figure 1 – an insurance firm
DESCRIPTION
FIGURE 1 – An Insurance Firm. proxy for performance is agent productivity (sales / op. exp.). Reject or Accept. CLAIMS Dept. INVESTMENT Dept. ACTUARIAL Dept. Pricing of Policies. Investment of Cash. Claims. Basket of Policy Variations. Portfolio of Policies. Premiums. Sales. - PowerPoint PPT PresentationTRANSCRIPT
FIGURE 1 – An Insurance Firm
ACTUARIAL Dept.
MARKETING Dept.
AGENCY Dept.
CLAIMS Dept.
INVESTMENT Dept.
Basket of Policy Variations
Portfolio of Policies
Claims
Pricing of Policies
New kinds of Policies
Sales
Cash Inflows
Investment of Cash
Reject or Accept
Lapsed Policies
Matured Policies
Premiums
Operating Expenses
Model Boundary
proxy for performance is agent productivity (sales / op. exp.)
30000
50000
70000
90000
110000
130000
1989 1992 1995 1998 2001 2004
FIGURE 2 – Productivity of the 3 groups
Productivity is measured in UK £ per person per year
FIGURE 3 – Normalized Productivity
The y-axis has been normalized, base set to 100
70
80
90
100
110
120
130
140
150
1989 1992 1995 1998 2001 2004
FIGURE 4 - Model Boundary
ACTUARIAL Dept.
MARKETING Dept.
AGENCY Dept.
CLAIMS Dept.
INVESTMENT Dept.
Basket of Policy Variations
Portfolio of Policies
Claims
Pricing of Policies
New kinds of Policies
Sales
Cash Inflows
Investment of Cash
Reject or Accept
Lapsed Policies
Matured Policies
Premiums
Operating Expenses
Model Boundary
proxy for performance is agent productivity (sales / op. exp.)
PRODUCTIVITY
SKILLHEADCOUNT
COMPENSATION SECTOR
FIGURE 5 – Model Overview
agent quits
hires
agents promoted
Agents
skill per agent
product sales
products lapsing
agent quit rate
skill level of hired agents
MANAGERMANPOWER
growth target
Agents
lost skill frompromotion
MANAGERIAL COMPENSATION
variable agentcompensation
managerquit rate
promotion rate
impact on lapse rate
ATTITUDE TO GROWTH TARGET
achieved growth rate
de-facto growth target
Agents'Sales Skilladded skill
at hire
skill peragent
lost skill from quits
level of hired agents
relative skillof quits
standardagent skill
at hire
lost skill frompromotions
relative skill ofpromoted agents
PRODUCTIVITY SECTORHEADCOUNT
SECTOR
HEADCOUNT SECTORhires
agents promoted
agents quits
COMPENSATION SECTOR
FIGURE 6 - Skill Sector modified by Agent
Learning
agent learning
HEADCOUNT SECTOR
Agent Learning Rate
Agentsimpact of recent compensation
+
+ +
+
+ +
+ +
time requiredon each activity
indicatedrecruiting time
target numberof recruits
days neededper recruit
indicatedcoaching time
target days ofcoaching peragent in a year
total timeneeded
ratio
HEADCOUNT SECTOR
Agents
FIGURE 7 - Time Allocation Sector
managerialtime available
working days peryear per managerManagersskill per
manager
standard manager
skill
admin
effect of relative
on efficiencymanager skill
relativeefficiencyof managers
MANAGER MANPOWER SECTOR
shortfall
weight torecruiting
shortfall ofeach activity
share of timeallowed for
ratio
each activity
HEADCOUNT SECTOR
SKILL SECTOR
+
+ ++
+ +
+ +
+
+
- -+
+
Alpha: Full weight to recruiting
Beta: Full weight to training
Net products sold per year
Time (year)
0 4 8 12 16 20
108K
83K
58K
33K
8000
Units: policies per year (left) and equivalent years of experience (right)
Skill per agent6
5
4
3
20 4 8 12 16 20
Time (year)
FIGURE 8 – Differences in Performance
FIGURE 9– Divergence in Size
Graph for achieved growth rate
Time (year)
0.20
0.10
0.05
0.0
0.15
0 4 8 12 16 20
Units: dimensionless (left) and agents (right)
Agents (size of sales force)
0 4 8 12 16 20
Time (year)
1600
800
400
0
1200
FIGURE 10 - Attitude to
Growth Target
achievedgrowth rate
perceivedgrowth rate
change in perceivedgrowth rate
timeconstant 1
Adjustment factor forchange in target
weight to salesgrowth target
Sales GrowthTarget
timeconstant 2
de-factogrowthtarget
changein target
HEADCOUNT SECTOR
+-+
+
+-
-
-
-
Time (year)
0 4 8 12 16 20
105K
85K
65K
45K
25K
5K0 4 8 12 16 20
Time (year)
10
8.6
7.2
5.8
4.4
3.0
2.2
Alpha-x: Full weight to recruiting
Beta-x: Full weight to training
Units: policies per year (left) and equivalent years of experience (right)
Units: dimensionless (left) and agents (right)
0 4 8 12 16 20
Time (year)
1800
900
450
0
1350
Time (year)0 4 8 12 16 20
0.20
0.15
0.10
0.05
0.00
-0.05
Net products sold per year Skill per agent
Agents (size of sales force)Graph for achieved growth rate
FIGURE 11 – Differences in Performance
FIGURE 12– Divergence in Size