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11 Cards in this Set

  • Front
  • Back
PLANNING CONSISTS OF:
Choosing a Mission Statement
Choosing Objectives
Choosing a Competitive Strategy
Choosing an Annual Plan
Choosing a Product Manager
Choosing a Competitive Strategy:
 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.
Choosing an Annual Plan:
 Profit objectives
 New business objectives
 Growth objectives
 all split by product line
 Lapse objectives
 specific projects
 dealing with regulations
Choosing a Product Manager, to:
 Monitor growth
 Plan the product range
 Monitor the market
 Develop promotional/training materials
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
Profit Factors
 RBC required
 Return on Capital
CONTROL CONSISTS OF:
 Picking a measurement system
 examining A/E deviations (in new business, lapses)
 making required changes
 Two sets of books are kept
Claims Control
 Verify eligibility of claims
 efficient processing
 prevention / wellness
 rehabilitation for disableds
 enforce plan provisions
 raise deds/copays
 prevent overinsurance
Expense Control
 Salaries
 commissions
 overhead
 Reduce number of ees
 relocate to cheaper location
 Improve technology to replace ees
 allocate the expenses to different units.
Investment Income Control
 review investment objectives
 analyze the market
 more important for LI than HI
Mix of Business Control
 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.