--- title: Monitoring ‘cost per policy’ to manage well & bid quick | 3 of 5 description: Managing a diverse book of products built from several rounds of integrations and regulatory changes will undoubtedly be challenging. image: https://www.profitand.com/hubfs/Insurance-policy.jpg --- Hit enter to search or ESC to close * ** * * ** * #### Contact us **Email:** [ info@profitand.com](mailto:info@profitand.com) Profit& Ltd** **100 Bishopsgate London EC2N 4AG United Kingdom **Telephone:** +44 208 1382241 Profit& Srl Via Savoia 78 00198 Rome Italy **Telephone:** +39 0685237413 Profit& Sp.zo.o Ul. Złota 59 Skylight p. 14 00-120 Warsaw Poland **Telephone:** +48 782 579 777 - [**](https://twitter.com/Profitand1) - [**](https://www.linkedin.com/company/profit%26-ltd/) # Monitoring ‘cost per policy’ to manage well & bid quick | 3 of 5 By [Antonio Flor](https://www.profitand.com/blog/author/antonio-flor) March 21, 2018 [ No Comment](https://www.profitand.com/blog/monitoring-cost-per-policy-to-manage-well-and-bid-quick-for-new-policies#comments-listing)   ### Bid quick or die! Managing a diverse book of products built from several rounds of integrations and regulatory changes will undoubtedly be challenging because: 1. Manual accounting processes run independently from the product mix. 2. Costs sit at the cost centre level and are not allocated to policies. 3. Costs of projects are sometimes mixed with the normal *‘business as usual’.* 4. There’s no clear view of policy numbers across the company. Understanding the overall cost base and forecast expenses at the *cost* *centre* and *accoun*t level is important, although effective management comes from understanding costs of products.  This is when a ‘*cost per policy*’ model can help. At the top-level, *cost per policy* is no more than *total costs* divided by *number of policies*.  But that’s just an oversimplification of all the intricacies that is required to cost a set of insurance policies and products, from in-force life and health to annuities, with costs sitting outside products in central service costs such as IT, HR and customer services functions. Understanding costs at the policy level is critical for a reinsurer to: - Cost new books of policies during acquisition bids. - Forecast costs for books under bidding and adjust bids according to product mix. This can be particularly helpful in avoiding a bad deal! - Uncover ways to tackle expensive policies with management actions. - Allocate costs through the business structure to unearth buckets of policies that have been unprofitable to manage and then raise red flags.  The first action to tackle the problem. Having worked in reinsurance to develop cost per policy models, I have learned that it is only after understanding the business, that it is possible to find ways to apportion costs from originating cost centres to allocating ones.  It is crucial to understand the production mechanics of a cost per policy model, and the need to identify functional drivers and inputs to apportion costs.  Specialist technologies make it possible to design models using the appropriate allocation methods, including waterfall and activity-based allocations.  These tools are flexible enough re-calculate costs per policy, given changes to the business following the integration of a new deal – and then moving onto the same cycle of change all over again. In my next blog I will talk about how to manage regulatory and integration projects in a unified process. #### SHARE THIS - ** - ** - ** ![Antonio Flor](https://www.profitand.com/hubfs/Antonio-Flor.jpg) #### [Antonio Flor](https://www.profitand.com/blog/author/antonio-flor) Antonio is an Anaplan Architect with over 10 years’ experience in BI reporting and data manipulation and analysis, within the Financial Services and Real Estate sectors. Prior to joining Profit& in 2017, Antonio held long term positions with Swiss Re and Jones Lang LaSalle. [**](https://www.profitand.com/blog/monitoring-cost-per-policy-to-manage-well-and-bid-quick-for-new-policies#) ** ** ** ### Recent Posts [ ## Manufacturing Planning Is Connected. 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