FIGURE 1

1
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
Cash Inflows
Lapsed Policies
New kinds of Policies
Operating Expenses
Matured Policies
MARKETING Dept.
AGENCY Dept.
Model Boundary
2
(No Transcript)
3
FIGURE 4 - Model Boundary
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
Cash Inflows
Lapsed Policies
New kinds of Policies
Operating Expenses
Matured Policies
MARKETING Dept.
AGENCY Dept.
Model Boundary
4
FIGURE 5 Model Overview
manager
quit rate
MANAGER MANPOWER
growth target
lost skill from
promotion
Agents
promotion rate
agent quits
agents promoted
SKILL
HEADCOUNT
hires
Agents
skill per agent
achieved growth rate
de-facto growth target
PRODUCTIVITY
ATTITUDE TO GROWTH TARGET
product sales
products lapsing
skill level of hired agents
impact on lapse rate
agent quit rate
COMPENSATION SECTOR
MANAGERIAL COMPENSATION
variable agent
compensation
5








6
(No Transcript)
7
FIGURE 8 Differences in Performance
Net products sold per year
Skill per agent
108K
6
83K
5
58K
4
33K
3
2
8000
0
4
8
12
16
20
0
4
8
12
16
20
Time (year)
Time (year)
Units policies per year (left) and equivalent
years of experience (right)
Alpha Full weight to recruiting
Beta Full weight to training
FIGURE 9 Divergence in Size
Units dimensionless (left) and agents (right)
Agents (size of sales force)
Graph for achieved growth rate
1600
0.20
0.15
1200
0.10
800
0.05
400
0.0
0
0
4
8
12
16
20
0
4
8
12
16
20
Time (year)
Time (year)
8
(No Transcript)
9
FIGURE 11 Differences in Performance
Net products sold per year
Skill per agent
105K
10
8.6
85K
7.2
65K
5.8
45K
4.4
25K
3.0
2.2
5K
0
4
8
12
16
20
0
4
8
12
16
20
Time (year)
Time (year)
Units policies per year (left) and equivalent
years of experience (right)
Alpha-x Full weight to recruiting
Beta-x Full weight to training
FIGURE 12 Divergence in Size
Units dimensionless (left) and agents (right)
Agents (size of sales force)
Graph for achieved growth rate
1800
0.20
0.15
1350
0.10
900
0.05
450
0.00
0
-0.05
0
4
8
12
16
20
0
4
8
12
16
20
Time (year)
Time (year)