Insurance Value Chain

The insurance value chain is a critical element of any successful insurer. To maximize efficiency and profitability, insurance companies must ensure that processes along this value chain are all functional and up-to-date. By having clear processes at each stage of the insurance value chain, insurers are able to increase efficiency, reduce risks, and ultimately increase customer satisfaction, all the while ensuring that each stakeholder involved in the entire life cycle of the insurance product is well taken care of. As such, processes along the insurance value chain are critical for insurers to provide exemplary service to their consumers and remain competitive in an already crowded marketplace.

The importance of a process along the value chain was determined by assessing a combination of various criteria, such as the process’s cost effectiveness, the time it takes to complete the process, the complexity of the process, the complexity of the customer requirements and their impact on the overall value chain performance, the volume and frequency of the activity, the complexity of the process and the impact of the process on customer experience. The following paragraphs introduce the different processes along the insurance value chain highlighting its importance in terms of percentage and giving reasons for their importance.

Product Management: 15%

Product management ensures that insurance products are tailored to meet customers’ needs, preferences, risks, and budgets. Product managers have a direct impact on the profitability of the insurer, as they are responsible for driving growth and profitability through product design and pricing. 

Marketing: 10%

Marketing is essential to help life insurance companies reach potential customers and build brand recognition. The activities are designed to inform potential customers about the products and services offered by the insurer, as well as to increase brand awareness. 

Sales and Distribution: 20%

Sales and distribution are critical for life insurance companies to succeed. The activities are designed to ensure that customers are aware of the products and services offered by the insurer, as well as to facilitate the purchase and delivery of those products and services. 

Underwriting and Risk Management: 20%

Underwriting and risk management processes are key factors in determining the success of life insurance products. The activities are designed to ensure that the insurer is able to accurately assess and manage the risk associated with each customer and policy. 

Policy Acquisition and Servicing: 15%

Policy acquisition and service requires the effective transfer of policy documents from the issuing company to the policyholder and the ability to provide the customer with ongoing support. The activities are designed to ensure that customers are able to easily purchase and activate policies, as well as to ensure that policies remain active and in compliance with the insurer’s requirements. 

Claims Management: 10%

The claims process must be fast and efficient, and the insurance company must ensure that the policyholder receives an appropriate amount of compensation according to the terms and conditions of the policy. The activities are designed to ensure that customers are able to easily file and resolve claims, as well as to ensure that claims are resolved in a timely and accurate manner. 

Finance and Accounts: 10%

Finance and accounts provide life insurance companies with the financial information and analysis needed to make informed decisions. The activities are designed to ensure that the insurer is able to effectively manage its finances and ensure compliance with applicable regulations.

The insurance value chain process is an integral part of any insurance model. The value chain analysis offers an effective method of understanding an insurance company's competitive market position and potential areas of improvement. It helps to identify areas where technology can be leveraged to improve customer service, reduce costs, and create more efficient operational processes. Furthermore, the value chain analysis can also help insurers identify and develop strategies that address potential risks and ensure long-term success. By leveraging the value chain, insurers can better understand customer preferences and develop more relevant products and services that will meet customer needs. This can lead to a more competitive market position, increased revenue, and improved customer satisfaction.