Why people stop paying for long term insurance policies - Case study on Gulf Insurance Company`s MISK policy

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EXECUTIVE SUMMARY

The insurance business in Kuwait is in a phase of transformation over the years from a national monopoly controlled by four companies amongst which Gulf Insurance Company (GIC ) is a major constituent to a competitive financial business . The people in Kuwait with the highest human development index in the Middle East have limited perception of the needs of insurance . Despite the same , a large number of local regional and international service providers have marked their presence in the country . The insurance

business has thus transformed from a monopoly to competition . The need for former nationalized entities as the GIC to ensure persistency through customer retention is thus paramount . MISK is one of the key policies marketed by GIC which is unit linked . Given the major advantage of unit linked policies it is essential that persistency is ensured as it enables better management of the insurance corpus . However over the year 's consistency in persistence is lacking as indicated by a large number of withdrawals . The reasons for the same are not wholly obvious thus there is a necessity for analysis of the high rate of withdrawal of MISK . Non persistency is related to external and internal factors , thus there is a need to examine these . Keeping this in view three research questions were identified to include customer perceptions in cancellation /retention of MISK policies and the internal and external factors identified therein

A realist research strategy has been used which is a balanced mix of positivism and interpretivism , due to the wide range of factors which are required to be analysed including a mix of social , actuarial and business components . This was seen to provide a clear indication of the behaviour of buyers and sellers and the impact of persistency in MISK Extensive use of questionnaire survey was made to seek and analyze primary data from past customers of MISK as well as those persisting with the policy beyond five years . Given the paucity of sources on the insurance business in Kuwait , main reliance was placed on similar surveys of persistency in the USA and UK . This indicated the influence of external factors in the insurance sector in these countries . These markets being mature with a saturation of players , there has been greater focus on customer service and quality to build consumer loyalty Kuwait is an emerging market which has been opened for competition lately . The level of customer quality is thus seen to have greater impact in Kuwait than the external factors . A rigorous statistical analysis led to corroborating conclusions arrived at through qualitative and literature review

The principal conclusions and recommendations arrived at in the research include primarily internal factors which can bring about change in perception in the policy holders of MISK restricting cancellations . The primary need is of enhancing customer focus , through improvement of service and building awareness . The need for GIC to exploit customer loyalty to enhance portfolio of existing policy holders was also...