Abstract
Decreasing margins and increasing cost of acquiring new customers are forcing insurance companies to take a re-look at their actual costs of business. Traditional cost accounting methods have not helped the insurance companies in this effort. Here, the absorption costing techniques are put to use, whereby over heads are “allocated” to every customer/product/cost center based on some unrealistic parameters which does not give the true picture of the cost.

Activity Based Costing provides the tools to go beyond gross margin and penetrate the real economics in all aspects of cost and profitability, including that of servicing customers. The analyses provided by activity based costing can provide solutions to many of the critical business issues facing the insurance industry. This whitepaper explains how.

Authors Deepak Mohan Hemantkumar Patil

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