UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Thi Lan SOLUTIONS TO ENHANCE COMMUNICATION SKILLS OF FINANCIAL CONSULTANTS WITH CUSTOMERS AT HANWHA LIFE INSURANCE, BRANCH OFFICE IN BUON MA THUOT CITY (HANWHA LIFE BUON MA THUOT – HLB), DAKLAK PROVINCE, VIETNAM. MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2016 123doc UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Thi Lan SOLUTIONS TO ENHANCE COMMUNICATION SKILLS OF FINANCIAL CONSULTANTS WITH CUSTOMERS AT HANWHA LIFE INSURANCE, BRANCH OFFICE IN BUON MA THUOT CITY (HANWHA LIFE BUON MA THUOT – HLB), DAKLAK PROVINCE, VIETNAM. ID: 22 13 00 34 MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR LE NHAT HANH Ho Chi Minh City – Year 2016 123doc ACKNOWLEDGEMENTS I got a lot of helps when I studied MBUS-MBA program and when I did the project, so, I would like to thank the following people. Firstly, I want to express my deep gratitude to all the professors at ISB – UEH, who taught me in MBUS-MBA program.
Secondly, I would like to deeply thank my supervisor Dr Le Nhat Hanh for her support, patience and help through the pass months Thirdly, I would like to thank all the professors of the thesis proposal defending council and the draft thesis suggestion council, who gave the helpful comment for me to complete the project in the right direction I also want to thank Mss Binh and Miss My Anh in my group research shared the documents and encouraged me in the study period and doing thesis process In addition, I want to say thanks to all the staffs, consultants and customers of Hanwha Life Buon Ma Thuot, who provided documents, answered the questionnaires and gave the feedback for finishing this project. Last but not least, I would like to thank my class mates in MBUS 4.2, my colleagues at Tay Nguyen University and my family members support me to complete this project. Students Tran Thi Lan 123doc LIST OF TABLES, FIGURES AND TRANSCRIPTS Table 1.2: New exploiting premium and the quantity of new contract. Cost and benefit of three alternative solutions.
Detailed implementation plan .1: The share of premium turnover and new exploiting premium of Vietnamese insurance market .2: Development of coffee price over the world .3: Cause - and - effect map. The number of life insurance policy that were sold by each financial consultants in 2014 .1: Customers’ assessing about communication skill of PruB’s financial consultants. Customers’ assessing about communication skill of HLB’s financial consultants .3a: Interview financial consultants to identify the most important causes of the problem .3b: Interview financial consultants to identify the most important causes of the problem .3c: Interview financial consultants to identify the most important causes of the problem .4a: Interview customers to identify the most important causes of the problem .4b: Interview customers to identify the most important causes of the problem. 46 123doc LIST OF ABBREVIATIONS HLB.
Hanwha Life Buon Ma Thuot PruB. Prudential Buon Ma Thuot VCCI. Vietnam Chamber of Commerce and Industry BOD .Board of Directors 123doc TABLE OF CONTENTS EXECUTIVE SUMMARY. Background of problem.
Justify the existence of the central problem. Justify the importance of the problem. Potential causes of the problem. 17 CHAPTER 2: ALTERNATIVE SOLUTION ANALYSIS.
Dismissal and recruitment. Select the best solution. 27 CHAPTER 3: ACTION PLAN. Cost and benefit of three alternative solutions.
Detailed implementation plan. 48 123doc EXECUTIVE SUMMARY Hanwha Life Buon Ma Thuot (HLB) offers the protection that is against the loss of income when the insured people pass away, get older or have a serious risk. The company provides life insurance for customers in Buon Ma Thuot city and Dak Lak Provice. Because life insurance is a special product, so in almost cases, an insurance policy is sold by a financial consultant.
Like other life insurance companies, HLB introduces and sales their product directly to customers by the financial consultant force. However, after six year launching their business in Buon Ma Thuot from 2009, almost all of the years, HBL got lost a lot of money. In addition, share of new exploiting premium and the share of premium turnover are much less than other life insurance companies in the area. Moreover, the information about purposes of life insurance product are not transferred sufficiently and HLB’s financial consultants sold less amount of life insurance policies and less premium than other financial consultants at other life insurance companies.
Our group research conducted a project to find out the roof of problem that make HLB have those bad symptoms. After research the real situation at HLB, we found that HLB has a problem about communication skill of their financial consultants. The financial consultants cannot explain thoroughly to make customers believe and choose their product. We discussed with the board manager to give three alternative solutions for solving the problem, which are Training, Teamwork and dismissal & recruitment.
After comparing the solutions we found that training bring more benefit and less time and cost 123doc than other two strategies, so we selected training as a best solution for the problem. It takes four and a haft month for this solution. Lectures from short-term department training of Tay Nguyen University will help HLB two weeks to coach all financial consultants for training listening skill, understanding customers & sympathy. The Board of managers will undertake to train knowledge of product in four months.
Training programs will apply on all financial consultants in 2016 to help HLB do their business more effectively than the previous time. Company background Hanwha Group (Hanwha Life insurance, n.d) was founded in 1952, one of the top 10 conglomerates in Korea and top 500 in the world with 3 divisions: • Manufacturing & Construction. Hanwha Group has diversified its business portfolio with 142 affiliates (52 affiliates in Korea and 90 affiliates overseas) such as Hanwha Corp., Hanwha SolarOne, Hanwha Q.Cell), Hanwha Chemical, Hanwha Engineering & Construction, Hanwha Life Insurance, and Hanwha Hotel & Resorts across other 19 countries, including Canada, China, Czech, Germany, Greece, Hungary, India, Indonesia, Italia, Japan, Philippines, Kazakhstan, Russia, Saudi Arabia, Singapore, Thailand, United Kingdom, United States and Vietnam. Hanwha Life Insurance (the former name called Korea Life Insurance) was established in 1946, which is the oldest life insurance company in Korea.
The company has grown to be the country’s leading life insurer with total assets of 80 billion US Dollar and an AAA solvency rating from prominent rating agencies. Hanwha Life Vietnam (formerly Korea Life Vietnam) was granted the establishment and operation license No. 51GP/KDBH on June 12th, 2008 with the name of Korea Life Vietnam. In January 2013 Korea Life Vietnam was changed the name to Hanwha Life 123doc 2 Vietnam to create brand identity for the group.
Hanwha Life Vietnam has the charter capital of 1,891,140,000,000 VND and becomes one of leading life insurers which having highest capital in Vietnam. Since 1 Apr 2009, Hanwha Life Vietnam has introduced insurance products to Vietnamese customers. Up to now, after 6 years of operation, Hanwha Life Vietnam has been honor granted Golden Dragon Award in 4 consecutive years 2010, 2011, 2012, 2013 for “Best financial services”. This is prestige award granted by Vietnam Economic Times, VCCI and Ministry of Planning and Investment.
Hanwha Life Vietnam is having nearly 250 staffs and nearly 18,000 Financial Consultants working in 45 offices on nationwide. Currently, Hanwha Life Vietnam is being trusted by nearly 69,000 (until May 2015) customers and their families. The company’s vision is through life insurance, to help Vietnamese plan the future and make their dreams come true. In 2009, Hanwha life also opened branch offices at Ho Chi Minh City, Buon Ma Thuot and Ha Noi.
The address of Hanwha Life Buon Ma Thuot is 3rd, The Central Office Building, 1-3 No Trang Long Street, Buon Ma Thuot City, Dak Lak province, Vietnam with two general agency offices at Eaka District and Buon Ho District. The office in Buon Ma Thuot is providing six kinds of life insurance product for Dak Lak insurance market, namely as Revamped universal life with guaranteed insurability option (AN KHANG TÀI LỘC), Triple care critical illnesses endowment (AN KHANG PHÚC LỘC), Family package (GÓI SẢN PHẨM AN KHANG TOÀN GIA), Education Plan 2015 Endowment (HANWHA LIFE- AN TÂM HỌC VẤN), Endowment With 123doc 3 Annuity Income Benefits (AN KHANG BÁCH NIÊN TOÀN DIỆN) and Short Term Endowment (AN SINH TÍCH LŨY NGẮN HẠN). Although Hanwa life insurance is the first life insurance company belonging to the top group in Korea, after six years launching their business in Buon Ma Thuot (BMT) with the office named HLB, they face some symptoms that bad affecting to their business. Background of problem 1.
Symptoms The purpose of doing business is getting profit. However, HBL had lost in consecutive four years recently from 2011 to 2014 with the large amount of money.1: Net loss/profit of HLB and PruB from 2011 to 2014 Unit: billion VND Prudential Buon HLB/PruB HLB Ma Thuot (PruB) +- % 2011 (6,735) 2,950 -9,685 -228.9 (Source: Annual report of HLB and Prudential Buon Ma Thuot) 123doc 4 6,000 4,400 4,700 4,000 2,950 3,000 2,000 0 HLB 2011 2012 2013 2014 -2,000 Prudential Buon Ma Thuot (PruB) -4,000 -6,000 -5,931 -5,787 -5,736 -6,735 -8,000 Net loss/profit of HLB and PruB from 2011 to 2014 The number in table 2.1 shows that over six billion VND lost in 2011 and more than five billion lost in each three years later were the loss that HLB have to face with in their business. In addition, low share of premium turnover and share of new exploiting premium are existing not only in HLB but also in Hanwha Life Vietnam.1: The share of premium turnover and new exploiting premium of Vietnamese insurance market The share of premium turnover New exploiting premium We can see the share of premium turnover and share of new exploiting premium of Source: Hong Hai, April 2015 As regard to Vietnamese’s life insurance market in February 2015 in figure 2.1% premium turnover were received by two life insurance companies namely as 123doc 5 Generali Life and Hanwha Life. New exploiting premium of Hanwha Life was also very low, which was in 9.24% with others life insurance companies.
According baochinhphu (September 2014), there were 17 life insurance companies have been operated in Vietnam, so 9.24% new exploiting premium was for 10 companies in which have Hanwha Life. The situation is similar in HLB, according to annual report four years recently of HLB and Prudential Buon Ma Thuot (PruB), Table 1.2: New exploiting premium and the quantity of new contract Prudential Buon HLB/PruB HLB Ma Thuot (PruB) +- % 1. New exploiting premium (billion VND) 2011 2. The number of new life insurance contracts (contract) 2011 950 25,574 -24,624 3.5 (Source: Annual report of HLB and Prudential Buon Ma Thuot) As we see in the table 2.2, all HLB’s norms were much less than PruB.
Specifically, HLB’s new exploiting premium and the number of new life insurance contracts from 2011 to 2014 were under 7% that compared to PruB. 123doc 6 Moreover, the information about purposes of life insurance product are not transferred sufficiently. Mrs Hoa, who is a customer, said that her daughter’s friend (an HBL’s financial consultant) always introduce her to buy life insurance policy by convincing that the interest of HBL products are much higher than deposit in a bank. She knows clearly that participate life insurance not for interest, the real purpose is for risk.
She got angry about to the wrong explanation of HBL’s financial consultants. She said Prudential’s consultants explain more clearly and persuasively than HBL’s consultants, so she chose Prudential and at the moment, she has a three - year - life insurance policy with Prudential Buon Ma Thuot.