Complexity in the Insurance Industry by karlheinzpassler.com
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Complexity in the Insurance Industry by karlheinzpassler.com

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The insurance industry exists for the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. The idea is simple. Over time, the idea of risk transfer has......

The insurance industry exists for the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. The idea is simple. Over time, the idea of risk transfer has resulted into the complex insurance industry we have today. Harmful complexity destroys 10% and more of annual profits in the insurance industry. Companies needed to dramatically reduce complexity and improve profitable growth, starting now!

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  • 1. Complexityin the Insurance Industry - the complexity tipping point - March 2013 Karl-Heinz Paßler Insurance and new value-added approaches
  • 2. Karl-Heinz PaßlerInsurance and new Insurance is a simple ideavalue-addedapproaches. The insurance industry exists for the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. The idea is simple: The Babylonians developed an early form of insurance that was recorded in the Code of Hammurabi dating back to about 1772 BC. karlheinzpassler.com Link to article: http://wp.me/p2t73f-db
  • 3. Karl-Heinz PaßlerInsurance and new Avoiding complexity is not an optionvalue-addedapproaches. Over time, the idea of risk transfer has resulted into the complex insurance industry we have today. Which means that: 1. Avoiding complexity is not an option for Insurance companies. 2. The choice comes in how to respond! karlheinzpassler.com Link to article: http://wp.me/p2t73f-db
  • 4. Karl-Heinz PaßlerInsurance and new Complexity and it s originvalue-addedapproaches. Complexity can initially benefit an insurance company. As it develops systems for managing people, new divisions, processes, products and strategic initiatives, these systems can proliferate and become over-engineered ... if left unchecked. karlheinzpassler.com Link to article: http://wp.me/p2t73f-db
  • 5. Karl-Heinz PaßlerInsurance and new The Complexity Tipping Pointvalue-addedapproaches. Profit Good Bad Complexity Complexity Fosters Fosters cost profitable and decreasing growth value Complexity The illustration of an inverted U-shape graph shows how complexity reaches a tipping point, after which any benefits are outweighed by additional costs. karlheinzpassler.com Link to article: http://wp.me/p2t73f-db
  • 6. Karl-Heinz PaßlerInsurance and new Mature firms and Complexityvalue-addedapproaches. A variety of mature Insurance firms will find themselves on the right hand side of the Complexity Tipping Point. They are too complex to perform at their best in order to generate additional profitable growth. karlheinzpassler.com Link to article: http://wp.me/p2t73f-db
  • 7. Karl-Heinz PaßlerInsurance and new Humans create complexityvalue-addedapproaches. Complexity is not created by itself, it is created by humans! Employees know their area of work well and can achieve local simplification. But missing the bigger picture let occur contradictions and ambiguity in the daily work. Thus isolated simplification leads to complexity in the whole corporation. karlheinzpassler.com Link to article: http://wp.me/p2t73f-db
  • 8. Karl-Heinz PaßlerInsurance and new It s a cross-functional problemvalue-addedapproaches. This cross-functional problem needs a vision of simplicity first. Then the next powerful lever of simplicity has to be pulled – leadership. karlheinzpassler.com Link to article: http://wp.me/p2t73f-db
  • 9. Karl-Heinz PaßlerInsurance and new Simplification is not easyvalue-addedapproaches. Insurers on the right side of the “Complexity Tipping Point“ struggle finding profitable growth. Harmful complexity destroys 10% and more of annual profits in the insurance industry. Companies needed to dramatically reduce complexity and improve profitable growth, starting now! karlheinzpassler.com Link to article: http://wp.me/p2t73f-db
  • 10. Karl-Heinz PaßlerInsurance and new Simplification is profitable!value-addedapproaches. Insurers on the right side of the “Complexity Tipping Point“ struggle finding profitable growth. Harmful complexity destroys 10% and more of annual profits in the insurance industry. Companies need to dramatically reduce complexity and improve profitable growth, starting now! karlheinzpassler.com Link to article: http://wp.me/p2t73f-db