Life Industry Cost Allocation Practices - 2014

Date:AUG 2014
Cost: $2000 Add to Cart

Ward Group recently conducted a survey on cost allocation practices at life and annuity insurers. The purpose of the survey was to obtain comprehensive and valuable information to help companies more effectively manage their budgeting and cost allocation processes. The survey evaluated the following key areas which included:

  • Cost chargebacks to department (i.e. technology, rent, etc.)
  • Departmental cost accountability
  • Allocations to life, annuity, accident and health, and investment expenses
  • View of overall internal allocation complexity
  • Review of staff department segregated charges
  • Insight into the effectiveness of cost accounting framework driving accountability at the “point of spend”
  • Observations on level of transparency and level of understanding of expense charges by “cost center managers” relative to peers

Table of Contents

Study Overview

  • Introduction
  • Profile of Participants
  • Executive Summary 

Key Findings

  • Company Statistics Summary

  • Budget Process

  • Cost Allocation Basis

  • Cost Allocation Maintenance

  • Corporate Overhead Allocation

  • International Business

  • Cost Allocation by Function

-  Acquisition
-  Underwriting
-  New Business and Policyowner/Client Service
-  Claims/Disbursements
-  Shared Services
-  General Support

  • Expense Allocation Matrix

Appendix: Detailed Study Results

Profile of Participants

This report presents the findings from a diverse group of life and annuity companies with an average gross premium of approximately $5.4 billion. In order to maintain the confidentiality of the data, the names of the participants are not disclosed. Results are calculated using the total number of participant responses to each survey topic. To further analyze the survey responses, participants were grouped by business mix and company size based on total gross premium.

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