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

  • Invisible earnings

  • Social benefits

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