VIETNAM NATIONAL UNIVERSITY - HANOI
HANOI SCHOOL OF BUSINESS

NGUYEN CHIEN THANG

IMPROVING SERVICE QUALITY
THE CASE OF UNITED INSURNCE COMPANY

Major: Business Administration
Code: 60 34 05
MASTER OF BUSINESS ADMINISTRATION THESIS

Supervisors: Dr Nguyen Viet Dung Hanoi – 2013
TABLE OF CONTENT
CHAPTER I: OVERVIEW OF THESIS 1
1.1. INTRODUCTION 1
1.2. OBJECTIVE OF SUBJECT 1
1.3. SCOPE AND METHODOLOGY OF RESEARCH. 2
1.3.1. Scope of research 2
1.3.2. Method of research 2
1.4. STRUCTURE OF THESIS 3

4.3.2. Responsiveness 43
4.3.3. Service capacity 47
4.3.4. Customer care 50
4.3.5. Convenient service access 53
4.3.6. 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 9
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

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 1

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.

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 3

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;

the needs and expectations of customers.
According to Kotler & Armstrong (2004), services are activities or
benefits that businesses can offer to customers in order to establish, strengthen
and expand the long-term and cooperative relationships with customers.
Implementation services can and cannot be related to the goods of its material
form. 5

Fitzsimmons said that the service is an intangible activity and storage,
made to a customer and the customer is the creator of the product.
2.1.2. Nature of service
To identify a service, it is often based on the following four specific
characteristics:
Characteristic of intangibility is defined as a certain things that cannot
touch, see, taste, hear or be aware of other goods (Groth and Dye, 1999).
Intangibility is the most important difference to distinguish between goods
and services (Santos, 2002). Due to the intangible characteristics of services
that now very difficult to determine the customer's perception of service, as
well as their appreciation about service quality is how (Parasuraman,
Zeithaml and Berry, 1985) .
Characteristic of inseparability is shown that service provider perform
service at the same time with the service consumption of customer . Service
providers cannot hide any fault or deficiency of services (Ghobadian, Speller
and Jones, 1994).
For services with high labor content, such as quality occurs during service
delivery, service quality expressed in the process of interaction between
customers and employees of service provider (Svensson, 2002). For those
services that require the participated opinions of consumers as health care,

Quality of service is a concept that attracted much attention and
controversy in the literature because the researchers have found difficult to
define and measure service quality in unity
Gronroos (1984) defined service quality perceived as a result of an
evaluation process when customers compare their expectations with the
service they actually received 7

Parasuraman, Zeithaml and Berry (1988) also views this as to that service
quality as a form of attitude, related but not homologous to customer
satisfaction, is the result from the comparison between the customer
expectations with actual service that they are aware of their consumption.
Expectations is the desire, the desire of customers to service, as customers
often feel that the service provider should offer something better than what
they did. Consumer expectations are formed based on their demand for goods
and services; purchase from experiences in the past and from the information,
they received from external vendors, friends or communication activities of
the service provider.
Cronin and Taylor (1992) suggested that, view concept service quality, as
a gap between expectations and outcomes of services, is not appropriate. They
point out the confusion related the relationship between service quality and
customer satisfaction for services. The concept of customer satisfaction is
defined as a gap between expectations and results, or an inconsistent with
expectations.
To clarify this issue, it is necessary to distinguish the differences between
the concept of service quality and customer satisfaction: According to
Parasuraman, Zeithaml and Berry (1988), perceived service quality is an
overall assessment or attitudes related to the characteristics of services.

Customer aware service quality in the two aspects of this: What do they
receive? How do they receive? How are form and manner of service like?
Depending on the evaluation of customers for service is good, average or bad.
Lehtinen and Lehtinen (1991) suggested that it is necessary to consider
service quality in the three aspects. The three aspects are: 9

- Material quality: Includes equipment and physical environment.
- Transactional quality: is mainly derived from the matching between
communication styles of delivered service and the customer's style.
- Company quality: is mainly assessment of company’ exterior form
Brady and Cronin (2001) also viewed service quality composed of three
dimensions, which has two dimensions same as Gronroos opinion of the
technical quality (the results of the service) and functional quality (quality of
transaction). The third dimension is the physical environment of the service.
Each of these dimensions (communication, environment and results) has three
sub-elements and customers conjunct with their assessment from additional
factors to form their perception of the quality of each the first main
dimension. Combination of that assessment will give the final result of overall
service quality

Figure 2.1: Hierarchical of service quality by Brad and Conin
Source: Brady, Cronin (2001), ―Some new thoughts on conceptualizing perceived
service quality: A hierarchical approach‖, Journal of Marketing, Vol. 65, pp. 37
Dabholkar, Shepherd and Thorpe (2000) said that service quality is the
customer's overall evaluation, which based on different elements / attributes
The Gap 2: this is the gap between the perceptions of the business about
customer expectation and the business characteristics of the service design. In
many cases, companies can realize the expectations of customers but
company cannot always convert these expectations into specific criteria for
quality and transfer exactly characteristics of services that customer expected.
The Gap 3:this is the gap between the business characteristics of service
provided and service delivery process. In service, the employees can directly
contact with customers, play an important role in the process of creating
quality. However, not always the staff can complete tasks according to the
criteria set out
The Gap 4: this is the gap between the service delivery process and the
implementation of promises to customers through external communication
activities. The promises in the advertising and promotion programs can
increase the expectations of customers but also will reduce the quality. In
such cases, customers feel when service providers do not comply with what
was promised 12

The Gap 5: this is the gap between customer expectations of service and their
perception of the results after the service consumer. Service quality depends
on this gap. Once customers see no difference between their quality
expectations and quality they feel when using a service, the quality of service
is considered perfect.
Parasuraman, Zeithaml and Berry (1985) introduced a model of Gap of
service quality as follows:

Figure 2.3: Service quality model by Parasuraman, Zeithaml, and Berry
(1985)
14
Figure 2.4: Dimensions of service quality perceived by customers of
Parasuraman and Coauthors
Source: Parasuraman, A., Zeithaml, V. A., and Berry, L. L (1985), ―A conceptual
model of service quality and its implications for future research‖, Journal of
Marketing, Vol. 49, Issue 4, pp. 8.
Ten dimensions of service quality model mentioned above have the
advantage of covering most aspects of the service. However, this model has
the disadvantage of complexity in measurement. Moreover this is theoretical
model, there may be many dimensions of service quality model not achieve
value distinction. Therefore, in later researches Parasuraman, Zeithaml and
Berry (1988, 1991 and1993) adjust the model to be more particular to five
dimensions of service quality, which are:
Word of mouth
communication
Personal need
Past experience
Reliability
Responsiveness
Competence
Access
Courtesy
Communication
Credibility
Security

Whatever the reasons, the risks often bring people difficulties in life such
as job loss, income reduction, destruction of property, shut down production
and business organizations, business, personal, etc This would affect the
social and economic life in general.
To cope with these risks, people have many different measures to control
and overcome the consequences caused by the risk. At present, in view of the
risk management, there are two groups of measures to deal with risks - which
are a group of risk control measures and group of financing risk measures 16

Group risk control measures including measures of avoiding risks,
preventing losses, mitigating risks. These measures are often used to prevent
or minimize the possibility of risk.
Group of risk financing measures include risk accepting and insurance.
These are the measures used before the risks with the aim of overcoming the
consequences of the loss caused by the risks, if any.
Insurance is an important part of the risk management program of the
organization as well as individuals. In view of the risk management, insurance
is risk transferring on a contractual basis. On social point of view, insurance is
not only the transferring of insurance risk but also reducing risk by focusing
on a large number of predictive risk can allow for losses when they occur.
Non-life insurance is a commitment between the insured and the insurer in
which the insurer will pay for the participant or beneficiary a certain amount
when events predetermined happen, but participants must pay the full
premium on time.
2.4.1. Principle of insurance business
- Insurance business based on majority rule: insurance fund was formed
based on the contributions of the many participants in insurance; this fund is

insured object. If any dishonesty was found, the insurance will be whole or
partly invalid. In contrast, insurance service is only a contractual commitment
of insurance company for their customer, so customer can only experience
service in case of claim happened. Quality of insurance service, assurance of
rights, rationality of premium… are all depended on honesty of insurance
company
2.4.2. Characteristic of non-life insurance service 18

- Product: The product is basically an insurance contract recorded a
binding agreement between two parties and legal requirement for each other.
A party makes the proposal and the other party accepts terms. A party pay
premium and the other commit to compensate in the case agreed. Insurance
products are characterized by:
 Unstable profit: profitability of insurance product is depended on
level of risk of insured object.
 The product is easy to imitate: an insurance contract, even if the
original cannot be patented, can not be protected.
 In terms of mentality: buying a insurance services is similar to
buying a commodity, but the buyers just want to prevent and limit
risk and do not want to receive insurance compensation.
- Insurance premium: Price of insurance is insurance premium.
Accordingly, insurance buyers pay for insurance companies to sell their risk
and take commitment of compensation if the risks that occur in the future.
Insurance cost depends on many factors such as: business insurance, risky
level, limit of liability, insurance coverage
- Claim: Claim is an accurate compensation for the loss of insured
object, which is compatible and reasonable with liability specified in