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 remarkable wave of mergers and acquisitions within the assurance and the emergence of non-traditional rivals akin to banks, mutual fund businesses and funding advisory agencies. this can be the 1st booklet to investigate the determinants of establishment functionality within the lifestyles coverage by means of deciding upon the `best practices' hired via best insurers to achieve this dynamic enterprise surroundings. The publication attracts upon information from insurer monetary statements in addition to upon an intensive survey of lifestyles insurer administration practices and strategic offerings in distribution platforms, details expertise, mergers and acquisitions, human assets and monetary techniques. wide-spread thoughts similar to price 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 industrial potency of insurers and by way of evaluating agencies around the undefined. either fee and profit potency are measured relative to most sensible perform effective frontiers which includes the industry's dominant lifestyles insurance companies. Economies of scale and the consequences of mergers and acquisitions on potency also are analyzed. monetary options are tested with particular connection with pricing coverage, valuation of resources and liabilities, and the present nation of firm-level chance administration platforms. The benchmarks demonstrated are the results of wide fieldwork that identifies key monetary dangers and methodologies to either degree and deal with them on the company point.
the consequences mentioned within the publication point out that company functionality is considerably correlated with administration practices and strategic offerings. hence, lifestyles insurers can increase profitability by means of adopting optimum mixtures of concepts. The ebook includes vital new fabric at the results of strategic offerings in product distribution structures, info expertise, mergers and acquisitions, human assets, and monetary possibility administration guidelines. within the region of potency, the method presents a brand new procedure for settling on peer teams of insurers and measuring the functionality of person insurers relative to their peer team. at the issues of danger and pricing, new insights are provided relative to present methodologies and in regard to parts the place development is obviously warranted. The booklet concludes with an research of the longer term possibilities and demanding situations within the existence assurance dealing with managers, and the strategic concepts to be had to them to deal with those changes.
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Extra resources for Changes in the Life Insurance Industry: Efficiency, Technology and Risk Management
The importance of development of alternative distribution channel measures rise over time while the importance of agent retention rates is falling. This confirms interview comments from industry executives who broadly anticipate the need to aggressively respond to changing distribution patterns in financial services. The reliance on existing agency systems and agents seems to be diminishing and insurers are striving to lessen their dependence on existing distribution systems that are costly and may not be effective over time.
Other distribution methods were mentioned by only a few of the participants, with less than 1% of life insurance expected to be sold in 1999 via nontraditional means. Enthusiasm for these distribution methods was slightly greater for annuities, but still amounted to only 4% of revenue. 44 CHANGES IN THE LIFE INSURANCE INDUSTRY Distribution vehicles mentioned included unaffiliated broker dealers, third party marketing operations, private label ventures, and membership firms. Curiously, the Internet was mentioned as a viable means of distribution by only one respondent in the 1996 survey.
Nearly all of those surveyed viewed client retention as the utmost priority. Those few that did not view it as a priority tend to have a strong product orientation toward annuities. For other objectives, there was far less consensus. Many of the other strategies listed were important to a sizable fraction of the sample, but not to a significant majority. These included focusing on customers over products, targeting wealthy individuals, providing extensive product ranges, and devoting significant resources to marketing.