Colorado State University – Global Campus

Colorado State University – Global Campus

MGT530: Operations Management

Dr. Victoria Figiel

Total Quality Management

Hessa Al Enazi

April 2, 2016

Products and Services Quality Management: A Case Study of Oman Insurance Company (PSC) in UAE

Quality is one of the fundamental expectations of customer’s aspects in invariably all products and services. Having a unique and high quality is a means to win customers as well as making them to remain loyal for long periods of time. Defining and assessing the quality of tangible products, such as manufactured goods, relies on characteristics such as conformance, dependability, performance, consistency, permanence, and serviceability. On the other hand, the quality definition of intangible products, such as insurance policy products, is attributed to promptness, friendliness, consistency, as well as courtesy. In the insurance industry, the concept of quality can be quite complex since the value of the insurance products to the policyholders, as well as other interested stakeholders is subject to a wide spectrum of factors. However, just like any other product, the quality of an insurance policy can be evaluated under the rubrics of aptness, price, and reliability (Gorji, 2011). While price depends on the marketing, underwriting, accuracy, and processing efficiency, the aptness for use is dependent on the product design, policy design and language, as well as the quality of claim service. Today, one of the fundamental successes in insurance companies is the use of management theories such as total quality management in attending to the needs of customers, continual enhancement of quality of products, services and processes (Heckman, n.d). This essay revolves around the application of total quality management to the insurance industry in the Middle East. A case study of Oman Insurance Company in UAE is put in consideration as a representation of this industry.

Oman Insurance Company (PSC)

Oman Insurance Company (P.S.C.) is a multi-product insurance firm that provides a wide spectrum of general insurance, life-insurance, as well as health insurance products to organizations and individual customers. The company provides customer-based products accentuated in superior quality services and underwriting. The company’s product assortment encircles endowment insurance, term-life insurance, unit linked insurance plans, critical illness insurance, individual health insurance plans, third-party liability motor insurance, travel easy policy, comprehensive motor insurance plans, home insurance, personal product insurance, group life, personal accident insurance, marine cargo insurance, engineering insurance, energy insurance, and aviation insurance (Augustine, 2014). PSC is a subsidiary of Mashreq Bank (PSC) which is among the leading financial institutions operating in the United Arab Emirates. It has branches in Dubai, Sharjah, Ras al Khaimah, Ajman, Doha, Muscat, Al Ain, Fujairah, and Abu Dhabi (Augustine, 2014).

The company prides in providing a wide spectrum of general, life, and health solutions and products for individuals, companies both small-sized and large, and multi-national corporations operating in UAE. The company is one of the leaders in the provision of risk underwriting solutions across the UAE. The company has a strong financial backing that is supported by the strong reinsurance protection from reinsurance subsequently allowing the company to fulfill their short-term and long term commitments to their partners and clients. The primary KPIs of PSC include clients’ retention, Cross Sell/Up-sell, enhanced offerings and market differentiation, and increasing profitability (Bawab & Abbassi, 1996). Some of the risks that PSC emanate from effects of globalization, market inflation, changes in sector regulation, high competition, and insurance market segmentation which has necessitated the formation of a Risk Management Department. In addition, PSC seeks to develop an effective communication strategy with the clients in a bid to enhance quality of products and services. The effectiveness of the quality management is enhanced through conducting trainings as well as through the implementation of close coaching (Augustine, 2014). Furthermore, the revision of price strategies and developing of new relationship with both local and international markets serves as useful tools for PSC quality enhancement thus leading to sales growth.

Total Quality Management and Oman Insurance Company (PSC)

Insurance market activities, both as financial intermediary and as providers of risk transfer as well as indemnification, promotes economic growth through allowing of different risks to be managed more efficiently. Health insurance allows individuals, families, and businesses to safeguard themselves against the risk of incurring sudden and substantial medical costs related to their health. Health insurance companies provide a wide spectrum of insurance products to aid individuals, families and businesses to access as well as afford the healthcare needs to provide financial protection in the event of unexpected illness or injury (Gorji, 2011). Seeking to achieve a sound business growth globally, health insurance companies continue to transform their enterprises amid the dramatically changing and turbulent business environment.

Oman Insurance Company (PSC) has a vision of enhancing the quality of service and customers’ satisfaction level, the health awareness improvement, and expands the medical network to enable all insured members to have access to their preferred medical professionals. Such vision accentuates the influence of quality of service and customers’ satisfaction in the sales increase, which should be taken into consideration in the company sales strategy (Vetter & Boecker. 2012). It is widely accepted that technologies can improve the quality, increase sales and profit, and enhance the performance outcomes of infomediary sales channels (Kuruzovich. 2013). Oman Insurance Company’s competencies in terms of quality are unique in that it is highly customer and product focused as a comparison to being profits focused. Once clients become loyal to the company due to its high quality services, they are bound to keep on purchasing the health insurance products from the company. Happy clients usually refer their friends or family members to products that they felt offered them the service that they needed (Bawab&Abbassi, 1996).

PSC still needs to develop the quality and qualification of the staffs and improve their negotiation skills, consequently, such skills are instrumental in supporting PSC in analyzing one of the areas of improvement for a better quality strategy, which is developing and training on quality which is considered as an important factor in the improvement of sales. The company embraces the fact that training is a large part of quality. The company has several training and quality officers spread throughout the branches, whoare instrumental in supporting the sales team on various levels which include product refreshers, licensing of sales team as well as new joiners, interdepartmental trainings with compliance and product management. The company has demonstratedits attempt to enhance their high quality service delivery over the next few years to come (Augustine, 2014).

The rationale for quality gaining such prominence with insurance organizations is that insurance providers have gained a comprehension of the high cost of poor quality. Quality affects all aspects of PSC and it has dramatic cost implications. Clear consequences take place when poor quality leads to dissatisfaction of customers and eventually resulting in loss of business. There are many other costs associated with quality and they can be classified into two major categories; quality control costs, and quality failure costs (Heckman, n.d). Quality control cost is associated with activities associated with achieving high quality products. Quality control costs are either prevention costs or appraisal costs. On the other hand, quality failure costs involve the cost consequences of poor quality, and they include internal failure cost, and external failure costs (Bawab & Abbassi, 1996). Oman Insurance Company (PSC) invests heavily in prevention and appraisal costs in a bid to prevent internal and external failure costs. They seek to detect and correct defects during the policy design of any insurance product thus ensuring that the insurance product is less expensive. In detecting and solving quality problems, PSC make use of Total Quality Management techniques in the operating areas of the insurance firm, which include; underwriting, claims, insurance processing operations, sales and marketing, financial management as well as research and development.

References

Augustine, B.D. (2014) UAE Insurance Sector Performance Seen Recovering, Gulf News, Retrieved from <http://gulfnews.com/in-focus/companies/abu-dhabi-national-insurance-company?page=abu+dhabi+national+insurance+company>

Bawab, F. A. & Abbassi, G. Y (1996), An Application of Total Quality Management for the Insurance Companies: A Case Study. American Society for Engineering Management Journal

Gorji, M (2011), The Study of the Relationship between Total Quality Management and Service Quality Improvement Leading to an Optimal Model Presentation, Australian Journal of Basic and Applied Sciences, 5(11): 1742-1749, 2011, ISSN 1991-8178

Grant, R.M. (2005). Contemporary Strategic Analysis. London: Blackwell.

Heckman, P. E (n.d), Total Quality Management in Property/Casualty Insurance: An Actuarial Perspective, Available Online, Assessed from <https://www.casact.org/pubs/dpp/dpp93/93dpp073.pdf>

Kuruzovich, J.(2013) ‘Sales Technologies, Sales Force Management, and Online Infomediaries’. Journal of Personal Selling &SalesManagement, 33 (2), pp. 211-224. Ebschost [Online] Retrievedfrom:http://content.ebscohost.com.ezproxy.liv.ac.uk/ContentServer.asp?T=P&P=AN&K=86457301&S=R&D=bth&EbscoContent=dGJyMMTo50SeqLY4zOX0OLCmr0yepq5Ss6m4TLCWxWXS&ContentCustomer=dGJyMOzprkmvqLJPuePfgeyx7Ybq3%2Bx9. (Accessed 28th Nov 2014)

Vetter, P., &Boecker, K. (2012) “Benefits of a Single Payment System: Case Study of Abu Dhabi Health System Reforms”. Health Policy, 108 (2-3), pp. 105-114. Ebschost