Insurance companies in Lithuania

 VILNIAUS KOLEGIJA EKONOMIKOS FAKULTETAS Draudimo vadybos katedra Dieninių studijų skyriaus PICKING THE INSURANCE COMPANY IN LITHUANIA Anglų kalbos savarankiškas darbas Darbo vadovė: Vertinimas ____________________________ _____________________________________ Data _________________________________ Vilnius 2009 TABLE OF CONTENTS 1. ABSTARCT 3 2. SUMMARY 4 3. INTRODUCTION 5 3.1 Methods 6 3.2 Results 8 4. CONCLUSION 12 5. REFERENCE 13 1 ABSTARCT Insurance is an arrangement in which you pay money to a company and they pay money to you if something unpleasant happens to you, for example if your property was stolen or damaged, or if you got a serious illness. Basically the purpose of all insurance is to protect yourself or your family against the financial impact when a tragedy happens. Insurance is not to help you to cut down your budget expenses, but to protect you against catastrophe. Life insurance is a form of insurance in which the person makes regular payments to insurance company. Fixed sum of money will be paid to the person after a period of time or to his/hers family if he/she dies. Automobile insurance is a form of insurance that protects against losses involving vehicles. Credit insurance repays a part or all loan back when certain things happen to the borrower such as unemployment, disability or death. Health insurance pays for medical expenses. Insurance is important and necessary. As everyone knows future is unknown. Insurance offers you to live your life without worrying about your future. Keywords: arrangement, borrower, disability, budget expenses. 2 SUMMARY English. Insurance is a contract in which one part agrees to compensate another part’s losses or damages caused by risks, identified in a contract, in exchange for the payment of a lump sum or periodic sums of money. There are two ways of buying insurance. One way is to go to the agent to whom you explain your situation and trust him/her to suggest the type of insurance that is right for you. The other is to do it on your own. Insurance company is a financial institution which sells insurance. Insurance companies may be classified into two groups: • Life insurance companies which sell life insurance, annuities and pensions products. • Non-life, General, or Property/Casualty insurance companies which sell other types of insurance. Here are the main factors to keep in mind when selecting the insurance company: price, financial solidity, services, comfort. Keywords: annuities, financial solidity, services. Lietuvių kalba. Draudimo sutartis yra kontraktas, pagal kurį viena šalis sutinka kompensuoti kitai šaliai už bet kokius nuostolius arba padarytą žalą, nustatytą sutartyje, mainais už mokėjimo vienkartinę sumą arba periodines pinigų sumas. Yra du būdai, kuriais galima įsigyti draudimą. Vienas būdas yra kreiptis į tarpininką, kuriam jūs paaiškinsite savo situaciją ir pasitikėsite jums pasiūlytu draudimu. Kitas būdas yra padaryti tai pačiam. Draudimo bendrovė yra finansinė įstaiga, kuri parduoda draudimo paslaugas. Draudimo kompanijos gali būti skirstomi į dvi grupes: • Gyvybės draudimo bendroves, kurios parduoda gyvybės draudimą, rentos ir pensijų produktus. • Ne gyvybės, generalinės arba neekilnojamojo turto / avarijų draudimo bendrovės, kurios parduoda kitų rūšių draudimą. Štai pagrindiniai dalykai, kuriuos reikia turėti omenyje renkantis draudimo įmonę: kaina, finansinis stabilumas, teikiamos paslaugos, patogumas. Raktažodžiai: kasmetinė renta, finansinis stabilumas, teikiamos paslaugos. 3. INTRODUCTION Insurance is a contract in which one part agrees to compensate another part’s losses or damages caused by risks, identified in a contract, in exchange for the payment of a lump sum or periodic sums of money. An insurer is a company which sells the insurance; an insured is the person buying the insurance. Use and weigh up these three steps when buying insurance: Step One: do I need this type of insurance at all? Step Two: will I be able to pay for this? Step Three: where should I buy it? There are two ways of buying insurance. One way is to go to the agent to whom you explain your situation and trust him/her to suggest the type of insurance that is right for you. The other is to do it on your own. You research the various types of offers, decide what you need, and then do a comparison of various companies. Insurance company is a financial institution which sells insurance. Insurance companies may be classified into two groups: • Life insurance companies which sell life insurance, annuities and pensions products. • Non-life, General, or Property/Casualty insurance companies which sell other types of insurance. There are also companies known as „insurance consultants“. There are many insurance companies, so choosing between them can be a challenge. Here are the main factors to keep in mind when selecting the insurance company: • Price. Many companies sell insurance policies and prices vary greatly from one to another; get at least three price quotes from insurance companies, agents or the Internet. • Financial Solidity. Select a company that is likely to be financially stable for many years by using ratings from independent rating agencies. • Services. Your insurance company and its representatives should answer your questions and handle your requests fairly, efficiently and quickly. • Comfort. You should feel comfortable with your insurance purchase, whether you buy it from a local agent, directly from the company, over the phone or over the Internet. 3.1 Methods Talking about insurance companies, it’s very important to know people’s opinion. We questioned 20 respondents. There were two types of respondents: students and elder people who have constant workplace and real experience in choosing insurance company and insuring their assets or life. Each respondent got survey via skype or e-mail. Figure 1. Types of respondents There were 11 elder people and 9 students questioned – as chart shows it is 55 and 45 percents respectively. The survey was composed from 8 questions about picking the insurance company in Lithuania. To go further, we will represent the questions and the answers of the respondents. Survey: 1. Your social status: a. student; b. employee/ -er. 2. Monthly income: a. up to 400 Lt; b. 401-1000 Lt; c. 1001-2000 Lt; d. 2001 and more. 3. Are you insured your life or assets? a. and life, and assets; b. only life; c. only assets; d. none. 4. Where do you get and find information about insurance companies? a. in the Internet, TV or radio; b. in the company; c. the company sends commercial booklets, flayers; d. from friends; e. other (type here)…………………. 5. Which element does the biggest influence in choosing the insurance company? a. the sum of a contribution; b. financial stability of the company; c. quality of service; d. certain market place in which insurer belongs to. 6. Do you take an interest in insurance company’s financial condition before choosing the particular one? a. I analyze company’s financial condition in details; b. I just smatter in financial condition; c. I’m not paying attention to it, because I think it isn’t necessary. 7. What are the main factors ranking the liability of the insurance company? a. a policy of investment; b. financial results of the insurance company; c. the image of the company; d. the settlement speed of the damage. 8. In your opinion which company can meet the requirements which were discussed in earlier questions? a. PZU Lietuva; b. ERGO Lietuva; c. AIG Life; d. Seesam Lietuva; e. Lietuvos Draudimas; f. If insurance; g. other: (type here)………………… 3.2 Results Figure 2. Monthly income We raised the hypothesis that monthly income should do a big influence in choosing the insurance company. As we thought people with high monthly income would choose insurance company which is the best ranked, stable in the market and choose the best offer no matter how much will it cost. Vice versa is about people with lower income. They would choose insurance company by the sum of contribution. But as we will see, our hypothesis didn’t absolutely proved. As the first chart shows 45 % of respondents monthly income is between 1001 and 2000 Lt, 15 % of respondents have 401-1000 Lt monthly income, a twice more have up to 400 Lt, a third less, only 10 %, have 2001 and more Lt. Figure 3. Insured life and assets The second step was to find out respondents type of insurance (Figure 3). We grouped and named life and none life insurance to more understandable and simpler types: assets insurance and life insurance. 10 respondents are insured only their assets. We can draw interference that those are elder people with compulsory automobile insurance. 7 respondents aren’t insured their life or assets. The majority of them are students. None of the respondents have only life insurance, 3 have both. Figure 4. Information source This chart shows from which source of information respondents get the necessary information. 60 % of respondents information look up in the Internet, TV or radio. 25 % learn it from friends, 10 % less know all required information from insurance company, zero respondents getting commercial booklets or flayers. Figure 5. Influence in choosing the insurance company One of the most important things is to know why people are choosing one or the other insurance company, in other words – which element does the biggest influence in choosing the insurance company. As we said, we had risen hypothesis which are written bellow the Figure 2 (monthly income). Not only people with high monthly income are choosing the insurance company by its financial stability. Nowadays when financial crisis is in the air, people’s aim is to get guaranteed security for their life or assets. To 75 % of respondents financial stability of the company does the biggest influence in choosing the insurance company, to 15 % the most important thing is the sum of contribution, to 10 % - quality of service. Figure 6. An Interest in company’s financial condition before choosing the particular one. Even though majority of respondents are paying attention to the company’s financial stability when choosing the insurance company, none of the respondents analyze company’s financial condition in details, 95 % of respondents smatter in financial condition, only 5 % not paying attention at all. Figure 7. The main factors ranking the liability of the insurance This chart shows the main factors ranking the liability of the insurance company. Not surprisingly that most people, 75 % of respondents, choose company by the settlement speed of the damage. It stands to reason that if you experienced insurance incident, you want the company to pay for the damage as soon as possible. 15 % of respondents take a notice of the image of the company, only 10 % to financial results of the company. None are paying attention to policy of investment. The reason can be the lack of information of some companies or laziness to look up for that sort of information. A policy of investment is one of the most important things to take an interest about. If the company invest successfully insurer’s money, its work is profitable. Figure 8. Company which can meet the requirements The last chart is generalization of all requirements which were discussed in earlier questions. The chart shows the companies respondents would choose or have chosen considering different aspects. Lietuvos Draudimas was chosen by 65 % of respondents, PZU Lietuva and ERGO Lietuva were chosen equally by 15 % of respondents. 4. CONCLUSION From the survey about insurance companies in Lithuania we can do conclusions: • half of the respondents were insured only their assets; • most respondents get information about the insurance company from the Internet; • financial stability of the insurance company is the element which does the biggest influence in choosing insurance company; • the main factor which shows insurance company’s liability is the settlement speed of the damage; • Lietuvos Draudimas was the company which, in opinion of majority respondents, can meet all the basic aspects. 5. REFERENCE 1. Insurance. Access on the Internet:

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