Changes in the Life Insurance Industry: Efficiency, by Anthony M. Santomero (auth.), J. David Cummins, Anthony M.

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By Anthony M. Santomero (auth.), J. David Cummins, Anthony M. Santomero (eds.)

Major demanding situations for all times insurance firms were posed by way of an extraordinary wave of mergers and acquisitions within the coverage and the emergence of non-traditional opponents akin to banks, mutual fund businesses and funding advisory businesses. this can be the 1st booklet to investigate the determinants of establishment functionality within the existence coverage through determining the `best practices' hired through prime insurers to reach this dynamic enterprise surroundings. The publication attracts upon facts from insurer monetary statements in addition to upon an intensive survey of existence insurer administration practices and strategic offerings in distribution structures, info know-how, mergers and acquisitions, human assets and fiscal ideas. conventional recommendations resembling expense management, consumer concentration, and product differentiation are analyzed in addition to strategic practices particular to the coverage undefined. most sensible practices are pointed out by way of measuring the commercial potency of insurers and by way of evaluating businesses around the undefined. either expense and profit potency are measured relative to top perform effective frontiers which includes the industry's dominant existence insurance companies. Economies of scale and the results of mergers and acquisitions on potency also are analyzed. monetary thoughts are tested with particular connection with pricing coverage, valuation of resources and liabilities, and the present country of firm-level threat administration structures. The benchmarks validated are the results of vast fieldwork that identifies key monetary hazards and methodologies to either degree and deal with them on the company point.
the consequences mentioned within the publication point out that enterprise functionality is considerably correlated with administration practices and strategic offerings. therefore, lifestyles insurers can enhance profitability through adopting optimum combos of innovations. The ebook includes very important new fabric at the results of strategic offerings in product distribution platforms, info expertise, mergers and acquisitions, human assets, and monetary probability administration regulations. within the region of potency, the technique offers a brand new strategy for deciding upon peer teams of insurers and measuring the functionality of person insurers relative to their peer staff. at the issues of probability and pricing, new insights are provided relative to present methodologies and in regard to components the place development is obviously warranted. The e-book concludes with an research of the longer term possibilities and demanding situations within the existence coverage dealing with managers, and the strategic recommendations to be had to them to deal with those changes.

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The disparity in these statistics hints at the diversity in the product offerings of participating firms. While traditional core products such as individual ordinary life insurance and fixed annuities were offered by nearly all respondents (50 and 48, respectively), variable life and annuities were offered by fewer firms. The majority of insurers had premium income from three to five source categories. Eighteen insurers were fully diversified in their product offerings and had premiums from six or seven of these categories.

7. Marketing and Distribution Issues An issue drawing much attention and debate in the insurance industry is the relative efficiency of various distinctly different distribution systems. Two systems have dominant percentages of the market: exclusive agency systems, where the commissioned agent sells only policies for a single insurer; and non-exclusive agency systems, where an agent may represent a number of different insurers. A third system of increasing importance is direct marketing. Here, in effect, the insurer does away with field agents and relies on telephone sales, direct mailings, affiliated groups, and other means to attract customers.

An insurance company is a collection of decision-makers and procedures as is any company. Many decisions are made daily. Others are made less frequently, but all have impacts that will shape the firm for years to come. Some are financial: How much should we pay underwriters? Agents? Claims processing personnel? How much should we spend on technology? Some are operational: How should we allocate our technology spending? What role should technology play in our underwriting process? Our claims processing?

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