Overview

Ward Group conducted a study on cost allocation practices at diverse group of property casualty insurance companies.  The objective of the study was to obtain comprehensive and valuable information to help insurance companies more effectively manage their budgeting and cost allocation processes.

Key areas related to cost allocation were evaluated including:

• Cost chargebacks to department (i.e. technology, rent, etc.)
• Departmental cost accountability
• Allocations to loss adjusting, underwriting, 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

• Introduction
• Profile of Participants
• Executive Summary

• Company Statistics Summary
   
• Budget Process

• Cost Allocation Basis Methodology
   
• Cost Allocation Maintenance

-    Evaluation Frequency
-    Department Responsibility
-    Maintenance Tool

• Cost Allocation by Function