The production of Life and Health Insurance
The most important operations in the production process include–
Insurance pricing – product is priced before actual production costs are known. Actuaries determine insurance premiums and necessary reserves using their best estimates of future losses and expenses.
Underwriting – underwriters determine whether and on what terms to issue a requested insurance policy.
Claims handling – claims personnel negotiate and settle claims.
Investment management – life insurers manage significant investment portfolios to maximize risk-adjusted investment returns because this can be a major factor in determining product competitiveness and profitability.
Financial management – financial management requires decisions on investment quality and quantity, including asset\liability matching and diversification.
Distribution – insurers sell insurance in one or a combination of three ways: 1. Through direct response. 2. Through agents. 3. Through banks
Benefits derived by society through insurance:
Reduces worry and fear
Makes available large funds for investment at low cost
Provides employment to a large number of people
Insurance enhances credit worthiness and reduces credit risk