MBA-7099-UWIC-MBA-MT-19-35

Cardiff Metropolitan University
Cardiff School of Management
MBA
Increasing the Efficiency through Business Process Re-Engineering
in Motor Claim Department in the Ceylinco Insurance PLC
Submitted in March 2014
By
Don Aruna Lahiru Manchanayake
(Student ID – 20037989 - UWIC/MBA/MT/19/35)
This dissertation is submitted in partial fulfilment of the requirements for the degree of
Master of Business Administration (MBA)

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DECLARATION
This work is being submitted in partial fulfilment of the requirements for the degree of
Master of Business Administration (MBA) and has not previously been accepted in
substance for any degree and is not being concurrently submitted in candidature for any
degree.
Signed : ............................................................ (Candidate)
Date : ...................................
SUPERVISOR’S DECLARATION STATEMENT
Student Name : Don Aruna Lahiru Manchanayake
Supervisor’s Name : Professor. Sunanda Degamboda
I acknowledge that the above named student has regularly attended the meeting, and
actively engaged in the dissertation supervision process.
Signed : ……………………………………………. (Supervisor)
Date : ...................................

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ACKNOWLEDGEMENT
I would like to take this opportunity to express my thanks and appreciation to the
supervisor, Professor. Sunanda Degamboda for the continuous guidance given to me in
completing my research and he has been a tremendous mentor for me.
In particular my subject lectures, Dr. Lalith Seneweera and Mr. Sunesh Hettiarachchi,
who guided me through the research methodology module, deserve my special thanks.
Moreover, I would like to express my grateful thanks to all the lecturers and
administrative staffs at ICBT campus for the knowledge and assistance given me to carry
out my studies.
I wish to sincerely thank to all my colleagues at Ceylinco Insurance PLC for the
assistance and information given to me. Also I would like to thanks my friends at ICBT,
who helped me in numerous ways to fulfil this research.
Last but not least, I also take the opportunity to thank my parents, who gave me their
fullest support to make this successfully.
This task would not have been without your help and support.
Thank You.
Lahiru Manchanayake

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ABSTRACT
The research is concerning on current claim process practice in the Ceylinco Insurance
PLC (CIPLC) and to measure the possibilities to increase the efficiency of the claim
payment process by implementing the Business Process Reengineering (BPR). Moreover
this research will find out the relationship with that parameters and how strongly it will
affect the claim payment process.
This research conducts the study on claim department at CIPLC, to understand where
they need to improve its efficiency to achieve the competitive market advantage in motor
business. To understand where the company currently spotted, this research studied the
current process and in comparison with the industry standard benchmark. According to
the brainstorming session, the need to improve the efficiency of claim settlement process
to gain the advantage over the other players has been identified. To gain the efficiency,
company had identified the potential of BPR methodology which are suitable for the
current business environment.
Then in the literature review stage, the theories and case studies relating to the BPR to
identify the positive and negative factors have been discussed. After indentifying
literature, the conceptual framework had formulated to carry out further studies. Based
upon the latter, questionnaire has been drafted with 32 questions to validate the
conceptual framework. This has been distributed among 58 claim processing staffs to get
their individual opinion about the current understanding and further expectations. Then
those collected answers were analysed by using the SPSS software and presented in
4th
chapter. In there we have rejected 4 Null Hypothesis (H10, H20, H30, and H50) and
failed to reject 4 Alternative Hypothesis (H1a, H2a, H3a, and H5a). Moreover, based on
the data gather from the questionnaire we have rejected an Alternative Hypothesis (H4a)
and failed to reject Null Hypothesis (H40).
While analysing the overall picture of the research, it is clear that company can increase
the efficiency by implementing the BPR in the claim department in CIPLC.

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Table of Contents
DECLARATION............................................................................................................. i
ACKNOWLEDGEMENT .............................................................................................. ii
ABSTRACT.................................................................................................................. iii
LIST OF TABLES ....................................................................................................... vii
LIST OF FIGURES...................................................................................................... vii
Chapter One .................................................................................................................1
INTRODUCTION...........................................................................................................1
1.1 Background of the Study ...................................................................................1
1.1.1 Business Process ...............................................................................................1
1.1.2 Claim Process....................................................................................................2
1.2 Research Problem Identification........................................................................4
1.2.1 Symptoms of the Problem..................................................................................4
1.2.2 Justification of the Problem ...............................................................................5
1.2.3 Defining Research Problem ...............................................................................6
1.3 Research Question.............................................................................................6
1.4 Objectives of the Study......................................................................................6
1.5 Limitations of the Study ....................................................................................7
1.6 Chapter Outline .................................................................................................7
Chapter Two ................................................................................................................8
CRITICAL REVIEW OF LITERATURE........................................................................8
2.1 Understanding Business Process Re-Engineering...............................................8
2.2 Understanding Process in Business Process Re-Engineering............................12

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2.3 Understanding Leadership role in Business Process Re-Engineering................15
2.4 Understanding Information Technology role in Business Process Re-
Engineering ...............................................................................................................17
2.5 Success factor for Business Process Re-Engineering........................................21
2.6 Integrating Business Process Re-Engineering into insurance industry..............23
Chapter Three ............................................................................................................25
RESEARCH METHODOLOGY...................................................................................25
3.1 Conceptual Framework of the Research...........................................................25
3.2 Development of Hypotheses ............................................................................26
3.3 Operationalization ...........................................................................................27
3.4 Research Design..............................................................................................28
3.4.1 Sampling Design .............................................................................................28
3.4.1.1 Population................................................................................................28
3.4.1.2 Sample Size / Sample Selection Procedure ...............................................29
3.4.2 Data Collection Methods and Techniques used for Research Analysis .............30
Chapter Four ..............................................................................................................31
DATA PRESENTATION AND ANALYSIS ................................................................31
4.1 Process ............................................................................................................31
4.2 Leadership.......................................................................................................35
4.3 Information Technology (IT)...........................................................................39
4.4 Process redesign towards Cost.........................................................................43
4.5 Quality and Quantity .......................................................................................45
4.6 Cost.................................................................................................................47
4.7 Overall Research Summery (BPR and Efficiency) ...........................................48

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Chapter Five...............................................................................................................51
CONCLUSION AND RECOMMENDATION..............................................................51
5.1 Summary of the Study.....................................................................................51
5.1.1 Process redesign toward increase of quality and quantity.................................52
5.1.2 Leadership toward increase of quality and quantity..........................................52
5.1.3 IT enhancement toward increase of quality and quantity..................................53
5.1.4 Process redesign toward minimizing the unforeseen cost .................................54
5.1.5 BPR toward increasing the efficiency ..............................................................54
5.2 Recommendations ...........................................................................................55
5.3 Suggestion for Further Research......................................................................56
LIST OF REFERENCES...............................................................................................58
APPENDIX 01 - Questionnaire ................................................................................... viii
APPENDIX 02 - Minutes of the Mandatory supervisor’s Meeting ................................ xii
APPENDIX 03 - Data Collection Summary................................................................. xiii
APPENDIX 04 - Data Collection..................................................................................xiv

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LIST OF TABLES
Table 1: Questionnaire development..............................................................................27
Table 2: Claim offices response on process improvement ..............................................31
Table 3: Correlation of Process & Quality/Quantity.......................................................33
Table 4: Claim offices response on leadership ...............................................................35
Table 5: Correlation of Leadership & Quality/Quantity..................................................37
Table 6: Claim offices response on IT............................................................................39
Table 7: Correlation of IT & Quality/Quantity...............................................................41
Table 8: Correlation of Process & Cost..........................................................................43
Table 9: Claim offices response about increasing the quality and quantity .....................45
Table 10: Claim offices response about unforeseen cost.................................................47
Table 11: Claim offices overall response .......................................................................48
Table 12: Correlation of BPR & efficiency ....................................................................49
LIST OF FIGURES
Figure 1: Claim Process in Ceylinco Insurance PLC ........................................................2
Figure 2: The Reengineering Concept..............................................................................9
Figure 3: Conceptual framework....................................................................................25
Figure 4: CIPLC Organisational Structure .....................................................................28
Figure 5: Sample size ....................................................................................................29
Figure 6: Correlation of Process & Quality/Quantity......................................................34
Figure 7: Correlation of Leadership & Quality/ Quantity ...............................................38
Figure 8: Correlation of IT & Quality/Quantity..............................................................42
Figure 9: Correlation of Process & Cost.........................................................................44
Figure 10: Correlations of BPR & Efficiency.................................................................49

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Chapter One
INTRODUCTION
This chapter summarizes the current claim process and business practice in Ceylinco
Insurance PLC. Moreover it illustrates the current practice versus the company
benchmarks. Throughout the study of business processes in Ceylinco Insurance PLC,
problems have been identified, which formulated the objectives to continue the research.
1.1 Background of the Study
Sri Lanka insurance industry consists of composite; life and general (non-life) insurance
companies. Composite insurance companies transact both life and general businesses. For
the moment 22 companies are registered for the insurance business in Sri Lanka under the
supervision of Insurance Board of Sri Lanka (IBSL).
Ceylinco Insurance PLC (CIPLC) is one of the oldest insurance companies in Sri Lanka.
It was established in 1987 but its history is going back to 1939. Ceylinco Insurance
registered as the first private sector insurance company. CIPLC involve into both General
and Life insurance business. The CIPLC is the largest private insurance company and
also the leading motor insurer in the country. The company accounted 6,619 million
premium incomes from VIP On The Spot (OTS) and which represents 60% of the total
general insurance premium income for the year 2012.
1.1.1 Business Process
Ceylinco Insurance PLC is categorised into life and non life business entities which
depends on the nature of the business which they involved in. Life insurance and other
investment related products are separately handled by Ceylinco Life division. While

Motor, Fire, Marine, Engineering and Miscellaneous products are handle by Ceylinco
Insurance General Division. Those two entities are doing their operation separately and at
the end of the year, it is incorporated into a single financial report. Here we are focusing
on the motor product in the CIPLC general division. Motor customers fall into two
categories namely individual customers and corporate customers. This allows the
company to give efficient service to the customer, based on their categories. Most of the
time customer insured with more than one vehicle are categorised as corporate customers.
General division of CIPLC comprise with 191 branch network and 106 service centres.
With the VIP concept CIPLC allow its assessor to pay the customer damages on the spot.
In certain cases, due to the non agreement of the claim amount or assessor can’t assess
the claim amount due to the accidental nature or if the accident is doubt full, assessor can
call the estimate from the customer. In either one of the above scenario, the claim will not
count as an OTS claim and the claim will be referred to the policy underwritten branch to
process it. The CIPLC has decentralised its claim operation, empowering branches to pay
the claim for their customers with the approval of technical staffs.
1.1.2 Claim Process
When it comes to the claim settlement there is a systematic way forward like the
underwriting. Automobile, Risk, Internal Audit, Reinsurance, Account and Claim
Departments are involving for the claim settlement process. Other than the OTS claim,
the usual acceptable claim settlement period for motor claim is within the four days once
the customer has submitted the relevant document with the estimation.
Claim process shows in the bellow diagram:
Figure 1: Claim Process in Ceylinco Insurance PLC

1.2 Research Problem Identification
1.2.1 Symptoms of the Problem
There are two processes the company has to deal with the customer. One when the time
customer visits the insurance company to insure his/her risk and the next is when the
customer meets an accident. To build a good relationship with the customer and to
continue further business with him, it is very important to give a quick service for the
claim. Quick claim settlements help the company to strongly deal with customers.
When analysing the CIPLC current procedure, company has promise to give, OTS cash
settlement for the claims which are under Rs. 25,000 while complying with all the
obligatory conditions. For the claim exceeding that amount assessor is giving the offer
and customer can reimburse it by visiting the nearest branch.
Issues are arising in other claim settling procedures. Once the customer got the offer he
need to visit the nearest branch then the claim technical officers are checking the
consistency of the accident and other mandatory requirement and then inform the
underwriting (UW) branch to generate the claim no for the payment. This is time
consuming if customer don’t have proper document with him. As well as the
intercommunication is delay between the UW branches and claim branch as priority is
given for the new policy holders. At times, when the customer is visiting the branch,
assessor may not be present in the branch as he may be visiting for OTS inspection. Due
to the issues arising on the customer side or any delay from the company side, only 15 –
20% claims are settled within 3hrs.
The assessor will not be able to give the offer due to the accident nature or issues with the
consistency like the customer not settle the premium, customer is not there or police
report is required due to the concern with the accident. Therefore customers need to visit
the branch with the accident vehicle or customer can call the assessor/ technical staffs to
visit the garage to continue with the claim process.

1.2.2 Justification of the Problem
CIPLC is operating its business in the competitive market where many companies are
trying to stabilize in the market. It is very difficult to survive as a leader in motor
insurance market. Quick claim settlement plays the key role in terms of increase in
customers’ attraction toward the company. CIPLC has to deal exceptionally well in the
market to give a challenge to competitors.
If the claim is delayed or the customer has to follow up the claim a little more than the
average time with the company, it gives an unpleasant feeling regarding the claim
process. Customers feel like it’s a time consuming process with the company and
sometime customer are being frustrated due to their busy schedules. Moreover,
involvement with the many processes sometime company can’t settle the claim within 4
days, which they promise to settle the claims.
This may lead to the customer dissatisfaction. Moreover, by delaying the claim settlement
period, the company is losing its core competency in the market while compared to other
companies. To address the issue the company plan to centralise its claim processing
operation while continuing with the de-centralise claim payment option. This is the
radical change in the claim departments.
Other than the customer’s perception toward the CIPLC, company will get many
financial benefits by implementing the BPR. As an example due to the restructure of the
processes company can cut down the contract staffs or reallocate them into the value
creation activities. By doing, CIPLC can save lot of financial resources.
CIPLC is going to deploy the BPR for the structural change in the company, in order to
give the immediate service to the customers. Through the BPR, claim department can
view the claimant in a new angle and can offer the quick and efficient service which they
are willing to give.

1.2.3 Defining Research Problem
Claim settlement is defined as the important function in the insurance process and which
help to build the bond between the company and customer. Usually average time taken to
settle the claim is around 20 to 30 days. This is the longer than expect period. Therefore
company is getting unpleasant comments from customers and that may be lead in loss of
CIPLC customers.
In the Sri Lankan context we have a matured market for the motor insurance and few
vehicles are registered with a motor registration department due to the high tax ratio.
Therefore all the general insurance companies are competing for the existing market
share. Therefore it is important to give the better service like claim settlement to retain
the existing customers.
1.3 Research Question
What would be the positive impact of increasing the efficiency through the Business
Process Re-Engineering in the motor claim department in the Ceylinco Insurance PLC?
1.4 Objectives of the Study
The main objective of this research is to identify how to carry on the Business Process
Reengineering in claim department and how it will help in claim department to increase
the efficiency.
 Identify the present level of efficiency in the claim department.
 Identify how to implement the BPR to increase the efficiency and measure the
performance.
 Provide recommendation to increase the efficiency in claim department.

1.5 Limitations of the Study
Although the research has been carefully design sometime we have to face some
limitation. The main objective is to carry out the BPR on claim departments to see
whether the claim processing is increasing on those departments or customers may get
issues on payment due to the involvement of account department.
1.6 Chapter Outline
The following research is carried out in five separate chapters as given below:
Chapter One: Introduction
Chapter Two: Literature Review
Chapter Three: Conceptual Framework & Research methodology
Chapter Four: Data Presentation and Analysis
Chapter Five: Conclusion and Recommendations

Chapter Two
CRITICAL REVIEW OF LITERATURE
The literature of the research is discussed in this chapter and given as a summary of
information published in the area of BPR. Moreover findings, theoretical and
methodological contributions to BPR have been mentioned. The theoretical base of the
research is based upon literature review, which also determines the nature of the research.
There will be reviews on the guiding concept of BPR and efficiency.
2.1 Understanding Business Process Re-Engineering
Ever since the industrialization began, the companies have expanded on various
dimensions. There have been significant changes and improvements on the type of
services available, to the strategies that have been applied. Among the many great
strategies applied in the recent years, Business Reengineering Process (BPR) receives a
significant place of importance in bringing credits to the company’s ultimate goal. The
ultimate goal of any company is to maximize the profit margin (Kumar and Shim, 2007).
The world been in a platform that has undergone much technological advancement, while
increasing different needs and wants, companies adjust their capabilities to meet up with
such requirements to ensure the sustainability of the company (Hammer and Champy,
1993). Kumar and Shim (2007), mentions that to serve the customer satisfaction and to
meet up with the maximizing profits, the company has to make adjustments in enhancing
the productivity and the efficiency of the organization.
As one of the many available strategies that has been used to meet up with the above
mentioned targets the BPR, plays an important role. Hammer and Champy (1993) has
defined the concept called BPR as follows: “The fundamental rethinking and radical
redesign of the business process to achieve dramatic improvements in critical,
contemporary measures of performance, such as cost, quality, service and speed”.

According to the definition the concept is made clear as a strategy that is been applied for
every possible aspect of a company. With regard to fact of “dramatic improvements”
from the previous research, Gunasekaran and Kobu (2002), investigates to prove that the
efficiency of a company could be enhance by the application of this process.
Figure 2: The Reengineering Concept
In working on the implementation aspect of the BPR, Kumar and Shim (2007) further
note on the importance of knowing the overall function on the current process.
Davenport (1990) findings base the facts to the above statement, while defining the
business as a combination of business processes. He describes a business process as “a
set of logically related tasks performed to achieve a defined business outcome”.
Therefore it is made clear all the business processes, which is also the source of business
outcome is focused to maximize the profits, and support the needs and wants of the
customers. In addition, it mentions the group of interrelation of the processes. It begin
from initial emphasize on the business objectives, giving rise to different kinds of
business processes, then those drive towards the need for redesign of the processes,
depending on the different needs of the company, than to optimize each of the sub
processes. This redesign of the processes could be defined in terms of both BPR, and
Business Process Change (BPC). BPC is also an initiation for changes in the processes
but not an overall image of the organization as the BPR, but changes in the specific areas
with regard to the business processes. This to encompasses reduction in the costs, time,
while simultaneously enhancing the flexibility, quality of service, and the satisfaction
within a specified process, while making adjustments or the interrelated web based on the

connections that exist between the structural, human resource, technology, and the means
of management. The difference between the two is that it is only focused on an
improvement, while BPR is much more focused on the redesigning; and BPR is overall
system redesign, although BPC is for the improvement in a more specified, narrow
pathway (Motwani, and Mirch et al., 2002).
It is also found in one of the findings that once each if the business processes have been
identified it is easier to investigate the roots, where the main change needs to be done to
achieve the targeted area (Kumar and Shim, 2007).
While analyzing the BPR, Hammer (1990) has identified few basic principles of BPR.
Some of them are the fact that many jobs are united, the fact that the employees are been
given the opportunity to make decisions, group of the steps been arranged in the natural
working order, reduction in the checks, and the work is done from the process selected
from the multiple process that makes a better sense with regard to the rest of the others
(Covert, 1997).
With regard to the components that are embedded in BPR, Al-Mashari and Zairi (2000)
has identified three main aspects: 1. changes in people, 2. processes and 3. technology,
that needs special attention onto. In thinking in these three dimensions than a simple
thought of reengineering, it is been understood that there could arise many more
complications. It is also mentioned that such complications would lead to the drawbacks
in innovation and continuous improvements. In contrary, Francis and Alley (2007) as
cited by Kumar and Shim (2007), identifies three similar but more defined areas as
components of BPR: Human resource, IT solutions, and physical space.
On the other hand, Motwani and Mirch et al. (2002), investigates on base where the
above components rests. They are having an environment that accepts the change, and the
ability an organization to manage the changes that is expected to be brought.

BPR is been accepted as a satisfying system by 88% of the CIO’s (Motwani and Kumar
et al., 1998). There are many drawbacks of the system. However, the findings on
effectiveness have concluded that Ford Motor, MBL Insurance, and Wal-Mart have been
companies that have achieved success through implication of the system (Al-Mashari and
Zairi, 1999). 60% of the Fortune 500 companies has also adopted, or have plans of
adopting the system. It is also found that implementation of the process can bring an
enormous productivity in the companies. This is made possible due to the arrangements
made in reducing the costs, and improvements made on the quality of the services
provided. Additionally, to escalate the effectiveness the business is needed to check the
business process against the success and failures they face, to avoid complexity (Al-
Mashari and Zairi, 1999).
Though it has many positivity, and is also embraced by many famous companies there
are many drawbacks of the system. However, one of the main drawbacks is the process
not having a defined system to make changes. The strategy does not have a standardize
format which a company could relate to once the process is on implication level. Hence
there is a need for having guide leaders who has a better insight on the innovation and the
changes that could be brought (Motwani and Kumar et al., 1998). Moreover, Al-Mashari
and Irani et al. (2001) bring forward the role of awareness. It is mentioned that the US is
far more a head in been effective when implementing, due to the familiarity of the
process due to the frequent exposure of the system, as it has smooth way to be more
familiar with the tools and the techniques that is involved to BPR. Furthermore,
Sockalingam and Doswell (1996) as cited by Al-Mashari and Irani et al. (2001) identified
that US organizations do better than others in terms of levels of awareness. Another
drawback is the downsizing the staff. Thus it turns to be a difficult strategy to be applied
by the companies of small scale. The result of Hammer and Champy (1993) as cited by
Al-Mashari and Zairi (1999) claims that 70% of the companies that adopt the process are
a failure. Also, the great deal of costs the companies have to bare can be one of the top
factors that contribute as a drawback. Hammer (1990) mentions “an organization’s
commitment of millions of dollars for redesigning internal business processes”;
emphasizing the monetary sacrifices the companies sacrifice on implication of BPR.

Regardless the efficiency and the failures, the BPR system is recognized as a strategy that
drives the companies to on heights while paving it’s pathway on customer-oriented
environment to grow and maximize its profits (Motwani, and Kumar et al., 1998). Covert
(1997), on the other hand adds to that through BPR a company can be an effective in
winning the market in the global platform as an effective competitor. BPR bringing such
advantages can also push the organizations away from the risk of bankruptcy as it is more
directed towards the maximizing the profits. Covert (1997), mentions that the reason
behind the many failures of implementation could be for not been having a depth
understanding on the business processes. Furthermore, this is a situation that results when
the organizations have around the fact that there needs to be a change, without been
aware of the where the intended changes would most suit or how it could be made to
match with the business objective to maximize the profits, while reducing the non valuing
adding processes (Covert, 1997).
2.2 Understanding Process in Business Process Re-Engineering
Findings based on the above, the process plays a vital role in BPR initiation and
implementation phases and it’s a key dimension which is going to affect into the overall
success or the failure in the long run. According to the Davenport and Short (1990)
process comprises with many logical interrelated task to achieve the common business
objective. Four enabler like, management information, technology and people can be
identified by analyzing the technical and social factors in the process. Further his studies
relating to the processes he had divided into two namely operational and management
oriented processes. When planning to restructure or going to redesign the process; need to
consider those enabler and have to manage those factors to increase the efficiency.
Motwani and Mirch et al. (2002) says senior management involvement in the
organization is key to strategic initiative of the business process. First phase of
commencing the BPR is radical change in the process. Therefore, this is needed to initiate
from top to bottom. Hence it is important to analyze the whole business process and get

an idea about its operations and where it interconnects with different sections. Those
identified business processes need to reengineer to improve the cross-functional
performance rather than focusing on each and every department separately. Moreover
companies can remove the identified non value creating activities to smooth the business
process. Reengineering gives an individual the overall responsibility about the total
business process which includes sequence of activities focus on define business outcome
(Gunasekaran and Kobu, 2002).
According to the finding of Hammer and Champy (1993) to gain the significant
improvement from the way the companies currently operate, they need to follow the
common guideline for reengineering, which are firstly, focus on the process rather
company structure, secondly, ultimate objective for the expected performance, thirdly,
make the significant move from old tradition to new and fourthly, creatively adopt the IT
where necessary.
Hammer and Champy (1993) argues that, BPR have to develop around the business
process instead of function, tasks or the people. In addition, to identifying the outputs
which value to customers mostly and accordingly, need to design the input or the new
processes to generate the added value to them. According to Ashayeri and Keij et al.
(1998) business will get the definite competitive advantage if processes evolve around the
customer orientation and its need to formulate the link between the criteria which are
valued by the customers and the performance measure .Companies has to integrate both
internal and external capabilities when reengineering the processes (Gunasekaran and
Kobu, 2002).
Furthermore, business process is defined as a set of interrelated tasks which
simultaneously create the value for the end user. Common goal in the process includes:
firstly, customer satisfaction, secondly, market share/position, and thirdly, return on
investment (ROI). To achieve these goals it is compulsory to improve the
interdependency of the process though the integration of business processes
(Gunasekaran and Kobu, 2002).

Studies relating to the Gulden and Reck (1991) as cited by Michela and Carlotta et al.
(2012) observe that a designed process to be successful does not lie in the current
performance of a firm, instead its being aware of the necessity to rebuild projects for
future business.
After the identification of the set of processes involve in the business, BPR team has to
compare those internal process with the ideal process in the industry. This benchmarking
can help companies to implement the industry standard process while eliminating the non
value creating activities (Ashayeri and Keij et al., 1998; Gunasekaran and Kobu, 2002).
Whether the BPR is involve with radical reengineering of the processes, Campbell and
Kleiner (2001) argues that the peoples will react more positively if the process changes
incrementally. Moreover, it will help to reduce the stress as well as ensure the continuity
of the organizational performance. This is effective but difficult to plan and implement,
while managing the human resource affects in those changes.
According to Berman (1994) as cited by Ashayeri and Keij et al. (1998) most of the time
companies are starting the process reengineering to achieve the efficiency/ profit by
cutting down the cost, when they face disaster or downturns. But the danger of the
redesigning the process is sometime company may slash the processes which they need in
the future growth to gain the competitive advantages. He further said that high level
planning is important to deal with the risk incorporate in radical improvement in business
process. With the good planning and risk evaluation in BPR give the significant
contribution for the business success.
Hammer (1990) state that “At the heart of reengineering is the notion of discontinuous
thinking of recognizing and breaking away from the outdated rules and fundamental
assumptions that underlie operations. It’s better to change the rules or else, it will be like
rearranging the deck chairs on the Titanic. Cutting fat or automating existing processes
will not result breakthroughs in performance. Rather, we must challenge old assumptions
and shed the old rules that made the business underperform in the first place”. Moreover

he illustrated how the ford motor had dramatically improved their performance by
implementing the reengineering to achieve the efficiency. This helps ford to optimize and
eliminate some of its business processes links with purchasing to account and vendor to
account payable process. This resulted in the reduction of their staff from 500 to 125 in
vendor payment process which equals to 75% of staffs reduction (Hammer, 1990).
2.3 Understanding Leadership role in Business Process Re-Engineering
Leadership is one of the main components in the BPR. When a process redesigning is
done, the employees job roles, the expectations, and many other factors related to the job
role changes. Also employees may develop a sense of dissatisfaction towards the
company; been resistance and disapproving the new process. Many other factors that
also would increase the intensity of the pressure are the inadequacy of the resources
available, insufficient attention towards the difficulties in adopting, lack of specifications
on the job role. Regardless the system applied if it is not been appropriately planned out
then there is a great probability of it to be a failures. The fact of efficient planning is a
characteristic of a leader. When the individuals resist change, the need for the change has
to be emphasized; this could be only done through the righteous leadership, who could
balance out the favouration towards the change to those who hesitate.
Hence, Gunasekaran and Kobu (2002) identifies that human capital is a major aspect of
BPR, as it is a necessity of any new system the responsibility of sustaining the employees
within the company, been motivated to perform their duty with satisfaction while been
ready to adjust to change.
Further, Motwani and Mirch et al. (2002) mentions that there is a great need to have
strong leader to keep up the high performance through interpersonal cooperation.
Moreover, he has emphasized that having a well-supported leadership when introducing
BPR is a prerequisite when BPR is implemented. Similarly, Gunasekaran and Kobu
(2002) state the priorities to be given for the education, training of the employees. Also

that these needs to be very well managed in making sure that as much as the leaders the
team members are also on the direction of embracing the change.
Sutcliffe (1999) mentions that there is a great need for the self-motivation and highly
skilled individuals as is not a programme that has a predefined input and an output.
Therefore the need to have directive, and charismatic leaders who could motivate the rest
is very much essential during the stage of implication. This emphasize that having
appropriate leaders with a definite vision is extremely important during strategizing.
Some of the studies has explicit that IT champions are been identified as having great
charisma, than any many other leaders.
Among the many research that is been conducted to investigate the most effective
performance for a leader, it has brought negative results. This also proved to be that more
than a characteristic of an ideal leader it is more appropriate to define leadership in terms
of the situation. This is because there is no one style of leadership that would be effective
in all situations. One theory that defines leadership is transformational leadership. It is the
charismatic leadership that an individual would be able to stimulate the individuals to be
motivated to be involved with an intended job role. However, the studies on such
leadership in IT have not shown positive results; as this model does not drive to
investigate the facilitation of the improvements in the team spirit to work towards a
common goal, when the individuals’ work has been changed, as there has to be much
more supportive system.
On the other hand, Sutcliffe (1999) further quotes the findings by Flamholtz theory called
leadership effectiveness framework. This framework has identified six leadership styles
that have been effective on different situations. These six styles have been reclassified in
to three main categories: non-directive, interactive, and directive. Further to the
framework there is a background factor contributing to investigate whether the situation
is goal focused or individual focused. Directive style can be categorized on to two
categories as Autocratic, and benevolent. Autocratic is more fixed towards the providing
the duty only with no description; benevolent is about providing the duty with an

explanation as to why. In both the cases decision making is not allowed. Interactive on
the other hand is also divided in to two as consultative, and participative. Consultative is
when ideas of the team is taken into consideration before planning; whereas participative
is when a plan is discussed with the team. Finally non directive: consensus, and Laissez-
Faire; where consensus when everyone is given the equal opportunity to perform, and
Laissez-Faire, leaving the group to make decisions on what needs to be done. In
elaboration on the practical scenario, non-directive is identified to be applicable when the
duties are hard to be specified, and directive when the task is easy to define (Sutcliffe,
1999).
Campbell and Klenier (2001) has investigated and found that reason behind failure in
many of the BPR implication was the unrecognized human element. Furthermore if the
motivation, culture, and leadership are embodied into BPR implementation is can bring
better results. As it will fit well with the business transformation, as the business is run by
the individuals; regardless what the strategy is. While reassuring Edward and Mbohwa
(2013) concludes that lack of implementation of leadership together with BPR has led to
the failure of the implementation.
It is the leader who could ensure the smooth running of the processes, especially when a
new system is processed. Therefore it is crucial to identify the leaders when BPR is at the
implementation stage, for introducing and the maintenance of the system.
2.4 Understanding Information Technology role in Business Process Re-Engineering
In begin Information Technology (IT) play a role in scientific areas but later IT comes
long way to change the fundamentals in business environment and way they operate. IT
can be used as an enabler to change the business process. But when, IT is used to capture
the business process, then most of these projects results in failure (Motwani and Mirch et
al., 2002).

When implementing BPR projects organizations had to challenge many fundamental
issues. IT can be determined as a key component when an organization is planning BPR
(Kumar and Shim, 2007). Studies relating to the Chan (2000) as cited by Kumar and
Shim (2007) said that there has been a growing impact of IT on business process.
Gunasekaran and Kobu (2002) found that IT is the major enabler in BPR as 75% of
companies out of 535 are successful because of IT.
According to Al-Mashari and Irani et al., (2001) BPR projects can be finished faster if
BPR software tools are used. Moreover, the resulting process has a considerable
association with BPR software tools. Similarly Grover et al. (1995) as cited by Al-
Mashari and Irani et al. (2001) mentioned that BPR achievement is associated within the
stages by the use of supporting technologies. He further noted that the broadly
implemented technologies enabling BPR are document management, databases and
communication networks.
There are two perspectives for the role of IT in reengineering according to Gunasekaran
and Kobu (2002); which are firstly, the role of the IT function (e.g. Internet, E-
Commerce, Multimedia, EDI, CAD and CAM); and secondly, the role of the
technologies themselves (e.g. ATM, and fibre optics). IT has played an important part to
make the overall reengineering scheme successful.
According to Gunasekaran and Kobu (2002) BPR requires radical changes. By
restructuring the information system to support process reengineering, BPR can be
accomplished. The main purpose is to enhance the supply chain management,
productivity and quality by functional integration, while restructuring an information
system
Gunasekaran and Kobu (2002) stated that in business process there should be a way for
mapping, measuring, tracking and managing commitments. Moreover, using a map of
interconnected network loops, the commitments of an organization’s network can be
shown. This map can be used firstly as a guide to design work processes, secondly as a

support for information technologies in order to manage commitments for customer
satisfaction and to measure productivity
According to Olalla (2000), existing business functions were supported by IT in order, to
improve organization’s efficiency. But the IT role has changed with time as new
organization forms, and patterns of collaboration within and between organizations have
been enabled. Furthermore, the basic underlying idea of BPR is to create value added
output to a customer which is similarly aimed by the concept of business processes
interrelated activities.
Modern computers and other communication methodologies were invented and
introduces as most business processes were urbanized. To automate and/ or speedup
isolated components the new technology has been applied to processes.
First companies need to find out the capabilities offer by IT and then need to restructure
its business processes around those identified capabilities. In that way it can increase
effectiveness of implementation in BPR (Davenport and Short, 1990). According to
Davenport and Short (1990), some firms have an outcome of multiple objectives while
redesigning processes with IT. For example, American Express authorizer's assistant
expert system. The redesigning successfully resulted in a $7 million annual reduction in
costs from credit losses; the average time for each authorization has reduced to 25%, and
30% reduction in improper credit denials. HP also found that it could improve cost, time,
and quality simultaneously by applying IT to the redesigning of several key
manufacturing processes.
The cause for most of the failures in implementing IT in BPR is, processes designed
without considering the capabilities of the IT initially. At the beginning an organization
has to determine the IT usage and its effectiveness of the business requirements and then
develop the system. Therefore, in the early part of its design, the role of IT in the process
needs to be considered and organization should foresee the generic capabilities of IT
while they are determining the major IT capabilities in improving business processes. By

adopting IT in to the business process it improves the coordination and information
access across organizational units. Hence it enhances the management of task
interdependence (Davenport and Short, 1990).
Davenport and Short (1990) identified that the IT proficiency that can reshape processes.
Most of the time, companies are willing to implement their own capabilities and
technologies to the processes which they employ. Once the organization restructure key
processes it needs to setup a mechanism to oversee how future redesign take place and
according to the ongoing statistics organizational changes need to ensure information
systems support process flow.
According to Davenport and Short (1990) IT group can stay behind the scene and educate
and facilitate the senior management to make decision of process redesign based on IT.
Then IT group can prepare the process redesign expense and make demand for that. He
further said then the IT group can begin to incorporate the Industrial Engineering (IE)
oriented skills of process measurement, analysis, and redesign, perhaps merging with the
IE function if there is only one in the company.
IT professionals in an organization can develop their own software to support the
organization processes rather buying very expensive software packages. As a matter of
fact, they are aware how to design software more effectively to satisfy their own users.
Similarly IT professionals will need to build robust technology platforms on which
process specific applications can be quickly constructed. This implies a standardized
architecture with extensive communications capability between computing nodes, and the
development of shared databases (Davenport and Short, 1990).

2.5 Success factor for Business Process Re-Engineering
The main goal for any project or BRP project is to be successful. There are different
parameters involve in BPR project, those are namely processes, leadership and IT, and by
managing those parameters company can achieve the miracles BPR implementation.
Successful implementation of BPR can be measured using the decreasing of cost or the
cycle times involve in each process. This will create a significant improvement in product
quality or in the service level offering to the customer (Covert, 1997).
According to the studies of Hammer and Champy (1993) it defines that, the company
which are engaged into the BPR had claimed only 30% success rate but on the other hand
Al-Mashari and Irani et al. (2001) disapproved the above success rate and according to
their studies they had proven 55% success rate. This indicates a good sign for future BPR
projects.
Methodological tool used for the implementation of BPR plays a vital role. Those
associated tool and techniques should be simple to change the organizational culture and
trends. Moreover issues relating human resource and change management need to be
handling carefully. To gain the ultimate company objective through the BPR
implementation it is necessary to use the acceptable techniques for project planning,
project management, process capturing and process creation (Al-Mashari and Irani et al.,
2001).
Hammer and Champy (1993) pointed out five guidelines for the success of BPR projects.
The guidelines are described as follows; always start with the customer and work
backwards, move fast, tolerate risk, accept imperfections along the way, don’t stop too
soon.
Fundamental organizational restructure is required to implement complex business
process changes through BPR. In order to avoid the implementation of pitfalls successful
factors should be identified and implemented (Al-Mashari and Zairi, 1999).

Success Factors;
1. Employee’s commitment and leadership.
There are significant impacts on processes, technology, and culture and job roles when
applying major changes to the business processes. Changing those simultaneously will
make it harder (Covert, 1997). Implementation of BPR affects multiple departments
within the company therefore there’s the need to get the commitment from all the
employees who comes under those affected areas.
Campbell and Kleiner (2001) argued that, it is very important to get the management
commitment for the project with the strong leadership before the implementation of BPR.
Those management commitments include sponsorship, dedicated BPR team and budget
allocations. Al-Mashari and Zairi (1999) said, in order to provide a clear vision for the
future, leadership has to be effective, strong, visible, and creative in thinking and should
be understandable.
2. Effective BPR team
Due to the effect in many functional areas within the company it is important to have the
cross-functional BPR team. Team should comprise with effective leadership, experience,
skill, self-motivation and team players (Al-Mashari and Zairi, 1999). Covert (1997)
recommended to have a less than 10 players per BPR team in order to maximise the
effectiveness.
3. Business needs analysis.
BPR team need to discuss with the process owner and stakeholder to identify, assess the
current processes, and what business processes need to restructure, to achieve the desired
outcome through the reengineering. More importantly those newly create processes have
to inline with the business objectives and corporate strategies of the company. Success of

the alignment can be displayed in form of customer service, financial statistics and
growth of the business (Covert, 1997).
4. Adequate IT systems and infrastructure.
For the successful implementation of the BPR, IT systems and IT infrastructure plays a
vital role (Al-Mashari and Zairi, 1999). The involvement of IT is one of the major
dimensions for the success of reengineering projects. Studies relating to the Hammer
(1990) explain IT use to challenge the day to day operational processes at an organization
long before modern IT system and infrastructure comes to play.
5. Effective change management.
When implementing the BPR, it makes significant change in the culture, people and
processes they are currently aware with (Al-Mashari and Zairi, 1999). Therefore they are
going to react for it. So it is important to deploy the change management as a discipline to
manage employees according to the situations, by considering that they are people too
(Covert, 1997). Campbell and Kleiner (1997) suggested that success of the changes is
depending on how effectively management spread the new culture to the company.
2.6 Integrating Business Process Re-Engineering into insurance industry
Insurance is considered as a risk management principle. Anyone can take the insurance
product by paying a certain amount of money as premium. When he/she faces with an
uncertain loss, the insurance company will pay back for the damage or losses incurred by
the insured (IF4 Insurance claims handling process, 2011). In many parts of the world, it
is compulsory to take an insurance cover for motor vehicle before it’s on public road.
Insurance claim processing with BPR can make significant improvement in areas like
delay in claim processing, average time taken to process the claim, areas vulnerable to

frauds and miscalculation of the claim payment structures. If the company couldn’t
addresses the above mentioned issued through the BPR implementation, which may lead
to over staffing issue and increase of management overheads. So the deployment of
quality claims management processes are important for the insurance companies to
manage the claim cycle in efficient manner (Bonitasoft.com, 2014).
According to the studies of MBL Insurance, Davenport and Short (1990) and
recombo.com (2013) reflects that, they had many issues with new customer acquisition.
For the underwriting stage it’s involved 30 steps between 5 departments and totally 19
people by average involved in handling new customer application. It’s usually taken 5 to
25 days to process the new policy and underwrite it. But with the reengineering they can
improve the processing time and which help them to increase their productivity by 60%.
Above exam is based on the underwriting process for the insurance company, which can
be practiced to improve the efficiency in the claim settlement process in an insurance
company by removing the non value creation activities in its business process.

Chapter Three
RESEARCH METHODOLOGY
The tools and set of ideas are being elaborated in this chapter, which would guide the
research. The conceptual model from which the hypothesis is derived is shown in the
research framework. In addition, the population and the sample are selected to carry out
the research, with justification.
3.1 Conceptual Framework of the Research
Figure 3: Conceptual framework
(Independent Variables) (Dependent Variables)
The above mention conceptual framework is based on the literature found in the Business
Process Re-Engineering (BPR). The framework is prepared to show how the BPR will
affect to an increase in the efficiency. BPR is elaborated by the variable of process,
leadership, information technology and the efficiency, which is sub categorized into the
Quality/Quantity and Cost to measure the effect from the component of BPR. By
increasing or decreasing that independent variable in BPR, it will effect to the efficiency.
Business Process
Re-Engineering
Efficiency
Process
IT
Quality / Quantity (No
of Claims)
Cost
Leadership

This is taken as dependent variable. Each element has taken in this conceptual framework
as a variable to establish the relationship between the BPR and efficiency. With the
positive relationship with above parameters, research can help to show the improvement
of efficiency in CIPLC.
3.2 Development of Hypotheses
Based upon the conceptual model, hypothesis are developed which necessitate its
validation, using advance statistical techniques such as SPSS.
H1a - Business process redesign through BPR will increase the quality/quantity of claim
settlement process in CIPLC.
H10 - Business process redesign through BPR will not increase the quality/quantity of
claim settlement process in CIPLC.
H2a - Leadership through the BPR will increase the quality/quantity of claim settlement
process in CIPLC.
H20 - Leadership through the BPR will not increase the quality/quantity of claim
H3a - IT system and infrastructure enhancement through the BPR will increase the
quality/quantity of claim settlement process in CIPLC.
H30 - IT system and infrastructure enhancement through the BPR will not increase the
H4a - Business process redesign through BPR will help to minimize the unforeseen cost
involve in claim settlement process in CIPLC.
H40 - Business process redesign through BPR will not help to minimize the unforeseen
cost involve in claim settlement process in CIPLC.

H5a - Business Process Reengineering will increase the efficiency in claim settlement
process in CIPLC.
H50 - Business Process Reengineering will not increase the efficiency in claim settlement
process in CIPLC.
3.3 Operationalization
Based on the conceptual framework it is compulsory to define the operational plan. To
validate the above developed hypothesis it is mandatory to define the set of questions
based upon combining dependent and independent variables. For that, the questionnaire
will be prepared with 32 questions.
Table 1: Questionnaire development
Concept Variables Indicator Measures Question
Business
Process Re-
Engineering
Process Redesigning of the
business processes
Likert Scale Q1, Q2, Q3,
Q4, Q6, Q7,
Q8
Leadership Guide, Training and
Empowerment
Likert Scale Q12, Q13,
Q14, Q15,
Q16, Q17, Q18
IT Offer new IT systems
and infrastructures
Likert Scale Q21, Q22,
Q23, Q24,
Q25, Q26
Efficiency Quality/Quantity
(No of Claim)
Improve the quality and
quantity of the claim
process
Likert Scale P - Q5, Q9,
Q10, Q11,
L - Q19, Q20,
IT - Q27, Q28,
Q29
Cost Reduce unforeseen cost Likert Scale P - Q30, Q31,
Q32
(Questionnaire is attached with the Appendix 01)

3.4 Research Design
3.4.1 Sampling Design
3.4.1.1 Population
CIPLC is the one of the largest insurance company in the market context. The company
involve with many classes of the insurance products which covers all the insurance need
in the market. Due to the complexity of the business nature, different department will
handle the different processes in the company.
Here shows the basic cross functional department structure to point out where the claim
department in the hierarchy.
Figure 4: CIPLC Organisational Structure
The company consists of 2360 permanent carder staffs. According to the company
hierarchy, technical department handle the tasks including underwriting, automobile and
claims. Claim department is divided into two separate sections by the nature of the
business they are operating. Generally one section handles the motor related claims
while the other is involved with non-motor claims.
CIPLC
Finance Technical
Underwritting
Claims
Automobile
Re-Insurance Information
Technology
Sales and
Marketing
Operation
Branches
CSD

Claim Processing Staffs 68
Focusing on the research, only the claim processing staffs from the motor claim
department will be taken as the population.
3.4.1.2 Sample Size / Sample Selection Procedure
To conduct the research it is mandatory to identify the appropriate sample size, out of the
total population in the motor claim department. In that context, a proportionate sampling
technique is used. In order to simplify the task, online sample size calculator has been
used to calculate the sample.
Figure 5: Sample size
(Source: http://www.surveysystem.com/sscalc.htm)
With 95% confidence level, the research results are within +/- 5 confidence interval
which results in the sample size of 58. To be unbiased with the research result we have to
select the employees from the motor claim department by using the simple random
sampling techniques.

3.4.2 Data Collection Methods and Techniques used for Research Analysis
Face to face interviews are carried out to collect the users view and their intention and
opinion about the current system process and future expectations. Primary data collection
techniques like research questionnaire are used to collect the feedback from claim
processing staffs. The questionnaire is design as self completion with likert scale
questions. This is positively helpful to collect the data from the staffs, which are not
willing to spend more time with the question. The questionnaire consists of 32 questions
fewer than 4 categories which had been identified in the literature review. Sample of the
research questionnaire is attached in Appendix 01.
The questionnaire handed over to the claim department staffs by hand to take the special
attention from them and by doing so they feel like little more commitment to give their
feedbacks. In Addition, where necessary, apply a little pressure though the senior
departmental staff to get the things done.
It took 8 to 12 days to distribute the questionnaire among them and to collect backed the
filled questionnaire. When the staffs needed to clarify any confusion regarding the
questionnaire, explanation to them over the phone or by personally visiting them were
made possible.
Summary of the collected data was attached for the reference in Appendix 03 as data
collection summery.

Chapter Four
DATA PRESENTATION AND ANALYSIS
This chapter relates the analysis of the data gathered for the purpose of the subject
research. Questionnaires have been used to gather data on the basis of different
dimensions of BPR which are analyzed according to their relevance in the targeted
audience as such providing the results to determine the BPR relationship with efficiency.
Hereby analyzing and discussing the factors comprising of process, leadership and
information technology; which are going to influence on the efficiency composed of
quality/quantity and cost. Below mentioned all the data obtained from the questionnaire
which is analyzed using the SPSS.
4.1 Process
Table 2: Claim offices response on process improvement

In this subsection of the questionnaire (Table 4.1), was designed on the basis of the
relationship between the business process redesign is needed to increase the
quality/quantity of the claim payment. For the analysis, the participants have been offered
the answer sheet with the likert scale which varies from Strongly Agree, Agree, Neither
Agree/Disagree, Disagree and Strongly Disagree. This is measured the scores from 5 to 1.
In the analysis of the questionnaire, it was made clear that the question, an individual’s
awareness on their role fitting the overall business process can make a significant change
in the quality of the business process, was selected by 47% of the claim officers as agree
while 40% of then strongly agree. This adds up the mean value to be 4.26 and 0.69
standard deviation. Similarly 59% of the claim officers agree that they are satisfied with
the way the usual works processes are organized in CIPLC while 22% of them neither
agree/disagree, where the mean of 3.71 and the standard deviation is 0.77. Likewise 60%
of the claim officers agree that CIPLC needs to be improved or redesigned in its claim
settlement process while 21% of them neither agree/disagree, where the mean of 3.81 and
the standard deviation is 0.78. The clients are not happy with the time taken to process
the claim is scored by claim officers with 36% neither agree/disagree while 28% of them
scored agree and disagree. Therefore the mean value of this is 2.97 with the standard

deviation of 0.95. For the question, after the implementation of BPR, you will get the
necessary support from other departments, was selected by 45% of the of claim officers
as neither agree/disagree while 33% of them are agree, where the mean value of 3.45 and
the standard deviation is 0.88. Also 52% of the claim officers agree that internal
resources are adequate enough to redesign the processes, where the mean value of 3.40
and the standard deviation is 0.92. In the same way 47% of the claim officers agree that
by implementing BPR in Claim settlement, CIPLC can have a competitive advantage in
the market place while 31% of them are strongly agreeing, where the mean of 4.02 and
the standard deviation is 0.87.
In summing up the results of the data gathered from the overall research it is clear that
most of the participants have scored in favour of business process redesign is needed to
increase the quality/quantity of the claim payment. The significance of the choice could
be proven by the mean value of 3.67 and standard deviation 0.84 assign to it on the
analysis.
Table 3: Correlation of Process & Quality/Quantity
**. Correlation is significant at the 0.01 level (2-tailed).

Figure 6: Correlation of Process & Quality/Quantity
As shown in the above Table 4.2 and Figure 4.1, the relationship between business
process redesign and the quality/quantity can be constructed with the help of Pearson’s
correlation. In accordance with SPSS the Pearson’s correlation provides the data of two
variables and by drawing a line of best fit, the relationship is deduced as shown in Table
4.2 and Figure 4.1. In Addition Pearson correlation (r) at 0.425 assesses the relationship
between process and quality/quantity being weak positive with n=58 at a significance of
the correlation is 0.001. The variable of process should be an independent in this
evaluation for the variable of quality/quantity to be dependent. Therefore if
the increase/decrease of business processes in CIPLC, it will lead to increase/decrease
of claim processing quality/quantity. The above relationships show us that, above 0.5 is
taken as strong positive and the range 0.0 to 0.5 is taken as weak positive. This is because
the relationship is based on Pearson correlation.

The hypothesis is validated at significance 0.05.
H1a - Alternate Hypothesis:
Business process redesign through BPR will increase the quality/quantity the claim
H10 - Null Hypothesis:
Business process redesign through BPR will not increase the quality/quantity the claim
As per the SPSS, The acceptance of a hypothesis is determined in terms of the
significance of the real data (Sig 2-tailed), which is in this study 0.001. This make the
real data error is less than standard 0.05. This would direct the conclusion that, Null
Hypothesis is rejected and the Alternate Hypothesis is failed to be reject. A relationship
to be found as strong or not is determined by linking this data together with the
correlation and coefficient values. Since the correlation is 0.425 (r) and the coefficient of
the relationship is 0.181 (r²) the relationship could be concluded as partially positive.
4.2 Leadership
Table 4: Claim offices response on leadership

relationship between the leadership is needed to increase the quality/quantity of the claim
payment. For the analysis, the participants have been offered the answer sheet with the
likert scale which varies from Strongly Agree, Agree, Neither Agree/Disagree, Disagree
and Strongly Disagree. This is measured the scores from 5 to 1.
In the analysis of the questionnaire, it was made clear that the question, they can trust on
their leaders, was selected by 45% of the of claim officers as agree while 36% of them
strongly agree. This adds up the mean value to be 4.10 and 0.87 standard deviation.
Similarly 57% of the claim officers agree that their department superiors have enough
managerial skills and strategies to introduce new business process/culture while 14% of
them strongly agree, where the mean of 3.98 and the standard deviation is 0.81. Likewise
55% of the claim officers agreed that the bond between the supervisors and the
employees facilitate the business process where the mean of 4.02 and the standard
deviation is 0.71. Their department superiors are more business oriented than people
oriented is scored by claim officers with 31% neither agree/disagree while another 31%
of them scored agree. Therefore the mean value of this is 3.29 with the standard deviation

of 1.09. For the question, they receive up to date information regarding the current and
future business process changes of CLPLC, was selected by 50% of the of claim officers
as agree while considerable no of participant (24%, 19%) scored as neither agree/disagree
and disagree, where the mean value of 3.45 and the standard deviation is 0.88. Also 52%
of the claim officers agree that their superiors are self motivated and independent
thinking leaders, where the mean value of 3.84 and the standard deviation is 0.81. In the
same way 67% of the claim officers agreed that they have been continuously assessed by
the supervisors where the mean of 3.98 and the standard deviation is 0.66.
most of the participants have scored in favor of leadership is needed to increase the
quality/quantity of the claim payment. The significance of the choice could be proven by
the mean value of 3.81 and standard deviation 0.83 assign to it on the analysis.
Table 5: Correlation of Leadership & Quality/Quantity
*. Correlation is significant at the 0.05 level (2-tailed).

Figure 7: Correlation of Leadership & Quality/ Quantity
As shown in the above Table 4.4 and Figure 4.2, the relationship between leadership and
the quality/quantity can be constructed with the help of Pearson’s correlation. In
accordance with SPSS the Pearson’s correlation provides the data of two variables and by
drawing a line of best fit, the relationship is deduced as shown in Table 4.4 and Figure
4.2. In Addition Pearson correlation (r) at 0.260 assesses the relationship between
leadership and quality/quantity being weak positive with n=58 at a significance of the
correlation is 0.049. The variable of leadership should be an independent in this
evaluation for the variable of quality/quantity to be dependent. Therefore if
the increase/decrease of leadership in CIPLC, it will lead to increase/decrease of claim
payment quality/quantity. The above relationships show us that, above 0.5 is taken
as strong positive and the range 0.0 to 0.5 is taken as weak positive. This is because the
relationship is based on Pearson correlation.

H2a - Leadership through the BPR will increase the quality/quantity of claim settlement
process in CIPLC.
H20 - Leadership through the BPR will not increase the quality/quantity of claim
4.3 Information Technology (IT)
Table 6: Claim offices response on IT

relationship between the IT system and infrastructure enhancement is needed to increase
the quality/quantity of the claim payment. For the analysis, the participants have been
offered the answer sheet with the likert scale which varies from Strongly Agree, Agree,
Neither Agree/Disagree, Disagree and Strongly Disagree. This is measured the scores
from 5 to 1.
In the analysis of the questionnaire, it was made clear that the question, the current IT
infrastructure and the systems are not satisfactory, was selected by 55% of the of claim
officers as disagree while considerable no of participant (19%, 17%) scored as neither
agree/disagree and agree. This adds up the mean value to be 2.59 and 0.96 standard
deviation. Similarly 66% of the claim officers disagree that the necessary information
can’t be acquired by using the current IT systems while 19% of them neither
agree/disagree, where the mean of 2.24 and the standard deviation is 0.71. Likewise 53%
of the claim officers agree that by using the improved IT system the accuracy of the
information can be improved while 41% of them scored as strongly agree, where the
mean of 4.36 and the standard deviation is 0.58. By introducing IT infrastructure and

systems the BPR can be made successful is scored by claim officers with 67% as agree
while 24% of them scored strongly agree. Therefore the mean value of this is 4.16 with
the standard deviation of 0.56. For the question, the manual processes needs to be
automated while introducing the BPR, was selected by 55% of the of claim officers as
agree while 38% of them are strongly agreeing, where the mean value of 4.29 and the
standard deviation is 0.65. In the same way 47% of the claim officers agreed that by
having a comprehensive training program relating to computer skills can increase their
job function while another 47% of them are strongly agreeing, where the mean of 4.40
and the standard deviation is 0.62.
most of the participants have scored in favour of IT is needed to increase the
quality/quantity of the claim payment. The significance of the choice could be proven by
the mean value of 3.67 and standard deviation 0.68 assign to it on the analysis.
Table 7: Correlation of IT & Quality/Quantity

Figure 8: Correlation of IT & Quality/Quantity
As shown in the above Table 4.6 and Figure 4.3, the relationship between IT
enhancement and the quality/quantity can be constructed with the help of Pearson’s
correlation. In accordance with SPSS the Pearson’s correlation provides the data of two
variables and by drawing a line of best fit, the relationship is deduced as shown in Table
4.6 and Figure 4.3. In Addition Pearson correlation (r) at 0.337 assesses the relationship
between IT enhancement and quality/quantity being weak positive with n=58 at a
significance of the correlation is 0.010. The variable of IT should be an independent in
this evaluation for the variable of quality/quantity to be dependent. Therefore if
the increase/decrease of IT enhancement in CIPLC, it will lead to increase/decrease
of claim payment quality/quantity. The above relationships show us that, above 0.5 is
taken as strong positive and the range 0.0 to 0.5 is taken as weak positive. This is because
the relationship is based on Pearson correlation.

H3a - IT system and infrastructure enhancement through the BPR will increase the
H30 - IT system and infrastructure enhancement through the BPR will not increase the
4.4 Process redesign towards Cost
Table 8: Correlation of Process & Cost

Figure 9: Correlation of Process & Cost
As shown in the above Table 4.7 and Figure 4.4, the relationship between business
process redesign and the reduction of unforeseen cost can be constructed with the help
of Pearson’s correlation. In accordance with SPSS the Pearson’s correlation provides the
data of two variables and by drawing a line of best fit, the relationship is deduced as
shown in Table 4.7 and Figure 4.4. In Addition Pearson correlation (r) at 0.034 assesses
the relationship between process redesign and cost being weak positive with n=58 at a
significance of the correlation is 0.801. The variable of process should be an independent
in this evaluation for the variable of cost to be dependent. Therefore if
the increase/decrease of process redesign in CIPLC, it will lead to increase/decrease
of unforeseen cost. The above relationships show us that, above 0.5 is taken as strong
positive and the range 0.0 to 0.5 is taken as weak positive. This is because the
relationship is based on Pearson correlation.

H4a - Business process redesign through BPR will help to minimize the unforeseen cost
involve in claim settlement process in CIPLC.
H40 - Business process redesign through BPR will not help to minimize the unforeseen
cost involve in claim settlement process in CIPLC.
real data error is higher than standard 0.05. This would direct the conclusion that,
Alternate Hypothesis is rejected and the Null Hypothesis is failed to be reject. A
relationship to be found as strong or not is determined by linking this data together with
the correlation and coefficient values. Since the correlation is 0.034 (r) and the coefficient
of the relationship is 0.001 (r²) the relationship could be concluded as negative.
4.5 Quality and Quantity
Table 9: Claim offices response about increasing the quality and quantity

In this subsection of the questionnaire (Table 4.8), was designed to analyze the quality
and quantity dependent variable for BPR. For the analysis, the participants have been
offered the answer sheet with the likert scale which varies from Strongly Agree, Agree,
Neither Agree/Disagree, Disagree and Strongly Disagree. This is measured the scores
from 5 to 1.
In the analysis of the questionnaire, it was made clear that the question, centralizing of
claim processing can increase the efficiency in claim settlement, was selected by 43% of
claim officers as strongly agree while 40% scored as agree. This adds up the mean value
to be 4.24 and 0.78 standard deviation. Similarly 59% of the claim officers disagree that
the current no of claim and the quality of the claims which they are processing, are not
satisfying while 28% of them are strongly disagree, where the mean of 1.88 and the
standard deviation is 0.68. Likewise 59% of the claim officers agree that redesigning the
processes can increase the quality and quantity of the claims while 36% of them scored as
strongly agree, where the mean of 4.31 and the standard deviation is 0.57. By
amalgamating some processes the claim processing time can be reduced is scored by
claim officers with 52% as agree while 28% of them scored strongly agree. Therefore the
mean value of this is 4.02 with the standard deviation of 0.81. For the question, by

receiving the necessary business training/ knowledge transfer you can increase the quality
of the claim., was selected by 67% of the claim officers as strongly agree while 31% of
them are agree, where the mean value of 4.66 and the standard deviation is 0.51.
Likewise 57% of the claim officers agree that by introducing new or improved IT
systems the user errors can be reduced but 16% of them scored as neither agree/disagree,
where the mean of 3.97 and the standard deviation is 0.77.In the same way 60% of the
claim officers agree that while centralizing the business process the number of claims
responded per day could be increased but another 22% of them are scored as neither
agree/disagree, where the mean of 3.90 and the standard deviation is 0.67.
most of the participants have scored in favour of improving the quality and quantity is
needed. The significance of the choice could be proven by the mean value of 3.90 and
standard deviation 0.68 assign to it on the analysis.
4.6 Cost
Table 10: Claim offices response about unforeseen cost

In this subsection of the questionnaire (Table 4.9), was designed to analyze the cost
dependent variable for BPR. For the analysis, the participants have been offered the
answer sheet with the likert scale which varies from Strongly Agree, Agree, Neither
Agree/Disagree, Disagree and Strongly Disagree. This is measured the scores from 5 to 1.
In the analysis of the questionnaire, it was made clear that the question, by redesigning a
process while removing non-value adding processes the operational cost can be reduced,
was selected by 53% of the of claim officers as strongly agreeing while 28% scored as
neither agree/disagree. This adds up the mean value to be 3.81 and 0.74 standard
deviation. Similarly 52% of the claim officers agreed that the investment on BPR is
justifiable for the return we are receiving from redesigned processes, while 36% of them
are neither agree/disagree, where the mean of 3.66 and the standard deviation is 0.69.
With centralizing the claim function of CIPLC, we can reduce the budgeted cadre for
claim settlement department is scored by claim officers with 36% as neither
agree/disagree while considerable no of participant (14%, 16%) scored as disagree and
strongly disagree. Therefore the mean value of this is 2.95 with the standard deviation of
1.13.
most of the participants have scored in favour of neither agree/disagree where the cost
can be reduce through the process redesign. The significance of the choice could be
proven by the mean value of 3.47 and standard deviation 0.85 assign to it on the analysis.
4.7 Overall Research Summery (BPR and Efficiency)
Table 11: Claim offices overall response
Data gathered from the overall research it is clear that most of the participants have
scored in favour of BPR is needed to increase the efficiency of the claim processing in

CIPLC. The significance of the choice could be proven by the mean value of 3.70 and
standard deviation 0.78 assign to it on the analysis.
Table 12: Correlation of BPR & efficiency
Figure 10: Correlations of BPR & Efficiency

As shown in the above Table 4.11 and Figure 4.5, the relationship between BPR and the
efficiency can be constructed with the help of Pearson’s correlation. In accordance
with SPSS the Pearson’s correlation provides the data of two variables and by drawing a
line of best fit, the relationship is deduced as shown in Table 4.11 and Figure 4.5. In
Addition Pearson correlation (r) at 0.406 assesses the relationship between BPR and
efficiency being weak positive with n=58 at a significance of the correlation is 0.002. The
variable of BPR should be an independent in this evaluation for the variable
of efficiency to be dependent. Therefore if the increase/decrease of parameter in BPR, it
will lead to increase/decrease of parameters of efficiency. The above relationships show
us that, above 0.5 is taken as strong positive and the range 0.0 to 0.5 is taken as weak
positive. This is because the relationship is based on Pearson correlation.
H5a - Business Process Reengineering will increase the efficiency in claim settlement
process in CIPLC.
H50 - Business Process Reengineering will not increase the efficiency in claim settlement
process in CIPLC.

Chapter Five
CONCLUSION AND RECOMMENDATION
In this chapter, conclusions have been made with the data analyzed in the previous
chapters, which are based on; the hypothesis identified and describes the relationships
between the variables. Moreover the latter covers considerable conclusions which have
been derived for each hypothesis, recommendations and areas for improvement.
5.1 Summary of the Study
The main target of the research is to investigate on the effects of process, leadership and
information technology on increasing the efficiency, while implementing the Business
Process Reengineering (BPR). To investigate, this study has focused on current claim
processing practice in Ceylinco Insurance PLC (CIPLC). Thus the effect of above
mentioned parameters on the efficiency of the claim settlement process is measured.
The analysis done on the business process of CIPLC, it was identified that there is a need
to improve the efficiency, to gain the competitive market advantage over the competitors.
The analysis also provided the information on where the company stood with regard to its
own benchmarks. Further, to gain the efficiency, company had identified a possible BPR
methodology which is suitable with the current business environment.
Upon the investigation done, the parameter that needs to be improved has been identified.
Then literature has been reviewed to investigate on the other similar researches that have
been carried out on the same area. In reference to the previous literature reviews, a
conceptual framework was defined. Thus a hypothesis was determined based.
Accordingly independent and the dependant variables were identified. Later a
questionnaire (with 32 questions) was designed based on the relationship of the variables.
Hence the research was carried out, while gathering data from 58 participants. The

gathered data was then evaluated using the SPSS software and presented in 4th
chapter.
This has resulted rejecting the 4 Null Hypotheses (H10, H20, H30, and H50) and failing
to reject 4 Alternative Hypothesis (H1a, H2a, H3a, and H5a). Moreover, based on the
gather data, have rejected an Alternative Hypothesis (H4a) and failed to reject Null
Hypothesis (H40).
In summing up it is clear that the efficiency could be improved by implementing the
BPR; in this study the efficiency of the claim department in Ceylinco Insurance PLC.
5.1.1 Process redesign toward increase of quality and quantity
With the questionnaire used in here, we try to understand the level of current processes
deployed in and whether they are being used to understand and adopt those with current
working style. The current understanding of the existing processes really helps for the
future redesigning of process. Then gradually arriving into the question to get idea like
whether they have further expectation to change the current process into new dimension.
Overall average score for process is 3.67 and with the deviation 0.84, which can conclude
as agreed. Moreover responders are agreed with the quality/quantity question where help
to increase the overall efficiency by improving the process redesign. This achieved the
overall score 3.39 with the deviation of 0.68. Based on the hypothesis validation with the
correlation (r) of 0.425 and coefficient (r²) of 0.181, we can conclude as there is a
relationship between the process and quality/quantity parameters. According to the above
identified facts, we reached to the conclusion that business process redesign will increase
the quality/quantity which lead to the overall efficiency in the claim settlement process.
5.1.2 Leadership toward increase of quality and quantity
With the questionnaire used in here we try to understand the current leadership
capabilities and leader’s relationship with their subordinate. Moreover, checking whether
they have the ability to influence the user to get desired outcome. This understanding is

necessary, when implementing the BPR many process, which will change tradition. As a
result, different users will response differently and the leaders need to handle those
issues. In addition, if the leader is close to the subordinate, it will be easy. Overall
average score for leadership is 3.81 and with the deviation 0.83, which can conclude as
agreed. Moreover responders are agreed with the quality/quantity question where help to
increase the overall efficiency with leadership capabilities. This achieved the overall
score 3.39 with the deviation of 0.68. Based on the hypothesis validation with the
correlation (r) of 0.260 and coefficient (r²) of 0.067, we can conclude as there is a
relationship between the leadership and quality/quantity parameters. According to the
above identified facts, we can conclude that leadership will increase the quality/quantity
which leads to the overall efficiency in the claim settlement process.
5.1.3 IT enhancement toward increase of quality and quantity
With the questionnaire used in here, we try to understand the current IT systems and
infrastructure used in the company and whether the system facilitate to query the
necessary information they need to process the claim. After the understanding on current
IT capabilities, moving gradually into the question like whether they need more advance
comprehensive system to manage the work smoothly and more efficiently. Moreover
trying to get users opinion about whether are they willing to automation of current
manual processes. Overall average score for IT is 3.67 and with the deviation 0.68, which
can conclude as agreed. Moreover responders are agreed with the quality/quantity
question where help to increase the overall efficiency by enhancing the IT system and
infrastructure. This achieved the overall score 3.39 with the deviation of 0.68. Based on
the hypothesis validation with the correlation (r) of 0.337 and coefficient (r²) of 0.113, we
can concluded that there is a relationship between the IT and quality/quantity parameters.
According to the above identified facts, we can reach to the conclusion that enhancement
of IT system and infrastructure will increase the quality/quantity which leads to the
overall efficiency in the claim settlement process.

5.1.4 Process redesign toward minimizing the unforeseen cost
This hypothesis is design to validate the relationship with, how to minimise the
unforeseen cost via the process redesign. Overall average score for process is 3.67 and
with the deviation 0.84, which can conclude as agreed. The questionnaire design to
validate the cost related questions like by redesigning the process, can we save the cost
by eliminating the non value creating processes. Moreover with the set of questions, we
are keen into getting the individual’s opinion on, with the implementation of new
processes; whether the company can reduce the staffs, where many respond has
disagreed. But as summery, many responders are agreed with the questionnaire by giving
the overall average of 3.47 and with the standard deviation 0.85. Based on the hypothesis
validation with the correlation (r) of 0.034 and coefficient (r²) of 0.001 with the
significant of 0.801, according to the data collected from questionnaire we can conclude
as whether the weak relationship is there between the process and cost parameters which
is not strong enough to prove the relationship with the significant higher than 0.05.
According to the above identified facts, we can conclude that business process redesign
will not reduce the unforeseen cost which leads to the overall efficiency in the claim
settlement process.
5.1.5 BPR toward increasing the efficiency
To have an overall conclusion, we analysed all the parameter which we took to measure
the overall performance in BPR and the parameter we used to measure efficiency. Based
on the hypothesis validation with the correlation (r) of 0.406 and coefficient (r²) of 0.165,
we can conclude that there is a relationship between the BPR and efficiency parameters.
According to the above identified facts, we can have the final conclusion that BPR will
increase the efficiency in claim settlement process in CIPLC.

5.2 Recommendations
The ultimate target of this study is to increase the efficiency of the claim settlement
process. Based on the conclusion, some recommendations are given bellow to improve
the performance in the claim settlement process.
 Implementation of centralise claim processing will give many advantages to the
company, as well as customers. In branches usually the insurance analyst will handle
the claim processing function with the guidance of the technical staffs and automobile
engineers. But insurance analysts are not well professional and educated in dealing
with claims like claim officers so they will face many difficulties while coming to the
technical side of claim process. Therefore, the company need to form up a separate
department in a centralised location by absorbing the claim officers and some
automobile engineers scattered around in branches. By doing so, CIPLC can
centralise the claim processing function while maintaining the de-centralise claim
payment option, to give the better service to its customer. The centralisation of claim
process will help to increase the accuracy and speed in the claim process where the
customer may visit the branch to collect the claim payment. The current process is as
follows; the processing branch needs to contact the policy underwritten branch to take
the claim no and all relevant details. But with the help of a centralised processing
department; we can remove those non value creating processes.
 According to the current practise of the CIPLC, claim process will start when
customers visit the branch with the relevant documents (eg: green copy). Instead of
the latter, company have to implement a new way forward to process the claim as
soon as the automobile engineer visit the accident location and collect the details.
Those details have to be transferred in a centralised claim processing department to
start the necessary works and by the time, customer may visit the branch where
he/she can receive the claim payment instead of starting the process.

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