Welcome

Reaearch proposal for our partial fulfillment of

BA degree in Management
Assessment of Claims Management Practices in
Case of Ethio- life and General Insurance S.C.

July ,2021
ACKNOWLEDEMENT

 First of all, we would like to thank our God, We are

especially in debted to Mr. Garedew Kebede
Department head of Business Management and our
Advisor, who have been supportive of our carrier
goal and who worked actively to provide us with the
protected academic time to pursue this goal.
 We are grateful to all those with we had to pleasure

to work during this research. we would especially

like to thank all members of risk underwriter, clam
officer and committee member of ELiG insurance
staff those helped us during our research work
whatever we want to pursue
Claim management
 The objective of claims management is to
ensure that claims services are run efficiently
with a view to satisfying the various
stakeholders.
 Claims settlement causes the largest outflow

of money from an insurance company. For

this reason, proper handling of claims is
important as it is key to protect both the
shareholders’ funds and the funds created by
the premiums paid by the policy holders
 The handling of claims is a key part of an insurer’s
business.
 Claims settlement can be used as a marketing tool
 An insurance system redistributes the cost of losses
by collecting premium payment from every
participant (insured) in the system.
 In exchange for the premium payment, the insurer
promises to pay the insured’s claim in the event of a
covered loss.
 It is after all the “promise to pay” which has been
purchased by the policy holder. It is that which is
tested when claim is made to the insurer.
 Dissatisfied customer is a bad publicity and has all
the potential to damage the reputation of the
company
 Delayed claim settlement, generally, result in higher

claims cost. Claims cost is a very important factor in

the profitability of the company
 The claims handling is more process oriented, the

insurance Companies have too much beyond the

handling of claims. The customer has to be kept
satisfied
 Insurance involves the transfer of potential losses to

an insurance pool
 With so many options available, a customer once lost

is most likely loss for ever.

Background of the originizations

 Ethio-life and general insurance S.C was founded

by 117 shareholders with a clear vision of
introducing and promoting long-term Insurance
bussiness.
 It obtained its license from the national Bank of

Ethiopia and commerce operation in October 2008

to transact long-terms (life) insurance business
 Ethio-life continued to be the only specialized

company in the life insurance business in the

Ethiopian insurance industry until Augest,2012
ance to the homes of millions.
Statement of the Problem
 Claims management is the core business area in the service of
insurance company.
 The claim is the tangible result of insuring. People take out
insurance because they worry about the possibility of
misfortune
 The increase in the number of lapsed policies is mainly caused
by the dissatisfaction of customers in the service of claims
management.
 It is clear that Claims payment involves outflow of money from
the insurance company and inflow to the customers. Hence,
the insurance company always works to minimize its costs
(claims payment
 The claims handling procedures in balancing the payable
amount will obviously matter in delivering quality service.
 If claims are handled efficiently and rapidly,
customers will be satisfied and satisfied customers
will continue to place their business with the
company and thus increases company’s market
share and contribute to the profitability of the
company. But customers of Ethio- life and general
insurance are complaining in the service of claims
and are not temped to renew their policy.
 For this reason the researcher is interested to assess

the major factors involved in claims settlement

process of Ethio- life and general insurance and
affecting customer satisfaction.
Research Questions

 How does insurance claim practices and

suitable in maintaining customer’s
satisfaction?
 How Ethio - life and general insurance does

addresses the issue of Indemnity?

 What are the major challenges of the ELiG

claims handling practice to deliver fast claims

settlement service to its customers?
Objectives of the Study

General Objective
 The general objective of this Study is to assess claims

management practices of Ethio - life and general

insurance S.C in Addis Ababa.
Specific Objectives
 To examine the Ethio-Life and general insurance claim

practice affecting customer satisfaction.

 To assess the Ethio - life and general insurance means

of addressing the issue of indemnity.

 To identify the major challenges of the ELiG claims

handling practice to deliver fast claims settlement

service to its customers
Significance of the Study
 The research may help for researchers, other researches

(references), selected organization, Insurances Company in

our country and Ethio-life insurance company to examine the
major findings obtained and to take corrective measurements.

Scope of the Study

 This study to assess factors affecting claims handling process

and claims management to solve customer compliances.

Among 18 Insurance companies in our country this study
conducted on ELiG at Addis Ababa in main branch claims
department by descriptive survey design method and this
study conducted in EliG by taking into account past three year
data from 2018/19 and 2020.
Limitation of the Study

 While collecting questionnaires most of

customers refuse to fill the questionnaires
because an anger crowd of claim settlement and
claim schedules of Ethio-life General Insurance
Company. Some of branch manager or a
committee member not interested to give the
right information or problems in underwriting
claim departments problems during interview
and collecting questionnaires .it was time taking
and exhausting to collect the questionnaires
both from employee and customers side
Operational Definitions

 Insurance:-system under which the insure, for a consideration usually agreed upon in
advance promises to reimburse the insured or to render service to the insured in the
event that certain accidental occurrence result in loses during a given period .it thus is a
method of coping with risk .its primary function to substitute certainly for uncertainty as
regard the economic cause of loss.
 General (non life) insurance:-are insurance related to property, motor, liability & marine

policy
 Life insurance:- are insurance related to life, person and permanent healthy policy

 Claims service:-is formal request to an insurance company asking for a payment based on

the term of the insurance doing .insurance claims are revived by the company for their
validity and then paid out to the insured or requesting party (on benefit the insured).
organization of the Study
 The research is organized into five chapters the first chapter that is introduction chapter

includes background of the study background of the organization, Statement of the

Problem, research questions, Objectives of the Study, Significance of the Study, Scope of
the Study and Operational Definitions. The second chapter contains review of related
literature. Chapter three deals with research design and methods. Chapter four focuses
on presentation, analyses and interpretation of data collected through questions .Finally
summary, conclusion and Recommendation of the study is given in chapter five.
RESEARCH DESIGN AND METHODS

Research Design
 Descriptive Survey research design method is more elaborate methods in

business studies. Accordingly, researchers use a descriptive research design

for the present study. This mainly enables the researcher to describe the
overall findings of the research. This method also helps to describe the fact
as it is.
Data Types and source
 Our research is conducted with primary data that is collected from first-

hand-experience. Primary data is more reliable, authentic and objective.

Primary data has not been changed or altered by human beings; therefore its
validity is greater than secondary data. Primary Data: In statistical surveys it is
necessary to get information from primary sources and work on primary data.
 Primary data can be collected through experiments, survey, interview,

observation or questionnaires, but in our research we collects through survey

and interviews and observation method mainly based focused Ethio-life
general insurance sc staff or employees and annual reports of Ethio-life
general insurance company
 Survey is most commonly used method in social sciences, management,
marketing and psychology to some extent. Surveys can be conducted in
different methods.
 Questionnaire: It is the most commonly used method in survey.
Questionnaires are a list of questions either open-ended or close-
ended for which the respondents give answers. Questionnaire can be
conducted via telephone, mail, live in a public area, or in an institute,
through electronic mail or through fax and other methods.
 Interview: Interview is a face-to-face conversation with the respondent.
In interview the main problem arises when the respondent deliberately
hides information otherwise it is an in depth source of information.
 Observations: Observation can be done while letting the observing
person know that s/he is being observed or without letting him know.
Observations can also be made in natural settings as well as in
artificially created environment.
  
Target Population

 Since claims are entertained centrally at Head Office level, the target population includes claims

department staff, claim committee members, and customers’ receiving service of claims during
data collection period
Sampling Size and Sampling Technique
 The claim department has its own claims committee which consists of four members; Finance,

Claim, Under-writing and Business development department managers. These to address the
population census survey method are applied and total number of motor claims processed in
2019/20 is 500. But addressing customers who received compensation before data collection
period is extremely very hard and expensive both in time and cost as their addresses are
scattered. In additions some claims are simply registered and become outstanding for longer time
without progress and addressing these customers is not significant. From the total number of
population who received the service a random Sample of taken by accidental method by
approaching claimants.
  

  

 n= n=
 n= 222
 n =Sample size

 N =Population Size

 e = level of precision
Types of Data Collected
 A primary source of data is used for the research study. Primary

source of data is obtained through survey method. The research used

both quantitative and qualitative data. Information gathered through
questionnaire is summarized quantitatively while data obtained
through interview from claims committee is expressed qualitatively
Methods of Data Collection
 The primary data is collected through semi structured interview and

close ended questionnaire. Interview held with members of claims

committee and claims divisions Heads. While questionnaire is
distributed to all claim customers. The student researcher uses
questionnaire because it keeps privacy of respondents and it is cheap
and can gather large information from wider response. Besides,
interview with employee at management level is carried out in order
to triangulate the results obtained from employees and customers.
Data Analysis Method
 After the data collection is over, the collected data is

carefully edited, tabulated and organized depending on

the type of basic questions and the nature of the data.
Then the data is analyzed by using descriptive statistic
method such as Table Percentage, Frequency because it
is appropriate to analyze quantitative data. Qualitative
data obtained through interview was presented by
description. The customer satisfaction based on their
claim settlement response was collected from customer
and tabulated in Table, percentage and frequencies
  
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

Summary
 This study tried to address 3 basic questions stated

earlier in chapter one of this study. Accordingly, all the

necessary information is collected from respondents by
raising specific questions and the findings are
summarized as follows:
 Employee were asked through questionnaires the most

challenges in ELiG Claim department today in

percentages as follow lack of modern technology
facilities (44%), insufficient information for risk
management (28%), existence of unqualified personnel’s
in claim the claim department (17%)and inefficient as
regard the time used in assessing risk (11%).
 The customers were asked if the claim settlement
provided by EliG Insurance as per their understanding
and cover they have, But from the respondent we attend
to only 24% of respondent said their claims settled or
handle as per their understanding and cover they have
also 70 % of respondent have complaints and
dissatisfied with their claim settlements. But claim
settlement is major factors involved in determining
indemnity but based on data collected the indemnity
principle of insurance were broken. Accordingly,
indemnity insurance principle ensures that policy holder
receive and settle an amount in benefit equivalent to
their actual losses, so do not make a profit from it.
 We try to compare ELiG with its competitor by asking customer
the prompt claim settlement service when comparing with other
insurance company. But the respondent answer as flow 74% of
respondent didn’t get prompt claim settlement service and only
26% of respondent get fast claim settlement service but majority
of claim settlement delay occur because of poor claim
management. Based on this analysis most customers decline to
renew during policy renewal.
 Therefore possible to conclude that company gives less attention

on creating brand image because of poor claim settlement

services.
 72% have told us their company have customer satisfaction

monitoring system and the rest 10(28%) disagreed or have no

information.
 .
 We were tried to ask the customer and employee claim
practices and maintaining customer satisfaction from
respondent claim settlement procedure that with 16%
respondents believe that the client appreciate a claim
settlements of the company the rest 84%they are not
appreciate claim settlement procedure.
 Employees were asked if the claims handling practice of

Ethio-life and General insurance company is convenient and

transparent to deliver quality service. Accordingly 12(33%) of
them replied that the company’s claims handling practice is
not convenient as well as transparent. Besides discussion has
been made with company’s Claim Committee and they have
mentioned that the practice of handling the claims is not as
such convenient to deliver quality service
 Conclusions
 Based on the respondents answer and summary of findings,
the student researcher has drawn the following conclusions.
 Most of underwriting officer didn’t give a brief explanation to
on the claim procedure at the time of issuance of the policy
this also creates a problem for the Claims officer too.
 From the research finding it can be inferred that the claim
practice of Ethio - life and General insurance company is not
as such convenient and transparent which is the cause for
customer dissatisfaction.
 The research finding shows that supporting documents
required to be fulfilled by the customers are not requested at
once and fragmented way of requesting documents will lead
to customer dissatisfaction.
 As per the research findings the art of service recovery (complaint
handling) is not well addressed. As a result the company misses the
opportunity to address its weakness and take corrective actions to
deliver the service to the satisfaction of the customer.
 As it is observed in the research findings majority of customers’
response shows that list is slow indicating the service of claims is not
prompt enough.
 It can be inferred from the research finding that the various process
involved in determining the indemnity is not considerate of the insured’s
expectation. As a result it will become the cause for dispute.
 From the research findings it can be inferred that the service is not
consistent among officers due to inconsistence in using claim manual.
 The research findings reveal that the company does not have the means
to know whether the customers are satisfied or not.
 The research findings reveal that the company does not have not using
advance technology to and claim manual
 Recommendations
 Based on the data gathered from employees and customers and the major findings
obtained, the student researcher gives the following recommendations.
 Insurance is a promise to pay in certain circumstances. When a claim occurs, this is
often the first contact a customer will have with the company since inception of the
policy. A perception of a company gained at this point is difficult to eradicate. Even if
a claim is paid in full, customers can be dissatisfied if the experience is less than
what they expected. Therefore the company should review the claim handling
practice so that it will be convenient, transparent and provide efficient services to the
satisfaction of its customers. In this aspect it will be better if it adopted management
philosophy such as total quality management or business process reengineering.
 According to unpublished training book of Ethiopian Insurance Corporation, No
wonder the claims department has been described as the shop window of an
insurance company. Bad experience of claims handling can affect whether or not to
renew with their current insurer. Hence the role of the claim department includes
Providing a fast and efficient claims service as well as Indemnify the policyholder in
accordance with the cover purchased. Hence the department has to be organized by
skilled, competent and empowered employees.
 In order to retain customers, the company should assure
customers are satisfied. To know this ELIG should carry out
regular customer satisfaction survey.
 Complainers provide the firm an opportunity to recover from the

service fail. Experts assert that actively encouraging complaints is

a good way to “break the silence”. A firm’s internal complaints
procedures must make provision for complaints to be investigated
by an employee of sufficient competence who, where appropriate,
was not directly involved in the subject matter of the complaint.
Hence the company should see complaints as opportunity to see
its weakness and revise and implement the Policies and
procedures on the claim manual to address complaints in the way
that it enables to recover from service failure.
 .
 Determining time standard enables the company to make control weather
customers are served or not in accordance with set time. Hence it is better
to the company to standardize the process so that each employee acts to
meet minimum.
 Customers insure their property to get indemnity at the time of a loss. In
order to reach on the indemnity amount the claim process needs to pass
through various stages. Hence the company should invite competent
garages, should handle tender transparently, should take care of over
imposing contribution as well as imposing on non-depreciable items and
should advise the insured on the time of assessment so that any
unforeseen parts may not be ignored. In addition the company should hire
competent employee and give sufficient training so that they can be able to
manage their work efficiently to minimize customer dissatisfaction.
 We recommended that ELIG to have customer satisfaction monitoring
system to increase customer lifetime value and it limits negative word of
mouth
Thank you