Cost Strategies Possible To Implement In Insurance Company

Abstract

The purpose of the present paper is to present various kinds of cost strategies implementable in the insurance company in changing market conditions. In order to attain the main goal such research methods as literature analysis, cause and effect analysis and deduction method have been used. The determinants of the latter-day insurance market having the greatest influence on the insurance company costs are: a new system of insurance supervision, functioning of financial groups, new type of insurance risks, new distribution channels, financial markets and new financial instruments and the rest (services of indemnity chancellery, changes to social awareness and client requirements, increased competitiveness resulting in paying more attention to service quality on the part of the insurer). Cost management process in the insurance company can be designed in various ways in accordance with the chief objective the process is to serve. Here are three most common situations: cost management is subordinated to finance management, cost management is correlated with implementation of kaizen (continuous improvement process) based on activity management, cost management is part of value-based management process. The choice of a strategy enables a precise definition what is objective achievement index of cost management whether a defined cost level, profitability or some other parameter whose achievement should guarantee achievement of the aims set by the insurer. In the case of insurance companies it is easy to distinguish basic cost strategies depending on: cost reduction/cost optimization, profitability, pricing policy, insurance risk, financial liquidity and capital cost minimization. Characterization of the aforementioned cost strategies is presented by way of indicating purposes their implementation is to serve. As a result instruments are obtained, which are used to achieve these goals. Issues to do with cost management have been very popular for years. However, the presence of these questions in business activity of insurance companies is caused by the specific way in which they operate