Assesing & Positioing Al Nisr Insurance Company-Medical Service

8/9/2019 Assesing & Positioing Al Nisr Insurance Company-Medical Service

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Service Marketing


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U niversity of Jordan

Faculty of Business

Department of International Business

Al Nisr Insurance Company-

Service Marketing Assessment, Evaluation,

and Positioning Case Study

Prepared by: Mera Horani

Enas Hamaideh

Services Marketing

Instructor Dr. Hani Al Dmoor

May 2010


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Table of contents

Table of contents____________________________________________________3

Executive Summary__________________________________________________4

History and Background______________________________________________5

Company Profile____________________________________________________7

Financial Analysis for ALNisr_______________________________________________8

The Main Service_________________________________________________________9

Competitors____________________________________________________________11

SWOT Analysis____________________________________________________14

Positioning________________________________________________________17

Research Methodology___________________________________________________18

Positioning Map_________________________________________________________18

Analysis_______________________________________________________________21

Conclusion________________________________________________________22

Recommendations__________________________________________________22

References________________________________________________________23Appendix_________________________________________________________24

Appendix


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Executive Summary

Health insurance has become an essential commodity that most people strive to have;

especially when the government does not offer a high quality medical service and when theinsurance only includes government staff. Naturally, it becomes a necessity and a fringe

benefit for which companies attract skilled staff and encourage them to work.

A good insurance company has to provide a maximum medical service with good quality and

minimum bureaucratic procedures as we are dealing with a sensitive issue, and of course

with an acceptable price that matches the service offered, in addition to training its

employees to handle difficult situations and act friendly with their customer while managing

problems smoothly- this could help the company retain its customer satisfied.

In this paper, we examined the medical service provided by Al Nisr Insurance Company

among its competitors in the insurance sector in Jordan. It has been intended to evaluate the

service and study the degree of customer satisfaction it has achieved through the SWOT

analysis which has investigated the weaknesses and the obstacles Al Nisr has encountered

on the one hand, and its successes and strong points on the other hand.

Moreover, this paper examines the position of Al Nisr Insurance company, by evaluating four

dimensions; Quality of service, Price, Complexity of Service, and Staff Cooperation. These

dimensions have been investigated to set the company on a position map and know where it

is located among its competitors.

Our study has been based on a situational and market analysis that has been collected from

a sample of customers dealing with different kinds of insurance companies including AlNisr.

The sample comprised thirty five individuals who were administered a questionnaire that was

distributed electronically via emails and in hand and some of them were interviewed

personally, during a period of approximately two to three weeks.

Therefore, our study finds Al Nisr Insurance Company has a moderate medical service

according to its customers, and in comparison to its competitors. It has been perceived as a

high price provider and with moderate quality and low cooperative frontline officers.

Consequently, Al Nisr Insurance Company has low customer satisfaction and is positioned

as high price provider despite its high capital.

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History and Background

The Jordanian insurance sector came into existence primarily in 1946 when an

insurance agency affiliated with the Egyptian Orient Insurance Company was

established. Prior to that, insurance had been limited to insurance on letters ofcredit that required cover on land or marine transport. This cover was provided

by the Ottoman Bank

through Eagle Star

Company in London. In

1956, the first

Association for

Insurance Companies

was established as the

authority responsible

for regulating the

sector.

During the fifties

period, a noticeable

activity in the field of

cars insurance (carsaccidents) took place

when Jordan was forced

to discharge goods at

Aqaba port which

created the need for a

strong sector of cars

transportation. As a

result for the need of

providing coverage in

these fields, insurance

companies were established; Jordans Insurance Company was established as the

first Jordanian insurance company at the beginning of the fifties period.

During the sixties period, Jordanian market witnessed an increase in the number

of insurance companies when Middle East insurance Company was established

followed by National Insurance Sharing Company. During the seventies and mideighties period, the sectors status remained the same where the number of

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As a result of the economic recess in late

eighties as well as the random

competition in a small market, in addition

to the decrease of insurance prices below

the technical level, many insurance

companies faced losses which made thegovernment issue the (Insurance Practice

Monitoring Act) No. 30 for the year 1984.

Article (56) of the said Act stopped the

issuance of new licenses for Insurance

Companies. In addition, Article 6/a

imposed the increase of insurance

companys capital to become 600

thousand Dinars and obliged insurance

companies to correct its status either by

merging or by increasing the capital. All

that led to the decrease of the total

number of companies to (17) local

company and (1) foreign company in the

year 1987. The situation was

comparatively stable until 1995 when law

No. (9) for the year 1995 was issued. That

law opened the opportunity once again to

establish new insurance companies and

obliged the increase of Jordanian


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Company Profile

Al-Nisr Al Arabi Insurance Company was founded in 1976 by Societe Nationale

DAssurances (now Allianz-SNA) and is one of the leading insurance companies in

Jordan with business activities that include the full range of Life, Medical, Marine,

Motor, Fire, Engineering, Liability and General Accidents insurances.

May 2006 witnessed a major step for Al-Nisr Al-Arabi through a Strategic

Partnership with the Arab Bank, whereby the bank acquired a majority stake in

Al-Nisr. Consequently, the new partnership created between the Allianz Groupand the Arab bank through Al-Nisr Al- Arabi is a major initiative that includes the

launching of a full Bank assurance operation in Jordan, and which promises to

propel the company into a higher level of growth and profitability.

AL Nisr Corp. dedicates its resources towards providing its clients with the finest

service at competitive terms, and rewarding its employees amid a continuous

learning and personal development environment.

Moreover, Al-Nisr has been an innovator in the local market, since the founding

of the company; ameliorating on new insurance concepts and solutions

developed in Europe. While these products are at the leading edge of new

financial solutions, Al-Nisr has been adapting these concepts to fit the needs of

the local market. In addition to providing the complete range of Non-Life

insurances, their strength lies in individual retirement and education planning as

well as employee benefit, retirement schemes, medical & borrowers group life

insurance.

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Financial Analysis for ALNisr

Main Shareholders

Arab Bank 50.0%Allianz MENA Holding

Bermuda Ltd.

18.0%

Sabella Family 13.2%

Mango Family 6.5%

JIF Bank 5.6%

Others 6.7%

Total Premiums2007 2006 Change

Life 3,548,617 2,534,906 40.0%

Medical 3,046,757 2,612,315 16.6%

Marine 549,969 420,711 30.7%

Fire 859,753 923,801 -6.9%

Motors 2,965,249 2,781,329 6.6%

GTP 299,409 201,759 48.4%

General Accidents 308,079 184,876 66.6%

Total 11,577,833 9,659,697 19.9%

Balance Sheet Figures

2007 2006 Change

Total Assets 28,450,949

27,366,445

3.96%

Shareholders Equity 17,778,9

63

17,682,8

69

0.54%

Paid-up Capital 10,000,0

00

5,000,00

0

100.00%

Net Profit (after tax) 2,063,58

0

1,909,34

1

8.08%

Earnings Per Share 0.206 0.458 -55.02%Distribution on Life

Portfolio/JD

6.00% 6.00%

Distribution on LifePortfolio/USD

4.75% 5.50%

Dividends Per Share 15% 30%

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The Main Service

Health Insurance is a financial mechanism with which people are protected

against catastrophic financial burden arising from unexpected illness or injury.

Having a well functioning insurance system ensures pooling of resources to cover

risks. Thus, medical insurance is the second largest segment of the insurance

sector in terms of premiums, comprising 16.6% of the total insurance service in

Jordan. Estimates by the Ministry of Health state that around 78% of the

population is covered by health insurance.

Health insurance is divided into two major categories as provided by the public

sector and the private sector. The public sector has tended to dominate theprovision of health care and coverage, through the Ministry of Health, the Royal

Medical Services, and the Jordan University Hospital. However, the private

health sector comprises private insurance companies, self-insured companies,

and third party administrators. These tend to deal primarily with private sector

physicians and hospitals. Private insurers typically determine premiums based on

age, sex, and medical history on an individual basis. Their health insurance

policies are designed to control costs and risks by excluding many treatments

and illnesses from their cover.

The Marketing of health insurance policies involve unique practices when

compared to marketing of any other product. Health Insurance policies are

services and hence intangible in nature. So there is no immediate chance of

realizing the services whether good or bad. It is the sales force to struggle much

to convince the buyers in all respects before materializing a contract.

In regard to the factors affecting the insurance service, it can be classified into

personal, social, economic, psychological and company related variables. If the

health insurance industry wishes to pull its weight in shaping this huge market, it

needs to analyze the major factors influencing the purchase of health insurance

policies, With competition growing endlessly, insurers need to be in the

continuous process of product innovation come up with innovative ways to

contribute toward implementing the governments priority of offering health

insurance to poor.

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Al Nisr Corp. offers a variety of insurance services that start from personal

insurance, retirement planning to education plan, personal accident plan,

medical plan, travel insurance, life insurance, cargo, engineering and money

insurance, and banc assurance. However, in this paper we are interested in

evaluating the medical insurance service offered by AL Nisr corp. in matter of

the insurance market in Jordan.

The following diagram shows the main insurance services offered by the

insurance sector in Jordan with detailed explanation referring to each insurance

company in the Jordanian market.

Diagram B:Insurance Services in Jordan by Companies

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Middle East Insurance (MEIN)

Middle East Insurance was established in 1963 as a public shareholding

company. The company raised its capital several times over the years, with the

latest increase occurring in April 2007 through capitalizing a portion of the

retained earnings to increase the capital from JD 15 million to JD 18 million. The

Company offers all forms of insurance and reinsurance. The following diagram

illustrates its financial situations;

Net Income 2006 JD 4,026,156Net Income (30/06/2007) JD 734,073Share Price (30/09/2007) JD 2.57Market Capitalisation

(30/09/2007)

JD 46,260,000

Earnings per Share 2006 JD 0.268Earnings per Share

(30/06/2007)

JD 0.041

Forward P/E (times) 31.51xTrailing P/E (times) * 9.59xTrailing P/BV (times) * 1.03x

Arab Orient Insurance (AALI)

Arab Orient Insurance Company was established as a public shareholding

company in 1996, with an initial paid up capital of JD 2 million. This was

increased over the years to reach JD 10 million. The Company offers all types of

general insurance services. AALI is a subsidiary of the Jordan Kuwait Bank, which

has a 65.7% ownership in the Company. The following diagram illustrates its

financial situations;

Net Income 2006 JD 1,313,636

Net Income (30/06/2007) JD 1,223,564

Share Price (30/09/2007) JD 3.50

Market Capitalisation

(30/09/2007)

JD 35,000,000

Earnings per Share 2006 JD 0.156

Earnings per Share

(30/06/2007)

JD 0.123

Forward P/E (times) 14.30x

Trailing P/E (times) * 22.44x

Trailing P/BV (times) * 2.93x

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Weaknesses Main term

Lack of strong regulatory

framework

Government

Sector earnings highly dependent

on stock market performance

Economical situation

Insurance companies are selling

almost the same products, and

competition is mainly focused on

price. Accordingly, manycompanies compete solely over

price; therefore, margins have

declined to an extent that many

companies are unable to cover

their expenses or even in some

instances are operating at a loss.

The pressure to lower prices is

leaving many companies

unprofitable.

Competition

Opportunities Main term

Awareness of importance of

insurance is increasing. Companies

and employees are acquiring the

importance of having health

insurance and this is not

considered anymore a fringe

benefit, its becoming more a main

part of taking the deal of a job.

Customer Awareness

Population is growing Market share

New developments in IT allowed AL

Nisr to explore new and economic

methods of distribution such as

Bancassurance

IT

Growing disposable income of

society may increase the market

density, since the average person

will earn more money and be able

to spend more on insuranceproducts.

Increase in income

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Cross-border expansion into

neighboring markets can facilitate

growth.

Globalization

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Threats Main Term

Economic slowdown Economical situation

Availability of international

insurance companies in Jordan

increases competition

Competition

Governments regulations and

possible increase of tax laws

imposed on the insurance

companies.

Governments regulation

Negative impact of local andregional economic downturn,

including, increased moral hazard

and increased cost of claims,

increasing reinsurance costs and

tough terms and conditions. It is

known that moral hazard, fake and

fraud claims, increases when

businesses get down or

unprofitable.

Economical situation

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Positioning

Falling in love! As entrepreneurs, they do it every day. The passionate belief in,and commitment to the product (or service) makes all things seem possible. The

most successful entrepreneurs learn to transform their passion intoposition.

Positioning is how a product appears in relation to other products in the market.

It is the perceptual location. It's where the product or service fits into the

marketplace. Effective positioning puts the companys product first in line in the

minds of potential customers.

As individuals, we continually position ourselves. The responsible older sibling,

the class clown, a super genius are all examples of positioning. These identifiers

help us define ourselves and distinguish our abilities as unique and different from

other people.

Thus, positioning is a powerful tool that allows the company to create an image.

And image is the outward representation of being who it wants to be, doing what

it wants to do, and having what it wants to have. Positioning can lead to personal

fulfillment. Being positioned by someone else restricts the choices and limits the

opportunities. In order for the customer to pick ONLY this companys service.

That's why it's so important for entrepreneurs to transform their passion into a

market position. As competition rises where the concept competition

intelligence arises, the need for positioning becomes integral. As a matter of

fact, ifyou don't define your product or service, a competitor will do it for you.

Your position in the market place evolves from the defining characteristics of

your product. The primary elements of positioning Al Nisr Insurance company

are:

Price; it tackles the service offered by the company; whether it matches

the cost of the service and the quality offered.

Quality; it implies the benefit offered in return for the price paid. Does it

achieve satisfaction for the customers?

Complexity of Service; it tackles the process of handling and offering

the service. In addition, it entails the whole medical experience starting

from essential treatment to commodity treatment and urgent issues;

whether they are being handled smoothly.

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Staff cooperation; it deals with the frontline staff who take care and

handle angry customers and deal with urgent issues faced by the

beneficiaries and handle customers inquiries.

Research MethodologyType and Nature of the study:The purpose of our study is analytical and the

unit of analysis is customers dealing with Al Nisr Insurance Company and its

competitors. The study setting is a field study since it has been collected

naturally without any interference from the researcher. The time horizon for the

study is a cross-sectional one as data were gathered once.

Sample: a sample of a thirty five individuals who have been customers of-Al Nisr

Insurance Company and its competitors- in different kind of sectors in Jordanian

companies have filled our questionnaire. These fifty individuals have been

chosen randomly composing a sampling design; where each of the fifty

individuals will have an equal chance.

Positioning Map

This part of the study aims at defining the medical insurance service position atAl Nisr insurance company among its competitors in the market. A useful way to

represent consumer perceptions of alternative products in visual format.

Therefore, we will be designing a four dimensions model.

The first diagram will constitute of two dimensions to be studied solely; price and

quality, in addition to another diagram that will study the staff cooperation and

the complexity of service. And the third diagram composes a fully summarized

chart for the four dimensions; explaining the position of each company on the

four previously mentioned aspects.

Naturally, since we are studying and assessing Al Nisr Insurance Company, then we are

interested to know its position in the insurance market; considering the four dimensions in

the medical services provided. This relationship is schematically diagramed in the fourth

chart.

Diagram C:Map Position in regard to Price andQuality of Service

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Diagram D:Map position in regard to Complexity and Staff Cooperation, Price,

and Satisfaction in the insurance market.

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Analysis

We have used a questionnaire of eighteen questions to study and evaluate the medical

insurance service provided by Al Nisr Insurance Company. The questions have beenaddressed to thirty five beneficiaries. It aimed at investigating the quality of service offered

by the provider, the level of satisfaction among they hold to their provider, the flexibility and

responsiveness of steps in handling any problem faced by the customer, and the

questionnaire had also examined the difference between Al Nisr Insurance Company and its

competitors in the eyes of the customers and according to their perceptions.

In analyzing the data; we have rated the degree the degree of satisfaction in a percentage

provided by the customers between (0-100%), as for the price it has been rated in a three

degree scale ranging from low to high and moderate; which have been scaled as follows

( low= -3, moderate=0, and high =3), the degree staff cooperativeness has been rated on a

scale of four as follows (high = 3, moderate =0, very high=6, very low=-3), and finally the

degree of service complexity has been rated on a scale of three as follows (low=-3,

moderate=0, and high = 3). All these numbers have been studied and analyzed using the

MS-Excel program and the data has been analyzed to come up with the following outcomes;

Al Nisr Insurance Company has been rated by its customers as a low insurance provider;

since its level of service scored 52% among the other competitors who have scored between80-100% except for German Insurance Company. As for the price offered, Al Nisr Insurance

Company is perceived as an expensive service to afford in comparison to other companies.

However, it should be born in mind that such results vary from one person to another

considering the social status, the living conditions, and the percentage of income per each

customer; some may perceive the service provider as high because their net income is

approximately moderate compared to others. Regarding the complexity of the service and

the bureaucratic steps-especially in urgent situations- the customers have rated Al Nisr

Insurance Company as a moderate complex service in comparison to other insuranceproviders who mostly scored 2 or 1 on the scale. Finally, Al Nisr Insurance Company has

been rated and distinguished itself in the communication field; where its frontline staff are

perceived moderately as cooperative and friendly team who are very responsive to urgent

situations facing the customers and always offer solutions that meet the customers

expectation and solve their problems. The company has been rated as moderate in regard to

this aspect compared to other companies who actually have exceeded the high expectation

with scores reaching 7 and 8 degrees on the scale.

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Conclusion

The insurance sector in Jordan is still a niche market; especially when speaking of private

medical insurance providers. As Jordan is a developing country and considering the livingconditions, the income, and the economical situation the insurance sector keeps struggling

to differentiate itself and its position.

Despite the fact that assessing a service that is absolutely intangible is quite a challenge, but

we have been able to connect the evaluation with sensible and material factors such as the

staff cooperation, the price, and the procedures needed to proceed in order to have the

service. Thus, we have evaluated Al Nisr Insurance Company as a moderate medical

service provider among its competitors who actually have more satisfied customers.

We have noticed after the questionnaire and evaluating the results that Arab Orient

Insurance Company achieved the highest satisfaction level among its customers and that

most of Al Nisr Insurance Company beneficiaries have shifted to Arab Orient.

Recommendations

Insurance companies should bear in mind that giving one bad experience that faces the

customers; usually in urgent situations, will cause the customer to withdraw and leave the

company unsatisfied. And since we are talking about a service, insurance companies have

to pay attention that word of mouth in angry cases would cause a damage that is very hard

to recover and will certainly cost the company more than it would if it had to offer better

service. Speaking of which, we believe that the staff cooperation and the complexity of the

process play a vital role in the medical service in specific; because people act emotionally in

such situations and they might perceive the service provider as merciless if he did not

cooperate. As a matter of fact, a customer would disregard the price being high if the latter

aspects were more simplified.

We believe that Al Nisr Insurance Company has the potential to perform better; having big

customers as the Arab Bank for example provides it with a competitive advantage among

other insurance provider, it has to take better care of its beneficiaries and offer them high

quality services with minimum bureaucratic procedures and maximum communicative and

skilled frontline staff; who should act as saving angles for their customers. A company has to

bear in mind that dealing with patients requires more attention and sensitivity. This way, Al

Nisr Insurance Company can easily achieve customer satisfaction.

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References

Kammash. T.( 2007). Insurance Sector of Jordan; published informational

report, ABC Investement Corp. Saleh. A., & Zeitun R. (2006). Insurance Company Performance in the

Middle East. University of Wollongon.

Manivannan L. & Kumar S. A. (2007). A Study on Marketing Problems and

Prospects of Health Insurance Policies in Coimbatore District. University,

Tirunelveli.

IBID. (2008). Jordan Insurance Commission, Jordan Insurance Business

Annual Report. {Online} available http:// www.irc.gov.jo

Nicolaides. (2009). Summary Rating Rationale. Arab Bank Plc.

JOIF. (2007). Historical Background. {online} available http://www.joif.org/

Al Nisr. (2010). Company profile {online} available http://www.al-nisr.com/

ASE. (2010). Financial statement {online} available www.ase.com.jo

JIIG. (2010). Company profile {online} available http://www.jiig.com/

JIC. (2010). Company profile {online} available http://www.jicjo.com

Arab Orient. (2010). Company profile {online} available

http://www.araborient.com/

Middle East Insurance Company. (2010). Company profile {online}

available http://www.meico.com.jo/

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http://www.irc.gov.jo/http://www.joif.org/http://www.al-nisr.com/http://www.ase.com.jo/http://www.jiig.com/http://www.jicjo.com/http://www.araborient.com/http://www.araborient.com/http://www.araborient.com/http://www.araborient.com/http://www.irc.gov.jo/http://www.joif.org/http://www.al-nisr.com/http://www.ase.com.jo/http://www.jiig.com/http://www.jicjo.com/http://www.araborient.com/


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Appendix

Questionnaire

Introduction to respondent

This survey is part of a marketing research for assessing Al Nisr insurance

company as study case for a service company. Please respond to all the

questions, as your answers will greatly help us achieve our goals throughout this

study. All the information and data collected will be used for the sole purpose of

this research. This survey is anonymous and your privacy is guaranteed.

Please put an (X) in the square that best suits your response:

Statement AgreeNeutra

l

Disagre

e

1. I join medical insurance voluntarily

2. I am concerned about moderate prices

more than quality

3. I chose Al Nisr among many other

companies

4. I prefer to join a well established

company

5. I prefer to join a local company rather

than an international company

6. The price I pay for the service I get is fair

7. The companys front line officers always

respond to my questions and inquiries

8. The company always updates its

communication list to include new

medical institutions, physicians, and

pharmacies.

9. The company keeps me updated with its

recent changes and offers

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10.I prefer to be a customer for Al Nisr more

than being with any other insurance

provider

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Interview

You are kindly requested to fill in the following questions; based on your

experience with the service provider.

1. What is the insurance company you are dealing with?

2. For how long have you been dealing with this company?

3. What is the previous company you have been dealing with?

4. To which degree are you satisfied with the current insurance company?

(%)

5. Does the insurance company provide a complete package of medical

services; including dental, surgical, and cosmetic?

6. How can describe the quality of service in regard to quick response to

urgent issues?

7. How can you evaluate the complexity of the service process?

8. Do you perceive the front line employees at the insurance company

cooperative?

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Abbreviations

AO = Arab Orient Insurance

NH= Nat Health Insurance

JFECO= Jordan French Insurance Company

JRM= Jordan Royal Medical

MN= Med Net Insurance

CM= Crown Medical Insurance

JIC= Jordan Insurance Company

EAI= Euro Arab Insurance

Documents

Assesing & Positioing Al Nisr Insurance Company-Medical Service