 - KMO and Bartlett's Test 51

Table 5 - Total Variance Explained 52

Table 6 - Rotated Component Matrixa 54

Table 7 - KMO and Bartlett's Test 55

Table 8 - Total Variance Explained 56

Table 9 - Component Matrixa 56

Table 10 - Descriptive Statistics of Tangibles 57

Table 11 - Descriptive Statistics of Reliability 58

Table 12 - Descriptive Statistics of Responsiveness 59

Table 13 - Descriptive Statistics of Assurance 59

Table 14 - Descriptive Statistics of Empathy 60

Table 15 - Correlations 61

Table 16 - Model Summary 63

Table 17 - ANOVAa 64

Table 18 - Coefficientsa 64

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CHAPTER ONE INTRODUCTION

1.1 Background of the study

Customer satisfaction is of utmost importance for any product or service provider In today’s age, consumers have become more demanding and are well-aware of various facts as compared to before Consumers want both quality and quantity oriented products and services Many organizations target customer satisfaction to stay in business and more importantly attain a competitive edge over their competitors For this purpose, exceptional customer services results not only in customer retention but also attracts other prospective customers

Customer satisfaction arising from customer service is a business priority today and is vital to future growth and success (Smith, 1991) According to Hofstee (2006), the importance of customer satisfaction in the insurance industry includes: survival of businesses in a competitive environment, meeting the ever-increasing demands made by the customers, contributing to the robust growth of the businesses which in turn contributes to the GDP (Gross Domestic Product) of the economy, and increased competitiveness Customer service is dependent on three things: customer-friendly policies set by the organization's executives, training offered to the staff, and the attitude of the staff about their own organization as generated by the way their company treats them (Smith, 1994) Good customer service is the lifeblood of any business A company can offer promotions and slash prices

to bring in as many new customers as it wants, but unless it can get some of those customers to come back, the business would not be profitable for long

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Customer satisfaction is perhaps more crucial in the service sector and more so in the insurance industry where the insurer does not offer any tangible item but just a promise

Customer satisfaction is a key and valued outcome of good marketing practice According to Drucker (1954), the principal purpose of a business is

to create satisfied customers Winning and retaining satisfied customers has immense benefits Increasing customer satisfaction has been found to lead to higher future profitability, lower costs related to non-defective goods and services, increased buyer willingness to pay premium prices, provide referrals, and use more of the product, and higher levels of customer retention and loyalty

In view of the increasing competition, this research attempts to make an assessment of customer satisfaction in one selected insurance companies and help understand the dimensions of service quality which assist in ensuring maximum customer satisfaction

1.2 Research Objectives

1.2.1 General Objective

In recent years when competitiveness is increasing, Hung Vuong’s performance has faced many problems: decrease in market share, revenue growth rate is not high Therefore, today whether customer satisfy with Hung Vuong’s quality service or not and the degree of that satisfaction are the problems and need solutions through which Company can have appropriate reactions

The General objective of the study is to examine customer expectations and satisfaction levels among customers thereby give solutions for improving service quality and efficiency for Hung Vuong Assurance Corporation (BHV)

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1.2.2 Specific Objectives

This study has the following specific objectives:

(1) The system of theoretical basis and practical customer satisfaction for insurance services

(2) Assess the level of customer satisfaction for motor vehicles insurance services of BHV, measure the degree of influence of the factors to customer satisfaction for motor vehicles insurance services of BHV

(3) Proposed solutions to enhance customer satisfaction with motor vehicles insurance services of BHV

1.3 Research questions

The main research question in this study is defined as follows:

(1) What is the satisfaction of customers, methods of assessment of customer satisfaction with the quality of insurance services?

(2) The situation assessment of the quality of customer service in motor vehicle insurance of BHV? What factors affect customer satisfaction for motor vehicle insurance service of BHV?

(3) How to improve customer satisfaction for service quality of motor vehicles insurance of BHV?

1.4 Scope of the study

Study subjects were identified as: customer satisfaction for service motor vehicle insurance in BHV

Scope of the study: The thesis studies the satisfaction of customers used the services of motor vehicle insurance of BHV from 6 months and older Because of these customers have enough time to feel the quality of service of BHV and their assessments will be more accurate than new customers to join Also, due to the time, the thesis focuses on assessing the level of

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customer satisfaction for the quality of motor vehicles insurance services of BHV

1.5 Implications of the study

By researching about the service in Hung Vuong Assurance, this study can investigate factors significantly affecting on the service offered to customers in terms of quality dimension to enable the company to develop strategies to improve the quality of service delivery This will in turn enhance Hung Vuong Company’s competitive position in the insurance industry and ensure survival of the company, especially in this period of extreme competition Investigating what customers’ awareness and thinking about the services offering, Hung Vuong can redesign, modify or revise the products providing to its users

Doing this Hung Vuong can bring the satisfaction to the customers and make them stay with company while attracting new ones Nowadays customers have more chances approaching many information so becoming quality conscious, they will compare the offerings and then choose what they perceive the better quality services Therefore, it is necessary to conduct this study to find out the problems in service delivery and then enhance customer satisfaction

The findings of this study can help the managers in other Insurance Companies operating in Ho Chi Minh City in general catching the main dimensions affecting on Insurance service quality Bringing about that they can conduct other researches about the awareness of customers in the service quality of the services they provided and find out solutions for better offering to customers

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CHAPTER TWO LITERATURE REVIEW

In order to have a fair idea on the issues pertaining to customer satisfaction in the ever changing business environment, to identify the expectations of customers of their insurers and the extent to which insurance companies are responding to these expectations, there is need to review existing relevant literature and models

2.1 Overview of the Insurance Industry in Vietnam

The insurance industry provides protection against financial losses resulting from a variety of perils By purchasing insurance policies, individuals and businesses can receive reimbursement for accidental losses Vietnam started liberalising its insurance market by allowing foreign insurers to participate in the domestic market almost 20 years ago Since then, its insurance market has grown exponentially Before the 1990s, Vietnam’s insurance market was dominated by state-owned insurance enterprises As at the end of 2014, there were a total of 30 non-life players from the state and the private sector, the latter including both domestic and foreign-invested companies

According to the figures in Vietnam’s Insurance Market report issued by the Ministry of Finance (MOF) annually, insurance business revenue increased by an average annualised rate of 13% to 15% a year Growth is likely to continue for the years to come

Non-life insurance products include:

(i) Property and damage insurance,

(ii) Insurance for goods in transit by road, sea, waterway, rail and air, (iii) Aviation insurance,

(iv) Motor vehicle insurance,

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(v) Fire and explosion insurance,

(vi) Marine hull insurance and ship-owners’ civil liability insurance, (vii) Liability insurance,

(viii) Credit and financial risks insurance,

(ix) Business loss insurance, and

(x) Agriculture insurance

Unlike life insurance products, the rules, terms and premium scales of non-life insurance products do not have to be approved by the MOF before they may be sold However, the MOF may request an insurer to suspend selling certain non-life insurance products where the MOF considers that the rules, terms and premium scales of such products fail to ensure the financial safety of the insurer and may affect the rights of policyholders In such case, the rules, terms and premium scales of the insurance products must be amended, and the amendments must be approved by the MOF before the insurer may resume selling them

Certain non-life insurance products are compulsory under Vietnamese laws, and for which the MOF sets the terms and premium scales and minimum sum insured Those products are:

(a) Civil liability insurance for motor vehicle owners

(b) Civil liability insurance for aviation carriers to the passengers

(c) Professional liability insurance for providing legal services

(d) Professional liability insurance for insurance brokers

(e) Fire and explosion insurance

Customers in human services are commonly referred to as service users, consumers or clients and they can be individuals or groups (Fornell et al, 1992) An organization with a strong customer satisfaction culture places the customer at the centre of service design, planning and service delivery (Healy, 1999) Customer centric organizations will determine the customers’ expectations when they plan, listen to the customer as they design, focus on the delivery of customer satisfaction activities, value customer feedback when they measure performance (Ohmae, 1982)

2.2.2 Insurance

Agreeing to the terms of an insurance policy create a contract between the insured and the insurer In exchange for premium payments from the insured, the insurer agrees to pay the policyholder compensation upon the occurrence of a specific event (Gart, 1990)

Insurance is a pooling of risks It is based on the premise that whereas many people will pay premiums to the insurance company, probably only a few will make claims Part of the payment of the many is used to pay compensation to the few who suffer losses (Troxel et al, 1983) Conceptually, insurance is a devise whereby many individuals facing the same risk form a pool into which each individual contributes premiums, and out of which the few who actually suffer unforeseen and unexpected losses are compensated

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2.2.3 Customer expectations

Customers have some expectations of their insurers That is the level of services that they expect their insurers to deliver Understanding customer expectations is an important and essential element in service delivery Generally, customers of insurance companies expect to be taken serious, receive prompt and reliable information, simplified and short processes, prompt payment of insurance claims, empathy and respect, honesty and dedicated attention, full disclosure of policy terms and conditions at the point of sales, quick and reliable feedback

2.3 Assessment of Customer Satisfaction Levels

Organizations need to retain existing customers while targeting prospective customers Measuring customer satisfaction provides an indicator of how successful the organization is at providing products and/or services to the market place Customer satisfaction is measured at the individual level, but it is almost always reported at an aggregate level It can

be, and often is measured along various dimensions (Gerard, 1971)

Customer satisfaction is an abstract concept and the actual manifestation

of the state of satisfaction will vary from person to person and service/product to service/product The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behavior such as return and recommend rate The level of satisfaction can also vary depending on other factors such as other products against which the consumer can compare the organization’s products (Marks, 1985)

Work done by Parasuraman, Zeithaml and Berry between 1985 and 1988 delivered the SERVQUAL which provides the basis for the measurement of customer satisfaction with a service by using the gap between the customer’s

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expectation and their perceived experience of performance (Parasuraman et

al, 1985 and 1988) The usual measures of customer satisfaction involve a survey with a set of statements using a scale, generally measured on seven-point scale as indicate below

Table 1 : Customer Satisfaction Scale

to focus on All of the effort is aimed to get customer satisfaction (Solomon, 1993) In order to achieve customer satisfaction the company has to understand the factors or dimensions of customer satisfaction (Parasurama, Zeithaml and Berry, 1985)

2.4 Customer satisfaction and service quality

Service quality and customer satisfaction are inarguably the two core concepts that are at the crux of the marketing theory and practice In today’s

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world of intense competition, the key to sustainable competitive advantage lies in delivering high quality service that will in turn result in satisfied customers These writers are positive that a higher quality leads to higher customer satisfaction There is therefore, no doubt that, service quality and customer satisfaction is the ultimate goal of service providers desirous of maintaining a competitive edge The quality of service is very critical in the assessment of customer satisfaction levels

The tool to each customer satisfaction namely ‘service quality’ (SERQUAL) consists of dimensions such as reliability, responsiveness, competence, courtesy, credibility, security, accessibility, communication and understanding the customer (Parasurama et al, 1990) All of the dimensions need to be fulfilled to make the customer satisfied

Fitzsimmons and Fitzsimmons (1997) expanded further these two dimensions of service quality, and summarised four aspects of quality which affect customers’ perceptions: technical quality, integrative quality, functional quality and outcome quality Technical quality refers to the skills

of the personnel and design of the service system In insurance this is very important as the customer uses the personnel and efficiency of the systems to judge the provider Integrative quality is concerned with how the different parts of the service delivery system work together This is crucial in insurance as the different department have to work together to deliver comprehensive service to clients in a timely manner Functional quality relates to the manner in which the service is delivered Outcome quality is when the actual service meets the promised service and the customer’s needs and expectations This is true in the case of insurance If a customer is dissatisfied, he or she is unlikely to do business with that company again

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2.4.1 Definition of Customer Satisfaction

Customer satisfaction is a widely used term in business to measure the kind of products and services provided by a company to meet its customer’s expectation In reality, it is difficult to define the satisfaction as it belongs to the context and this concept often differs according to the particular setting and purposes of the study

According to Oliver (1997), customer satisfaction is the customer’s judgment that a product provided a pleasurable level of consumption-related fulfillment Therefore, in intensive competitive environment like insurance market, customer satisfaction is seen as a key performance indicator to measure an operation of company As Zeithaml and Bitner (2000) stated that the satisfaction of customer state their satisfaction when they buy service, while service quality is consider by service dimensions Moreover, service quality nowadays has affected to customer satisfaction (Oliver, 1993) To protect or gain market shares, organizations need to outperform competitors

by offering high quality product or service to ensure satisfaction of customers

With insurance industry, customer longevity is achieved through the delivery of high quality services especially under competitiveness and volatile market conditions Insurers need to understand customers’ service requirements and how it impact on service delivery and customers’ attitudes, for a small increase of customer satisfaction can to customer loyalty and retention (Bowen & Chen, 2001)

2.4.2 Definition of Service Quality

Service quality is a field of many ambiguities and complicated to define What makes it more complicated is a different customer finds different features important as their awareness in the same service It is also true for

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the unique service like insurance industry Some customers are likely to appreciate if the service is rendered in an esthetical room, by employees having a decent appearance, proper skills and capable of providing adequate and useful information about policies, premiums, benefits and obligations on the insurance coverage they considered However, other customers will be satisfied only when the agents discount the premiums and perceive this service is qualified

The research results of Gronoos (1984) has found that service quality is perceived as the result of an evaluation process when customers compare their expectations and the real service after they received from service providers and from that indicate their satisfaction or dissatisfaction with the products or services purchased Parasuraman, Zeithaml and Berry (1988) also share this vision when thinking service quality is a form of attitude, related but not homologous to customer satisfaction, result of the comparison between customer expectations with the actual services they are provided The expectation is a desire, wish of customer about service offerings, customers often expect that the providers should offer something with better service than they have provided to customers Customer expectations are formed based on their needs for goods and services, on purchasing experiences in the past and on the information they receive from outside such as retailers, friends, company’s communication activities

If sellers too exaggerated features of goods and services, the consumer will have too high expectations and the expectations will finally turn into disappointment The greater the gap between the expectations and actual usage attributes, the higher the degree of consumer dissatisfaction Conversely, if the actual usage attributes consistent with the expectations of consumers, the user will be satisfied, and if its actual attribute is higher than

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customer expectations, the user will be very satisfied (Kotler, 2005) However, Cronin and Taylor (1992) stated that considering definition about service quality is the gap between the expectation and the result received is not appropriate They have indicated the mistakes related to the correlation between service quality and customer expectations in terms of services They considered whether the concept of customer satisfaction is defined as the gap between the expectation and result or the mismatch with expectation

In order to clarify this problem, it is necessary to distinguish the different between definition of service quality and customer satisfaction According to Parasuraman, Zeithaml and Berry (1988), service quality is considered as the general evaluation or the attitude related to attributes of service Meanwhile, satisfaction is related to a unique transaction Service quality and satisfaction have relationship with each other, service quality can create satisfaction but cannot be understood in reverse direction Satisfied with one service offering cannot be concluded that service has high quality because satisfaction is influenced by many other impacts such as prices, situation, personal factor and so forth Satisfaction is temporary; customer always requires higher service quality

2.4.3 Relationship between service quality and customer

satisfaction

In the period of economic crisis and tough competition, it is necessary for all sectors in economy and also for insurance service as well to achieve customer longevity through providing excellence service Service quality is recognized as potential factor for ensuring customer satisfaction and retention, operational efficiency and profitability of an organization File and Prince (1992) argue that satisfied customers are comfortable repeating engaging in business with the firm and even recommend it to others The

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customers sell the company to other customers by using word-of-mouth when they feel satisfied with the services and thus increase the positive image for company Similarly, Martins and Toledo (2000) suggested that service quality increases market shares by maintaining current customers as well as soliciting new ones

This paper establishes that customer satisfaction has a strong positive correlation with customer retention and from then on the current customers will recommend insurance offerings of insurers to their acquaintances and friends As a result, the insurers will gain more confidence with repeated and stable Reichheld (2006) states that companies with higher customer loyalty experience growth in revenue twice as much as their competitor

2.5 Service Quality Models

There are several models have been identified in the literature for measuring service quality, namely: e-service quality model, perceived service quality and satisfaction model, Performance only model (SERVPERF), Three components service quality, Service Quality model (SERVQUAL), Hierarchy Model about Service Quality

Model of e-service quality (Santos, 2003): Service quality is one of the

key factors in determining the success or failure of electronic commerce service can be defined as the role of service in cyberspace (Rust and Lemon, 2001) This study proposes a conceptual model of e-service quality with its determinants It is proposed that e-service quality have incubative (proper design of a web site, how technology is used to provide consumers with easy access, understanding and attractions of a web site) and active dimensions (good support, fast speed, and attentive maintenance that a web site can provide to its customers) for increasing hit rates, stickiness, and customer retention

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Figure 1: Model of e-service quality (Santos, 2003)

Model of perceived service quality and satisfaction (Spreng and Mackoy, 1996): this model attempts to develop the understanding of the

constructs perceived service quality and consumer satisfaction This model is modified based on Oliver’s (1993) model The model emphasizes the impact

of expectations, perceived performance desires, desired congruency and expectation disconfirmation on overall service quality and customer satisfaction Set of ten attributes of advising is measured (convenience in making an appointment, friendliness of the staff, advisor listened to my questions, the advisor provided accurate information, the knowledge of the advisor, the advice was consistent, advisor helped in long-range planning, the advisor helped in choosing the right courses for career, advisor was interested in personal life, and the offices were professional)

Among the models for measuring service quality, the most acknowledged and applied model in variety of industries is the SERVQUAL (service quality) model developed by Parasuraman et al The model originally provided a list of ten determinants which the customers use for evaluating service quality: access, communication, competence, courtesy, credibility, reliability, responsiveness, security, understanding and tangibles In other further studies, Parasuraman, Zeithaml and Berry (1988, 1991, 1993) have provided a concise list of aspects of service quality by merging correlated variables and reduced the determinants into five consolidated dimensions: tangibles, reliability, responsiveness, assurance and empathy (Parasuraman

et al., 1988; Zeithamlet al., 1990) The SERVQUAL model assesses

2.6 Customer satisfaction challenges

2.6.3 Systems and processes

While operations managers are always confident they could deliver on their core transaction processes, they face a number of other challenges Systems and processes are in need of updating to help improve on the quality and timeliness of information and reduce the number of system failures Many large insurance organizations have legacy systems that have difficulties interacting with one another A significant problem area for operations is the difficulty of creating systems that work across all business units and channels (Hartley and Starkey 1988)

The majority of people these days expect a response back from their inquiry within a reasonable time frame Whether it would be an email or phone call, a prospective or client, it is important to set up an effective communication system and make out an easy schedule to respond to customers inquiries (Parasuraman et al, 1985 and 1988) Hot lines and free tolls as well as easily accessible websites are very critical to customer satisfaction According Taylor (1991), one way to increase customer satisfaction is to communicate with clients through their preferred method

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2.6.4 Customer information

Good data management by operations is important to help meet the demands of marketing departments, in terms of generating information about customers and providing the systems to access and manipulate this data Success in this area has been mixed and examples of where insurance companies had no way of knowing how many customers they had for certain product areas (Wood and Palmer, 1991) Buying something is an important and often emotional decision in a person’s life Consumers will generally select service providers whom they feel will take care of their needs best (Peters and Austin, 1986) Service providers can best serve their customers if they have adequate and complete information about them With the require information about customers, service providers will act in ways that demonstrate that they consider them a close acquaintance and think from the customer’s perspective The simple rule applies to any marketing initiative Seeing things from the customer’s perspective will help keep their experience a positive one

2.7 Conceptual framework

A basic agreement emanating from the wide range of literature on the quality of service delivery and customer satisfaction is that quality service delivery and customer satisfaction are conceptually distinct but closely and positively related constructs Customer expectations constitute the signpost that should direct service quality measures and satisfaction strategies Profitability levels are directly related to the level of customer satisfaction The rationality of this assertion is based on the fact that, customer satisfaction guarantees repeated purchases and referrals Business professionals and academics therefore, see customer satisfaction as a must rather than an option if desirable profitability levels have to be attained

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(Shaw and Stone, 1988) Based on the literature review, the relationship between service quality and customer satisfaction is shown on Figure below Relationship between service quality and customer satisfaction based on SERVQUAL

Figure 4 : The relationship between service quality and customer

satisfaction

SERVQUAL remains the most important tool use to measure service quality By the use of the SEVQOAL scale, it is possible to compare customers’ expectations and their perceptions of actual performance The relationship established, is that, the various elements of the service quality collectively contribute to customer satisfaction

2.8 Elements of the service quality

Anderson et al (1994) have identified four elements of service quality: tangibles reliability, responsiveness and assurance

2.8.2 Service reliability

Ability to perform the promised service dependably and accurately is critical in assessing the satisfaction level of customers Some aspects in the reliability factor have to do with “doing what is promised” and “doing it at the promised time” (Reichheld et al, 1990) Thus the insurer can assess his customer satisfaction levels by assessing whether claims are paid equitably and promptly If customers cannot trust an organization to do what is promised, those customers will be dissatisfied

2.8.3 Responsiveness

There should be high level of willingness to help customers and provide prompt service One of the aspects in the responsiveness factor is giving prompt service The amount of time it takes to deliver insurance quotation, renewal notice or pay a claim appear to be of great importance to insurance policyholders Organizations will have to try to find the right balance between quality and speed when it comes to satisfying the customer

2.8.4 Assurance

An important aspect in the assurance factor is knowledge to answer questions Customers expect to find the right answers to their questions promptly and not to be passed around Customers will certainly not be

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satisfied if they have to visit the premises of an insurance company severally before having access to the needed information Insurance web sites need to have great deal of reliable and rich information Knowledge and courtesy of employees and their ability to inspire trust and confidence are very vital

2.8.5 Empathy

The provision of caring, individualized attention to customers, informing the customers in a language they can understand Understanding customer's specific needs and providing individualized attention are very important in customer satisfaction The satisfaction of insured customers requires building relationship of confidence and trust between the buyer and the seller It is essential to build trust so that the intentions of both the parties are clearly understood by each other

3.1 The Study Area

Hung Vuong Assurance Corporation (BHV) is a non-life insurance company in Vietnam It was established in 2008

BHV aims sustainable development, create fundamental values and steady through the provision of services in non-life insurance the most advanced on the market of Vietnam

BHV have 3 brands: Ho Chi Minh, Binh Duong, Ha Noi Number of employees is about 170 persons BHV wants to become a dynamic insurance institution, most trusted, meet the best needs of financial security for businesses and individuals

They set the goal to become one of ten enterprises in non-life insurance products in Vietnam in 2018

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Figure 5: BHV’s operating structure

In that:

Division of Sales and Marketing

Sales and Marketing department is to engage in a variety of activities with the objective to promote the client engagement of an insurance service Marketing department is as a bridge between the inside and outside, between products and customers, between product attributes and customer needs

Division of Services and Support

Management customer services, provides support services, resolve complaints and compensation, risk management for company

Board of Directors

Division of Sales

and Marketing

Division of Services and Support

Division of Controlling

Business Dept

Marketing Dept

Insurance Provision Dept

Claim Dept

Reinsurance Dept

Finance and Accounting

Human resources

IT Dept Project management

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Division of Controlling

To advise and assist the Board of Directors in the following areas: Managing capital and assets of the company, Accounting and financial matters; The work of internal audit; Monitoring and addressing economic contracts; Control costs of company operations

3.2 Overview about Insurance

Insurance industry is business operating the risk, shares losses with customers, insurance is a product of service and has its own specific characteristics , very abstract but concret For customers, they buy insurance for the peace of mind in life, sharing concerns about the losses may occur in the future The success of one insurance enterprise is the customer's safety, social security People cannot absolutely prevent risks happening in their life, but they can minimize and seek to overcome the losses due to the perils,

in order to reduce the consequences they suffered Through insurance commitment, it allows them to get a sense of safety when transferring some

of the risk for the insurance enterprise

3.2.1 Principle of Insurance

Insurance activities based on the law of large numbers: insurance fund was formed on the basis of the contribution of large numbers of insured people; this fund is used to pay for a few unfortunate participants when they suffer personal or property losses The greater the number of people insured, the higher the solvency of insurers and the more effective the operation of insurance company

Principle of diversifying loss: the insurer should obey the requirements by government for adequate loss reserve, unearned premium reserve as well as adequate surplus in order to maintain the solvency for paying claims when the losses occurred To insure the solvency, insurers

Therefore, there is a "waiting" period from the point receiving premiums to the time paying claims to customers Because of this period, insurance companies usually have large and relative stable idle funds Insurers can invest this amount of idle funds on many different sectors of the economy to increase the profitability of capital such as bonds, stocks, real estate and other miscellaneous assets Generally, the insurer’s revenue is not only the premiums collected from customers but the largest proportion revenue comes from the returns from their investments Given the strong competition, insurers who use funds effectively will achieve the highest level

of profitability which can in turn positively affected on operating results of the company

3.2.2 Characteristics of Insurance

Product: insurance is essentially a contract recorded an agreement between two parties to bind each other in terms of legal One party (insurer) makes a policy and the other party (insured) accepts or do not accept that policy One party pays the premium, and the other commits to settle the claims in the case agreed

Price: price of insurance is the premiums that customers have to pay for insurers to sell their risks and take promises to be paid if the coverage risks occur in the future

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Premiums depend on several factors such as the insurance industry, risk levels high or low, levels of liability coverage Value of price is expressed at low premium levels corresponding liability to pay claims when compared with similar products of competitors, while other factors involved are assumed to be the same All customers want lower insurance costs and maximum protection

Indemnity: indemnity is an accurate reimbursement for the loss of owner’s property to restore the original state of the material as before the loss The concept of indemnity is applied only in the property insurance The principle of indemnity states that the insurer agrees to pay no more than the actual amount of the loss; stated differently, the insured should not profit from the loss The principle of indemnity has two fundamental purposes The first purpose is to prevent the insured from profiting from the loss and the other aim is to reduce moral hazard If dishonest insured could profit from the loss, they might deliberately cause the losses with the intention of collecting the insurance

However, life insurance is not a contract of indemnity because the human life is priceless In these types of personal insurance, this concept is called pay insurance for people is priceless

The quality of insurance services is expressed through process of insurers’ activities done to improve aspects of their performance in order to create increasing satisfaction for the needs of customers throughout process

of before, during and after sales As a result, customers will maintain the insurance contract and talk about insures in a positive way to other potential customers

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3.3 Research process

Before embarking on the details of research methodology and techniques, it seems appropriate to present a brief overview of the research process Research process consists of series of actions or steps necessary to effectively carry out research and the desired sequencing of these steps The chart shown in Figure well illustrates a research process

of Kothari (2004)

Figure 6 : Research process in flow chart

Step 1 - Formulating the research problem: To identify issues to be

studied, specifically, here are problems that affect the quality of insurance services for customer satisfaction like How to determine the level of service quality assessment and customer satisfaction of insurance services?

Step 2 - Extensive literature survey: Research the concepts, theories

and findings from past studies on the impact and relationship between service quality and customer satisfaction Research the model and the results

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of the evaluation level of customer satisfaction for the various services, especially banking and insurance from the research in the world and in Vietnam This step will help shape the research hypothesis, the relationship between these concepts should be examined in the specific research environment

Step 3 - Development of working hypotheses: Based on the study,

identifying the theoretical concepts and the results of previous studies with the analysis of actual research issues at the unit, proposed a hypothetical model and the research to proceed conducted a study design and data collection, data analysis helps answer the research questions posed by research purposes

Step 4 - Preparing the research design: After identifying the model

study, the research hypothesizes, will perform the study design to answer the research question posed Specifically will perform group discussions with customers to adjust the reference questionnaires from other studies, determine the sample size necessary to collect data, determine the type of scale for the question questionnaire (observed variables) to fit the statistical analysis techniques will be used, define strategies for data collection, etc Finish this step will build a service questionnaire for collecting empirical data

Step 5 - Determining sample design: Data collection studies, this is

done by sending the questionnaire to the respondents to collect data on service implementation analysis to answer the research question posed

Step 6 - Collecting the data: The data collected will be conducted

cleaned and analyzed using statistical analysis techniques such as descriptive statistics, testing the reliability of the scale, exploring factor analysis,