A critical analysis of current vs proposed risk underwriting and claims management procedures at Sasguard Insurance Company Ltd

Smith, Etienne Roche (2007-12)

Thesis (MBA (Business Management))--University of Stellenbosch, 2007.

Thesis

ENGLISH ABSTRACT: Since its inception in 1998 as a wholly owned captive insurer, Sasguard has successfully supplied the short-term insurance needs of its parent company, Pioneer Foods Pty Ltd. Although the financial results of Sasguard increased steadily over this entire period, the insurer has never investigated the quality of its service regarding the perceptions of its internal support staff, who represent Sasguard to its client Pioneer. The objective of this research report was to critically analyse the insurer’s current risk underwriting and claims management procedures to determine if the current situation was acceptable and if not, to present proposals to reduce costs and to supply Sasguard’s internal clients (members of the parent company) with a better service. The tasks that were completed for this report were: • a literature study on aspects of risk management directly applicable to Sasguard; • critical analysis of the current risk underwriting and claims management procedures; • identification of shortcomings in the current structure; • collection of responses from internal support staff members by an electronic questionnaire; • critical analysis of those responses; and • proposals which Sasguard can implement to address identified shortcomings. The questionnaire was posted on Pioneer’s intranet site, and the entire population of 30 members was notified by email to complete and submit it within a specified period. Twenty-eight staff members did, with two on leave, for a 93% response rate. The responses were analysed in detail to form the basis of the empirical investigation. They were compared to the writer’s own observations, and together were used to develop conclusions and recommendations which Sasguard can implement in future to reduce both risk and costs associated with claims submitted by its internal clients. The main findings follow. Not enough representatives are at management level. Most (89%) want to increase their background knowledge of insurance, mainly through Sasguard. They want a paperless system to view claims. They were divided on whether to establish a workshop to recover parts of disused vehicles; more study is needed. They want to simplify the process of getting quotes and thus facilitating claims. They want better two-way communication. They favoured using the claims history of a branch, along with other forms of reward, to motivate supervisors and drivers, and others, to reduce the accident rate. The issue of whether out-sourced drivers have increased accident claims needs more study. Indeed, the legal employment status of out-sourced drivers needs to be addressed. Most of the internal client representatives were satisfied with the speed of claims settlement, but nearly a third were not entirely satisfied, which the researcher interprets as a cause for concern. Furthermore, one fourth would consider moving to a traditional insurer; this perception also is worrying and can be addressed, possibly through better understanding of the captive insurer and its practices. Proposals followed from the findings, hopefully to be implemented in due course. While results cannot be generalised, they can be provide insight to other captive insurers, especially those in a manufacturing environment similar to that at Pioneer Foods.

AFRIKAANSE OPSOMMING: Vanaf die totstandkoming van Sasguard as ‘n alleenbeheerde gevange versekeraar in 1998, was die maatskappy deurgaans instaat om in sy moeder maatskappy se korttermyn verskeringsbehoeftes te voorsien. Alhoewel Sasguard se finansiële resultate vir die totale periode voortdurend gegroei het, het die versekeraar dit nooit voorheen nodig geag om ‘n ondersoek te loods om te bepaal of dit werklik in sy interne kliënte se verskeringsbehoeftes voorsien het aldan nie. Die oogmerk van hierdie navorsingsverslag was om ‘n kritiese analise op die versekeraar se huidige onderskrywings en eise besturingsmetodes toe te pas om daaruit te bepaal of die huidige metodes wel voldoende is aldan nie. Indien daar bevind sou word dat die huidige metodes nie voldoende is nie, voorstelle te ontwikkel om die koste van eise te verminder en ‘n beter diens aan sy interne kliënte te kan lewer. Die voortvloeinde take van die werkstuk is: • ‘n Literatuurstudie op daardie aspekte van risikobestuur wat ‘n direkte invloed op Sasguard se besigheidsomgewing het; • Kritiese analise van die huidige metodes om risko te onderskryf en eise te bestuur; • Om tekortkominge in die huidige struktuur te identifiseer; • Verkryging van die versekeraar se interne ondersteuningspersoneel se opinies deur ‘n elektroniese vraelys; • ‘n Kritiese analise van die respondente se antwoorde; en • Voorstelle wat Sasguard kan gebruik om die geidentifiseerde tekortkominge suksesvol aan te spreek. Die vraelys was op die maatskappy se intranet netwerk geplaas en e-posse is gebruik om elke individuele respondent in kennis te stel om die vraelys te voltooi binne ‘n bepaalde tydperk. ‘n Totaal van 28 uit die 30 populasie het die vraelys voltooi, vir ‘n totale reaksie van 93 persent. Die antwoorde vanaf respondente is getabuleer en het gedien as basis van die empiriese studie. Deur die getabuleerde data met die skrywer se eie observasies te vergelyk kon voorstelle ontwerp word wat die versekeraar in die toekoms kan gebruik om aan die een kant sy blootstelling aan risiko te verminder en aan die ander kant sy eisekoste te verlaag. Die hoofbevindinge van die studie volg hiernaas. ‘n Grooter aantal interne kliënt verteenwoordigers moet op bestuursvlak dien by die interne kliënt. Die meeste van hierdie verteenwoordigers het ‘n behoefte daaraan om hulle verskeringskennis uit te brei, hulle verkies ‘n papierlose sisteem waarop vordering van hulle ingediende eise vertoon word, hulle het ‘n behoefte aan ‘n meer eenvoudige proses om kwotasies te verkry en hulle benodig verbeterde tweerigting kommunikasie. Hulle is optimisties dat aksies waardeur goeie drywers erkenning ontvang ‘n positiewe invloed kan hê op hierdie drywers, asook ander individue, wat daardeur ook toekomstige eise sal verlaag. Die terugvoer was dubbelsinnig rakende die oprigting van ‘n sentrale onderdele verskaffer, die ongeluksratio van uitgekontrakteerde drywers, sowel as die wetlike aspekte rondom die status van hierdie drywers. Areas van kommer is die ontevredenheid van sommige interne verteenwoordigers ten opsigte van die spoed van eise afhandeling, asook die siening dat tradisionele versekering moontlik meer waarde kan bied as gevange versekering. Alhoewel die resultate van hierdie navorsingsprojek nie veralgemeen kan word nie, voorsien dit wel insig aan ander gevange versekeraars, veral vir organisasies wat in dieselfde vervaardigings-sektor as Pioneer Foods sake doen.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/847
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