The beginning of insurance in Malaysia can be traced to the colonial period between the 18th and 19th centuries when the British trading forms or agency houses established in this country acted as agents of the insurance companies incorporated in the United Kingdom. The insurance industry in Malaysia had been largely patterned on the British System whose influence still continues until today. Even as late as 1955 it was reported that foreign insurer's domination of the local insurance market was as much as 95% of the total transacted. After independence in 1957, however, conscious efforts were made to introduce domestic insurance companies. The early 1960's witnessed the growth of quite few life insurance companies, which wound up soon after due to their sound operations and inadequate technical background. This unsavoury featured culminated in the government's invention through enactment of the insurance Act 1963 to regulate the insurance industry. The general supervision and control of the insurance, functioning under the Ministry of Finance. Hence, the Insurance Act 1996 (replacing previous Insurance Act 1993) which came into force on 1st January 1997 made a significant change on legislative framework for improving the supervision and regulation in terms of operational and financial discipline, transparency of policies and practices and protection of the policy owner.
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Nowadays, the problems of insurance claims on motor insurance become more serious because one of the reasons is the company insurance delay about the claims. Motor insurance is to provide cover against losses and liabilities that the party may suffer in the event of accident, fire, theft or any other events which is relating to their vehicle. It provides the financial compensation to cover liability for any injuries caused by the owner of their vehicle or injuries to other people. Motor insurance is compulsory by law, meaning that if the person wants to buy vehicle, they must have motor insurance first before using that vehicle on public roads. There are three types of motor insurance covers which are comprehensive cover (first party), third party and third party, fire and theft. Normally if it is a new vehicle, the insurance company suggest to the owner to buy the first party insurance which is wider cover than another types. As we know, the population and development in Klang Valley are increased over and over again by past few years. It also included the number of vehicle on roads which is increased every year. So, vehicle are the important needs in society today which are give easily and save time to the people to go anywhere.
Researchers have pay more attention to antecedents of satisfaction clients on insurance claims instead of unsatisfaction of clients upon the insurance claims. Normally, client dissatisfaction comes about as a result of lack of management business practices. As a result, the claims have been delay which is should be pay early. Insurance company must do something so that the clients not complaints or reduce the complaints about their claims. The service must be good in order to enhance customer loyalty to that firm. If the service failure perceived by the clients it will effects the company reputation because the clients might be not satisfy with the service from the company. As a result, the clients may change up their mind and start looking to the other company which give them a better service.
Complaints behaviour from clients might give bad reputation to the company. As usual, the clients might be complaints about the delay claims, bad service and sometimes they feel have been cheated by the insurance company because for example, if they want to claims the damage of their vehicle, it is not worth it to claims if the damage is in small amount. Actually the complaints from the clients is good because knowledge about complaints from the clients give the opportunity to the company to identify the problems, improving their service quality and understanding what the clients want. Sustaining and growing the clients relationship of handling complaints is said a critical "moment of truth" (Berry and Parasuraman, 1991; Dwyer et al., 1987).
The focus of this research is to know the unsatisfactory of insurance clients upon motor claims in Klang Valley area. This research is important to know the perception of the clients insurance in Malaysia through the unsatisfaction of the insurance clients, what is the exactly factors that the clients unsatisfied upon motor claims. All clients must want the best service from their insurance company so that they trust to that company. So this research must know what the factors that make the insurance clients are unsatisfied.
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1.2 PROBLEM STATEMENT
In the past, the insurance industry has avoided pressures mainly because insurance is a very complex product which only a handful could understand. This was probably the reason why the majority of the insurance clients were quite 'blissfully ignorant' about insurance. The situation however has changed in recent years and the industry has become the target of consumer pressures. According to the International Consumer Movement, consumers have eight basic rights which include: right to satisfaction; right to information; right to choose; right to basic goods and services; right to be heard; right to redress; right to consume education; and right to a safe and clean environment.
At the year ending 2008, Two hundred and forty-five (245) complaints were received from the public against insurance companies. Most of the complaints were from persons with motor insurance claims (NIC, Annual Report, 2008). Sebiyam (2005) said "many people in this country are not aware of the existence of insurance policies in the country; others do not see the need of undertaking insurance policies even though they are aware of it". "Unfortunately, most of the country's drivers regard having insurance only as a means to pass through the checkpoints with the minimum of fuss by the police". Sebiyam (2005) further stated that "transport owners or drivers who have undertaken motor vehicle insurance find it difficult to make claims when there is an accident without resorting to hiring a lawyer". Consequently, clients who are rightfully entitled to admissible claims get fed up in the process and stop pursuing it. Some, mostly motor third party insured, do not make attempt to pursue at all. "Insurance companies, quick to collect premiums but slow at paying claims" (Otoo, n.d cited in a Newsletter of NIC, July-September 2005).
With respect of the above, the main problem of this study is to answer the question what is the factors that make the insurance clients dissatisfy upon motor claims. First of all we must to find out what are the significant elements that may influence the unsatisfactory of clients insurance upon motor claims.
The objectives of this study are:
a) To identify whether the complaints by the clients influence the unsatisfactory of insurance clients upon motor claims.
b) To determine the safety of vehicle spare part affecting the unsatisfactory of insurance clients upon motor claims.
1.4 RESEARCH QUESTIONS
In this study, we will answered the following research question,
a) What are the most complaints in the service quality in motor insurance claims?
b) Does the safety of spare part affect the unsatisfactory of insurance clients to use for their vehicle?
1.5 THEORETICAL FRAMEWORK
Independent Variables Dependent variable
Unsatisfactory of clients insurance upon motor claims
Safety of vehicle spare part
This model shown about the relationship between the dependent and independent variables. The dependent variable is the level of unsatisfactory of clients insurance upon motor claims and the independent variables are complaints and safety of vehicle spare part.
Dependent variable is the main concern of the study and variable of primary interest. Dependent variable of this study is the factors that contribute to motor accident risks. Hence, the causes of the unsatisfactory of clients insurance upon motor claims are measured depending on various factors.
Independent variable is one of that influences the dependent variable in either a positive or negative way. For this study, there are several independent variables which influence the unsatisfactory of clients insurance upon motor claims. Those factors are:
Safety of vehicle spare part
1.6 SCOPE OF STUDY
This study of this research is about unsatisfactory of insurance clients in Klang Valley which are the major areas that the people have their own vehicle. A total of 50 respondents replied to the survey. The study will discuss about the unsatisfactory of insurance clients upon motor claims which is will responded by the clients in the area such as Cheras, Bukit Jalil, Shah Alam and others nearby. The respond will be selected according to the numbers of respondent who are used to make claims on the motor insurance.
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1.7 SIGNIFICANCE OF STUDY
Through study on the dissatisfaction of insurance clients upon motor claims, hopefully this study can give benefit to the Insurance Company by knowing the elements that contribute to the unsatisfaction of insurance clients upon motor claims. This research has brought a more reliable scientific perspective for measuring the level of dissatisfactory of c lients insurance upon motor claims. Therefore, the insurance company must take caution or prevention on the factor that can influences the dissatisfaction of clients insurance. This study also can help the insurance company enhance the client satisfaction upon motor claim in the motor insurance industry so that the clients loyal to their insurance company and the insurance company can achieve their goals and objectives.
1.8 LIMITATIONS OF THE STUDY
The first limitation of this study is about time. Mostly the students face the problem of short time period to complete this study. So, students are required to finish it during the period given. This research also were distributed the questionnaire to the Klang Valley area to cover only. It means that the result of this research is limited just from that area. If given much more time, I think this research will be to increase the sample that can be representative the whole population.
ii. Full Cooperation
The second limitation of this study is hard to get the respondent with the full cooperation. I think it is hard to get 50 respondents which are having claims their motor insurance. If not, I think this research not succeed because it is not achieved the objective of this research.
The third limitation of this study is about financial. Normally students will face the financial problems because to done this research, it incurred more cost on paper and ink printer to make sure the research report was ready. Another thing is the cost of photocopy of questionnaires to be fulfilled by the respondents. The cost of fuel consumption also be including by going all the area Klang Valley to collect the data
CHAPTER 2 (LITERATURE REVIEW)
2.1 MOTOR INSURANCE
Motor insurance is designed to provide cover against losses and liabilities that the driver may suffer in the event of an accident, theft or certain other events relating to their vehicle. It provides financial compensation to cover liability for any injuries caused by the driver or owner of a vehicle to other people or their property. It is compulsory by law to have motor insurance before using or keeping a motor on public roads. Hence, "in non-life category, other than car insurance, no other insurance is mandatory for the customers" (Goswami, 2007). A driver faces a potential economic loss if his car is damaged. A larger possible economic risk exists with respect to potential damages a driver might have to pay if he injures a third party in car accident for which he is responsible (Anderson and Brown, 2005).
2.2 TYPES OF MOTOR INSURANCE
2.2.1 Comprehensive Insurance
Comprehensive insurance provides wider insurance cover which is cover includes third party, fire and theft insurance. In addition, it will also pay for repairs to your car. There is a range of extra cover that some policies provide, including:
Cover for your own death or injury, or that of your partner or other members of your family, up to a limited amount.
Cover for your personal belongings if they are stolen from your vehicle or damaged.
Cover for your medical and legal expenses.
Hiring a replacement vehicle.
2.2.2 Third Party Insurance
This is minimum amount of insurance cover that you must have by law for your vehicle. Third party insurance only covers you for damage to someone else's vehicle or property, or injury to someone else in an accident which involves your car. This includes accidents caused by your passenger. If your vehicle is damaged in the accident you will have to pay for the repairs yourself.
2.2.3 Third Party, Fire and Theft Insurance
This includes third party cover and, additionally, damage to or loss of your car by fire or theft.
2.3 Clients Dissatisfaction
Szymanski and Henard (2001) said many researchers have given more attention to the client satisfaction rather than the client dissatisfaction. Client dissatisfaction normally comes from the result of poor business practices (Broadbridge and Marshall, 1995). In order to reduce the dissatisfaction of clients, service firms must provide good service to their clients. Service failure by the firms perceived by the client is a primary factor because it may effects on the service outcome (Gustafsson, 2009).
Nowadays, we heard many complaints from the clients against the motor insurance claims. It is because the clients did not satisfy about their claims. According to the Fonseca, 2009; Gustaffsson, 2009 the complaint behaviour is significant phenomenon to the service scholars and managers to understand in terms of the impact on clients' perceptions. The complaint behaviour from the clients give the firm worthy insight into varies area. The firm can identify service problems, improving service design and give strategic planning (Harari, 1992; Johnston and Mehra, 2002; Marquis and Filiatrault, 2002; Tax and Brown, 1998; Edvardsson, 1992; Harrison-Walker, 2001; Dröge and Halstead, 1991). Sustaining and growing the relationship with clients by handling their complaints is said "moment of truth" (Berry and Parasuraman, 1991; Dwyer et al 1997). Normally the client complaints the motor claims because of the delays claims. It is refer that when you file a claim, chances are you need prompt assistance to deal with a fire, car accident, injury or other loss. If your insurer takes too long to handle your claim, you could lose money, property and peace of mind. Many states have laws that dictate how long an insurer has to respond to an initial claim report, how long an investigation can continue without notice to the insured and how quickly it must settle the claim once the investigations are finished. Without these laws, insurers could simply delay your claim infinitely until you withdrew it. Besides that, the clients' complaint about the denials claims. Since you buy the insurance company's promise of future payment, it may feel like a violation of trust if your claim gets denied, in part or in full. States have strict laws that dictate what an insurer must do to deny a claim, and they often face steep financial penalties for violating those laws. Your insurer must, generally, give you an explanation in writing that includes the part of your policy that allows it to deny your claim. If you feel that your claim was wrongfully denied, you can report the claim to your state's department of insurance for assistance. Another complaint by client is about compensation disagreements. Whether you must agree on the value of your totalled vehicle or the size of your medical bills, you may disagree with your adjuster as to the amount of money you deserve as compensation for your claim. The insurers often have cost-cutting measures that help them deliver adequate services at a lower cost than you could obtain on your own, and your adjuster may have valid reasons for offering a settlement lower than you expect. Support your claims with documentation showing why you believe you deserve a higher settlement, and consult an attorney if necessary. Furthermore, there have some misunderstandings between the insurer and insured. The insurance industry is highly regulated at the state and federal level, but many consumers are not aware of the laws that govern a claims situation. For example, your vehicle may sustain only cosmetic damage, but your insurer might declare it a total loss anyway due to the associated repair cost. Despite your emotional reaction to this, and despite how unfair it may seem to you, your adjuster must obey your state's laws regarding what qualifies as a total loss. You may avoid some claims problems by becoming familiar with your state's laws before working with your adjuster. According to Nyer (2000), if the firm can handle the complaints and positive response to clients', it can increase the clients' loyalty to the firm. Hence, it is important to the firm to understand the clients' complaints behaviour.
2.5 Safety of Vehicle Spare Parts
Spare parts are a replaceable component, sub assembly, and assembly identical to and interchangeable with the item it is intended to replace. The components of spare parts give impact to the vehicle so that the vehicle is in good condition. If the spare parts are non-original part, the clients might be dissatisfied because the clients want the original spare parts in other to replace their components of broken vehicle. Normally workshops or panel workshops that use non-original will be removed from insurance company panel. Federation of Automobile Workshop Owners' Assembly of Malaysia (FAWOAM) president Simon Too admitted that workshops were using non-original parts for the repairs, but blamed this on loss adjusters who he said were forced by insurance companies to reduce vehicle repair claims under a key performance index (KPI) system. The clients also did not satisfy if the panel workshop uses the second hand spare parts but charge the clients under the new spare parts. This problem give the clients become more satisfy because they have to bear more cost.
CHAPTER 3 ( RESEARCH METHADOLOGY )
3.1 RESEARCH DESIGN
The research designs that are used in this study is a descriptive study which is also known to be widely used in the areas of educational and social research. It is appropriate for this study and was used to identify the relationship between dependent variable and independent variables as shown in the theoretical framework.
3.1.1 DESCRIPTIVE STUDY
Descriptive study are undertaken to understand the significance factors that contribute to the dissatisfied of clients insurance upon motor claims in Malaysia. Therefore, the data must be gathered and discussed in detail. The researcher will identify the relevant factors and justify it parallel with the current situation. The data are mostly gathered through questionnaires, journals, advertisements, brochures, pamphlets and also through the internet or websites. These techniques will help to gather accurate information regarding to significant factors that may influence dissatisfied of clients insurance upon motor claims which are complaints and safety of vehicle spare parts. Nevertheless, researchers believed that observations using questionnaires is more suitable for gathering data on finding the relationship between the independent variables and dependent variable.
3.2 SAMPLING DESIGN
The difference between non probability and probability sampling is that, non-probability sampling does not involve random selection whiles probability sampling does. This implies that the usage of non-probability samples cannot depend upon the rationale of probability theory.
The population for the study comprised people around Klang Valley. The choice of this area due to the fact that there are a lot of people makes claims to their vehicle. This research analysed the sample of 50 respondents who makes claims for all the independent variable. The respondents are from both male and female. Respondents ranged in age 18 to 60 years. Besides, only people who have makes claims will be selected as a target population. The selected target will answer the questionnaire which the targeted places are at insurance companies and randomly at shopping complexes. Furthermore, the questionnaires specified between the ages below 21, 22-49 and above 50 were needed for a study.
3.2.2 SAMPLING METHOD
Researcher had chosen the convenient sampling method where the collection of information from population members who are conveniently available to provide it. Convenient sampling is one of non-probability sampling techniques in which the sample members were chosen because they are easily accessible. Researchers had personally distributed the questionnaires to the respondents. Moreover, one advantage of convenient sampling is quick. The questionnaires are divided into 3 section which were demographic section, complaints section and safety of vehicle spare parts section. The demographic questionnaire probed subjects for standard personal information including age, gender, and marital status. For complaints questionnaires, the respondents were asked about the complaints from clients. In addition, for safety of vehicle spare parts, the respondents were asked regarding the safety of vehicle using the original spare parts, whether it is safe using spare parts components and when using spare parts, it gives good condition or not to the vehicle.
3.2.3 SAMPLE SIZE
A sample can be referring as a subset of the population. It comprises some members selected from it. A sample is thus a subgroup or subset of the population. By studying the sample, the researcher should be able to draw a conclusion that would be generalizable to the population of interest. Sampling size for this research is 50 which were distributes to the public people and insurance company. According to (Sekaran 2003) the sample size can be 30 to 500 units, so 50 respondents are considered as acceptable for being chosen in this study. If the sample size is too large, many problems can be occurs such as bias and less reliable and efficiency of data.
3.3 DATA COLLECTION METHOD
There are numerous and variety sources of data which could be used to gather information needed in the research. In this research primary data, secondary data and questionnaire will be used to gather information. In this research, the researcher has decided to use both of primary and secondary data.
3.3.1 PRIMARY DATA
As according to some of the researchers such as Hair, Money, Samouel & Page (2007), a research cannot be accomplished with only depending on secondary data. Researchers are also requires to collect and gather primary data as well in order to obtain a complete data to achieve accurate and better results. Even though there are many advantages by using questionnaires, but yet there are also some drawbacks where there is always a chance that questionnaire could cause some problems in consistent with some past studies (Sudman & Blair 1998). There are also other limitations by using the technique of questionnaire. This is due to questionnaire survey always indicated human respondents in which human respondents may not be accurate since human have different perceptions and opinion towards the particular issue which it may cause the data collected to be not reliable enough (Jackowicz et al 2000).
In primary data collection method, it can be divided into two different methods that is qualitative and quantitative research (Hair et al 2007). In our research, we have used quantitative technique which is the questionnaire survey method, where it is one of the quantitative research methods. It is because the questionnaire survey will help us in collecting data from other respondents where respondents may answer few questions regarding this topic where it is based on a predetermined number of answers. Moreover, questionnaire survey method is relatively cheap and it is easy to obtain data that we needed from this technique.
Questionnaires are the most common field method because they can administer quickly and easily.
3.3.2 SECONDARY DATA
According to Hair et al (2007) secondary data is addressed as the data which is already gathered by other people or researcher and available for everyone to be used. Other researcher also defined secondary data are the data that have been collected from other respondents such as individuals and organizations for the research purposes (Lehmann, 1989; Parasuraman, 1986).
Our secondary data are mainly from online journal from other researchers such as Google Scholar, Science Direct, ProQuest, articles, journals and reports. The main reason I used secondary data is because it is easy to obtain data by clicking several "hot key" or button and it is relatively low-cost as well.
3.4 STRUCTURE OF QUESTIONNAIRE
The questionnaires were design based on literature review and the theoretical framework. There are 23 questions provided in these questionnaires. The questions have been divided into few sections which ask the question about demographic factors, complaints factors and safety of vehicle spare parts.
Principles of wording that been used is:
1) Consent and purpose of question
ï‚§ï€ Where objective variables, such as age and marital status of respondents, are tapped, a single direct question. Purpose of each question can adequately measure the variables.
2) Wording and language
ï‚§ï€ The language at the questionnaire should approximate the level of understanding of the respondents
3) Types and form of questions
ï‚§ï€ Open-ended versus closed questions
- Open-ended questions allow respondents to answer them anywhere they choose
- Closed questions in contrast, ask the respondent to make choices among a set of alternative given by the researchers
ï‚§ï€ Positively and negatively worded question
- Instead of phrasing all questions positively, we include some negatively worded question as well, so tendency in respondents to mechanically circle the points toward one end of the scale is minimized.
ï‚§ï€ The sequence of question in the questionnaires should be such that the respondent is led from questions of a general nature to those them are more specific, and from question that are relatively easy to answer to those that are progressively more difficult.
5) Classification data or personal information
ï‚§ï€ Classification data also known as personal information or demographic questions, elicit such information as age, marital status, and gender.
3.5 SCALE OF MEASUREMENT
The questionnaire contained nominal scale which allows the researcher to assign subjects to certain categories or groups whereby respondents are required to circle the appropriate answers that have been given. The information that can be generating through this scale is the calculation of the percentage or frequency in the sample of respondents. Researcher also used dichotomous scale which to elicit a YES or NO answer.
3.6 STATISTICAL METHOD
For this analysis, SPSS (Statistical Package for the Social Science) software application for windows will be used to determine the right figure and percentage in differentiate the outcome among the factors involved. Data frequency was used to assess the relationship between the dependent and all the independent variables.
3.7 TYPES OF ANALYSIS
After data were obtained from the questionnaires, they will be coded, keyed and edited by using a computer. The types of analysis have a strong relationship with the objective of the study. The objective of the study will be achieved by using the related analysis which had been identified as to identify whether the complaints by the clients influence the unsatisfactory of insurance clients upon motor claims and to determine the safety of vehicle spare part affecting the unsatisfactory of insurance clients upon motor claims. All the data will be collected by using primary data, which is questionnaires, and secondary data, which is the data is referring to journals, books, internet, and publications. Method of analysis that will be used to measure my findings and the relationships between variables is frequency, bar chart and pie chart.
A CASE STUDY ON THE UNSATISFACTORY OF CLIENTS INSURANCE UPON MOTOR CLAIMS
Dear Valued Respondents,
We would like to have your opinion with regards to Unsatisfactory of Clients Insurance Upon Motor Claims. This study is the purpose of completing the program of BBA (Hons.) Insurance from Universiti Teknologi Mara. Your cooperation and time consideration is highly appreciated.
SECTION A (DEMOGRAPHY)
c) above 50
What is your occupation
c) Private Sector
5. What is your education?
a) Certificate and below
a) Less than RM 1,000
b) RM 1,001 - RM 2,000
c) RM 2,001 - RM 3,000
d) Above RM 3,001
7. Have you met in accident?
8. Have you claim your motor insurance?
SECTION B (COMPLAINTS)
9. Do you satisfy with your motor insurance claims?
10. How many times that you make motor insurance claims?
b) Less than 2
c) More than 2
d) More than 5
11. What types that of motor insurance that you take?
a) Comprehensive Insurance
b) Third Party Insurance
c) Third Party, Fire and Theft Insurance
12. What are you dissatisfied about your motor insurance claims?
a) Delay Claims
b) Denial Claims
c) Compensation Disagreements
13. Have you been rejected when you file motor insurance claim?
14. How long the Insurance Company take time to pay your claims?
a) 1-3 Months
b) 4-6 Months
c) 7-9 Months
d) Above 9 Months
15. When you make claims, is the claims worth to you?
16. When you deal with your insurance company, do they give you good services?
Please circle the number corresponding to your assessment for each of questions below
SECTION C : SAFETY OF VEHICLE SPARE PARTS
Do you feel safety when your vehicle use spare parts components
When you repair your vehicle, does the Panel Workshop use the original spare parts
The components of spare parts that replace to your vehicle give good condition to your vehicle
Do you think that new spare parts components better than second hand spare parts components
It is worth it that the Panel Workshop replace the new spare parts than replace with second hand spare parts
Replacement of the vehicle spare parts give you more satisfy
In overall, do you have intention of switching to use a better insurance company's services