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11 Cards in this Set
- Front
- Back
PLANNING CONSISTS OF:
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Choosing a Mission Statement
Choosing Objectives Choosing a Competitive Strategy Choosing an Annual Plan Choosing a Product Manager |
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Choosing a Competitive Strategy:
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Lower Prices
lower cost distribution system better technology claim cost containment (UM, CM, discounts) relocate improve productivity or: Differentiation unique (or higher quality) product development of new products Superior service wider distribution or: Niche Marketing specialized product and specialized knowledge about the customers Moral: To compete successfully, a company needs: Efficiency Modernity Quality. |
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Choosing an Annual Plan:
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Profit objectives
New business objectives Growth objectives all split by product line Lapse objectives specific projects dealing with regulations |
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Choosing a Product Manager, to:
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Monitor growth
Plan the product range Monitor the market Develop promotional/training materials |
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FACTORS AFFECTING PROFIT & GROWTH
Growth Factors |
New Business – which depends on:
price, quality, distribution, promotion/advertising Persistency – which depends on: policyholders’ perception customer service Renewal Increases or Decreases – which depend on: adequacy of initial rates inflation / trend expense control |
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Profit Factors
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RBC required
Return on Capital |
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CONTROL CONSISTS OF:
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Picking a measurement system
examining A/E deviations (in new business, lapses) making required changes Two sets of books are kept |
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Claims Control
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Verify eligibility of claims
efficient processing prevention / wellness rehabilitation for disableds enforce plan provisions raise deds/copays prevent overinsurance |
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Expense Control
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Salaries
commissions overhead Reduce number of ees relocate to cheaper location Improve technology to replace ees allocate the expenses to different units. |
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Investment Income Control
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review investment objectives
analyze the market more important for LI than HI |
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Mix of Business Control
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Market to an attractive population:
risk characteristics products they need geographic area To find the best target market: assess profit/growth potential in major markets notice economy / competitivity determine necessary shifts in business determine strengths, weaknesses, and ability to make those shifts. Done. |