You are an operations manager for WSP plc, a UK-based personal lines insurer

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M92 coursework assignment questions
Question 1
You are an operations manager for WSP plc, a UK-based personal lines insurer.
WSP plc distributes its products directly to its customers. All post-sales administration and
claims handling are completed by FTN plc, a third-party service provider. FTN plc is
located outside of the UK. A recent analysis of policyholder complaints has revealed that
FTN plc's recent service delivery is inferior to that previously achieved.
a) Identify, with justification, three significant challenges for WSP plc in continuing to use
FTN plc. (6)
Loss of customers
It will be hard to explain to the customers that the inferior services are delivered by FTN plc
because they will not be aware of. The reputation of the company will decrease, leading to the
withdrawal of most of the customers. Lost customers can quickly degrade the company's
reputation and the image in the market place, which is a great challenge to WSP plc. A lost
customer means lost sales and revenues that are lost forever.
Decreased profits
Inferior services can reduce the company's profits when they continue to use the service provider,
which is the third party.
The decrease in profits can lead to a reduction in the value of the stock, which can adversely
affect the shareholders of the WSP plc company. Decreased profits in a company can lead to
reduced operations. This reduction may make WSP plc to lay off some employees, sell some
assets or equipment.
Low morale
The department of customer service at WSP plc will be greatly affected due to the delivered
inferior services. This will happen because they will be spending much time on the phone trying
to argue with unsatisfied customers. The morale of these employees can be negatively affected,
and some of them may decide to resign from the company, which will lead to low productivity in
the company. Everybody wants to work for a top-notch company.

2. (b) Explain one significant action you can take to improve FTN plc's service delivery, based
on the challenges you have identified in (a) above. (4)
Use of Key performance indicators (KPI)
KIPs will help FTN plc with an immediate snapshot of the overall business performance. KIPs
will also provide the actions which are required to change the services delivered by FTN plc
positively. These actions will be measurable and specific, and if, in any case, a positive outcome
is not achieved, they will be tracked in order to give the company an idea of where the it is going
wrong hence taking the appropriate actions with immediate effect. This will improve the services
provided by FTN plc hence maintaining the customers.
Question 2
You are the newly appointed Financial Director for ORI plc, an insurance broker
employing 50 staff. ORI plc transacts a range of personal and commercial insurances.
The majority of the current Board founded ORI plc 20 years ago. Although ORI plc has
expanded, the Board continues to make many of the day-to-day decisions.
Over the last five years, ORI plc has had an ambitious growth strategy. However, growth
targets have not been achieved.
In recent years, ORI plc has experienced a much higher staff turnover rate than the market
average.
(a) Identify, with justification, the management style the Board should promote to
positively influence growth. (2)
Management style refers to methods used by a person to manage a group of people or an
organization. In any organization corporate culture, management style is considered to be one of
the main essential element. When looking for a management style which can influence growth
positively, conducting a SWOT analysis and having an idea of the current business is regarded to
be essentials. In this instance, ORI plc can consider promoting open door management style
which will
influence growth in a positive way. Due to high number of staff turnover in the company than the
market averages this style will lead to promotion of team work in the company and a common
course which will encourage growth and innovation of ORI plc. The financial director need to
change the company's innovation so that it can achieve the growth targets while coping up with
the high staff turnover. Also, in open door style of management, the staff are in a position to
approach the managers at any given time.

3. (b) Explain, with justification, four significant challenges for ORI plc should they choose to
promote the management style you have identified in (a) above. (12)
Challenges for ORL plc if they chose to promote open door management style:
Reduced opportunities for exploiting best practices
Open door management style can offer limited knowledge sharing in the ORI plc. This limitation
can bring about long-term issues in the company unless ORI PLC develops a forum which will
be used to share information and best practices in the company.
Isolation of individuals
If ORI plc embraces open door management style fully, many people may be isolated especially
in relation to their geographical differences. This implies that regions may be offering more
objectives compared to those perfectly suit ORI plc. There will be therefore a chance of
diverging the company's objectives due to irregular contact. Therefore, diverged company's
objectives can negatively affect the business leading to low production.
Hiding of company's issues
Increased turnover of staff compared to the market average may make the financial director
unable to know the weaknesses of each staff. It will be hard for the financial director to share
some information therefore some issues may be covered up. Although open door management
style is intended to positively influence growth, if the appropriate control and checking is not
maintained, then there will be a significant risk in maintain the high staff number which can
negatively affect ORI plc daily activities.
(c) Explain, with justification, two significant challenges for the staff should the
management style change to the one you have identified in (a) above. (6)
Disruption of workflow
When an employee of a given company bypasses a group leader or an immediate supervisor with
a suggestion or a good idea, it will have a negative impact to the middle manager which will
make him not to vet the concept or idea. When the established workflow is disrupted, it will be
very possible to find that no one in the company knows the status of the project. A slowdown in
productivity can have a negative financial impact on most of ORI plc operations.
Time management
Open door management style can make the company's manager unable to maintain the
employees schedule if he lacks the knowledge of the leaving hours of the employee to go home
after finishing the activities of the day or the time taken by a conversation. If a lot of time is
spent on handling the employee's issues, other roles and responsibilities can be neglected
although this can be using an appointed system.

4. Question 3
You are the Compliance Officer for RKU Ltd, a family owned insurance broker. RKU Ltd
intends to list their shares on the London Stock Exchange (LSE), within the next 12
months.
RKU Ltd has the following notable features:
• The Chairperson leads the Board and is responsible for all strategic direction.
• The Chairperson is also the Chief Executive Officer (CEO).
• The Chairperson's sister is the Finance Director.
• The majority of the Board members have been on the Board for more than 20 years.
• The current strategic objective is to grow quickly and it has recently been undercutting
the competition to secure business.
• The internal procedures have remained unaltered for 10 years.
RKU Ltd's Board have asked you to report on the regulatory and compliance obligations
that need to be addressed, prior to RKU Ltd listing their shares.
(a) Explain, with justification, three significant corporate governance requirements that
need to be addressed by RKU Ltd, before the shares are listed on the LSE. (12)
Accountability
Accountability is one of the important elements in a corporate governance. Government bodies
plays a critical role of holding the management to be accountable to their performance. RKU Ltd
should address accountability as a corporate governance requirement. This will enable them to
quickly identify failures of the company and hold the management accountable. In an
organization, accountability can lead to high productivity, high quality, credible decision-making
process, and good customer services.
Remuneration
Remuneration refers to the money which is paid for a service provided or work done.
Remuneration practices and policies are designed in a manner that they can promote long term
sustainable success and support the strategies of the company. Executive renumeration should be
aligned to the values and the purpose of the company where it should be linked to the success
delivery of the long term strategies of the company. Remuneration needs to be addressed as one
of the corporate government requirements because it will motivate LSE before listing the shares
to them. This will make the working to be effective and efficient.

5. Board composition and development
Board have a clear term of references and responsibilities and are guided by the best practices of
the corporate governance. The appointed board should consider practicing transparency and
formal procedures in all activities. Also, the board and the senior management team should
always consider maintaining a succession plan which is effective. Both the succession plan and
the appointments should be based on the objective criteria and merits of the company. Those
should also advance the backgrounds of social and ethnics, gender diversity, personal and
cognitive strengths.
(b) Discuss two significant actions RKU Ltd could take to address the corporate
governance requirements you have explained in (a) above. (8
Remuneration
Establishment of transparent and formal procedures
A transparent and a formal procedure for policies development in the executive remuneration and
for determining the remuneration for the senior management and the directors should be
established. No director should be given a chance to decide the outcome of their remuneration.
Directors of the company should also practice discretion and autonomous judgement when
authorizing the outcomes of the remuneration taking into account the individual performance of
the company and also wider circumstances.
Accountability
Accountability can be addressed by ensuring that the resources of the company are kept orderly
for the aim of measuring
their and meeting them. For a period of ten years, the RKU ltd internal procedures has not been
changed. This can be done by changing the team in project management who have the
responsibility of supervising and managing all the projects. Therefore the accountability will be
guaranteed hence focusing on the regular updates of the projects.
Question 4
You are the Underwriting Manager of PFO plc, an insurer. PFO plc has given delegated
underwriting authority to a number of managing general agents (MGAs).
You are concerned that the service offered by the MGAs is not always to the same high
standard PFO plc provides when transacting business on a direct basis.

6. Following a number of recent audits of the MGAs, you have established following issues:
• Staff are less experienced than those of PFO plc.
• Underwriting authorities are not always adhered to.
• Record keeping is variable in both quality and quantity.
(a) Explain, with justification, three common functions within PFO plc that may be
negatively affected by the issues highlighted in the audits. (12)
Risk management
Experienced staff plays a great role in the success of an insurance company. An insurance
company should have a well experience board whose objectives are to promote the company's
success. This can be accomplished by generating the company's values to the stakeholders and
contributing much to the surrounding society. The board establishes the values, purposes and the
strategy of the company. The board of the company ensures that all the company's resources are
put in place to measure performance against them and to meet the company's objectives. When
the staff of MGAs are less experienced PFO plc will not be able to establish transparent and
formal policies and procedures of ensuring effectiveness of the risk management which will
negatively affect the company's daily performance.
Premiums calculation to be charged for the risks to be insured
Calculation of risks premiums is termed to be the main role of the underwriting department. The
department also controls and creates the cover provided by the insurance policies. The
underwriting department has many levels where each level has authorities to be adhered to.
When the authorities of the underwriting department are not adhered to, the premiums of the
occurred risks may be wrongly calculated which can lower the customer services of the
company. This can lead to losing many customers hence affecting the company negatively.
Business assumptions, pricing and solvency capital calculation
Business assumptions pricing and solvency capital calculation may be contrarily influenced
when the quality and quantity of record keeping is not consistent. Business planning assumptions
in an insurance companies are based on the number of occurred risks which are worth to be
insured hence an reliable data is of great importance. The information must be kept up in a
configuration that can be promptly gotten to by the suitable staff. Underwriters utilize the
information as the main contribution during the programming process of the risk expectations. .
It is in this way significant that any adjustments in the gathered information or put away
information is known by the actuaries of the company as well as the underwriters. Having the
option to confirm information precision is significant while giving investigation and reports to
the senior administration. Precise record keeping is likewise a prerequisite of the Data Protection
Act 2018(DPA 2018) and General Data Protection Regulation 2018(GDPR).

7. In general, it is fundamental for PFO plc to understand that all capacities affect the business and
that by getting them to cooperate, at their ideal level, encourages it to accomplish its gainfulness
targets.
(b) Recommend, with reasons, two significant actions PFO plc could take to improve the
service performance of the MGAs. (8)
Frequent training of staff
Staff training leads to growth of a company because trained employees offer great services to
customers which leads to high customer satisfaction. Poor staff training may lead to failing of
services standards by low employees' engagement. Therefore, PFO plc taking the action of
training MGAs staff frequently will improve their services performance.
Introduction of more electronic record keeping
Electronic record keeping makes the work of capturing information's, generation of reports and
legal reporting requirement easier. Electronic recording can be able to keep large amounts of data
where the confidentiality of the information can be protected by the use of encryption and
passwords systems. Therefore, PFO plc introducing more electronic record keeping in MGAs
will improve their services performance.
Question 5
You are the Head of Underwriting for an insurer.
You are conducting a review of the insurer's four existing business classes (A, B, C and D)
and two prospective business classes (X and Y). The prospective business classes are not
currently underwritten by the insurer.
There are varying characteristics for the four existing business classes, as follows:
• Business class A has experienced static growth over the last five years.
• Business class B has been subject to a significant number of emerging claims.
• Business class C was introduced by the insurer five years ago.
• Business class D is its longest established class of business.
For your review, the following information has been compiled:
Table 1 – Most recent annual figures for existing business classes.

8. Table 2 - Most recently reported annual figures for prospective business classes.
(a) Analyze the four existing classes of business, to decide which class presents the greatest
risk to profitability. Include in your answer all your workings and assumptions. (12)
Profitability is the ability of a company to make profits. Profitability can be analyzed in various
manners and right now, have concentrated on business classes. Subtraction of costs and expenses
from the gross income give out profitability of a given organization.
If the remaining amount of money acquired when all the expenses and costs are subtracted from
the gross amount of the organizations income is positive, then it is concluded that the
organization has acquired a profit.
consequently, if the amount of money which has remained is exactly zero, then the organization
is termed to have broken uniformly meaning that the organizations expenditures matches the
income acquired by the organization.
Finally, a negative amount indicates that the organization is operating at a loss.
Profitability= Gross written premiums – (claim paid + claim outstanding + expenses)
Business class A

9. Gross written premiums = 55
claim paid = 35
claim outstanding = 10
expenses =4
=55 – (35 + 10 + 4)
= + 6
Business class B
Gross written premiums = 21
claim paid = 2
claim outstanding = 17
expenses = 3
=21 - (2 + 17 + 3)
= - 1
Business class C
Gross written premiums = 7
claim paid = 5
claim outstanding = 1
expenses = 1
= 7 – (5 + 1 + 1)
= 0
Business class D
Gross written premiums = 30
claim paid= 14
claim outstanding = 5

10. expenses = 4
= 30 – (14 + 5 + 4)
= + 7
 From the above calculations, one can conclude that business class B has the greatest risk
to profitability. From the calculations above, the profitability is -1. It is assumed that if
the amount of money left over when all the expenses and costs are subtracted from all the
income of the organization is negative, then it is concluded that the organization has
made a loss which presents a great risk of to profitability of the company.
Assumptions
There are no changes in the valuation bases because a change can affect both profit and surplus.
The customer service is of high quality
The profitability ratios are not interfered with.
(b) Analyze the two prospective classes of business, to decide which, if any, the insurer may
consider acquiring. Include in your answer all your workings and assumptions. (10)
Profitability= Gross written premiums – (claim paid + claim outstanding + expenses)
Prospective class X
Gross written premiums = 19
Anticipated claims = 15.5
Expenses = 2
= 19 – (15.5 + 2)
= + 1.5
Prospective class Y
Gross written premiums = 24

11. Anticipated claims = 13
Expenses = 4
= 24 – (13 + 4)
= + 7
Ø The insurer may consider getting prospective class Y. The profitability of prospective class Y
is + 7 which is greater than the profitability for prospective class X by 5.5. It is assumed that if
the amount of money left over when all the expenses and costs are subtracted from all the
income of the organization is positive, then it is concluded that the organization has made a
profit.
Assumptions
There is undissipated in the inflation of the claims.
There is no legislative changes.
(c) Explain, with justification, two risks of comparing the classes of business identified in
the two tables. (8)
Problems in cash flows
Comparison of the business classes in the two tables above can lead to cash flow consequences.
Deficiency of cash flow from activities of financing, investing and operating can make the whole
cash flow performance which means the cash inflow of the company has been reduced and the
cash flowing outside increased. This can lead to threatening of the company's solvency.
Decreased market share due to Competition
Comparing the classes of business above will lead to competition in the firm. Competition will
lower the market share which will negatively affect the base of the customers. A market which is
competitive can be forced to reduce the prices in order to stay competitive which can lead to
great loss in the business classes.
Question 6
You work in the actuarial department for an insurer. The insurer underwrites a diverse
portfolio of property insurance, which includes cover for earthquakes.

12. Very recently a major earthquake occurred and it is anticipated to produce a significant
volume of claims for the insurer.
The Chief Actuary has asked you to prepare a report on the implications of the recent
earthquake for the figures to be reported in the next annual accounts. These accounts are
due to be finalized in two months' time.
Your report should focus on the potential conflict between the insurer's requirement to
produce 'true and fair' accounts and the uncertainty created by the recent earthquake.
(a) Identify the potential conflict between 'true and fair' accounts and the uncertainty
created by the recent earthquake. (2)
Inadequate claims reserves where the total cost of the earthquake claims may be underestimated
and the long tail claims be settled early which needs to take long time to be settled is the conflict.
(b) Discuss how the insurer could resolve the potential conflict you have identified in (a)
above. (8)
It is very important for the insurer offer accurate reserves because it is administrative and lawful
and requirement. The process of reserving is very hard and it has a lot of uncertainties around it
because prediction of earthquake clin process is very challenging and difficult. Naturally, long
term claims means that the claims are settled after a while therefore judging them about their
outcomes is a very crucial part of the department of claims. The claims team should identify all
the claims which can be this conflict. The claims team has some methodologies to use to avoid
some potential conflicts between 'true and fair' accounts and the uncertainty created by the recent
earthquake. . In the event that this issue is significant, at that point there might be some
legitimacy in setting a temporary case save on the claims record to guarantee every
administrative necessity are met. The principle approaches they should seriously think about are;
The method of loss ratio
This technique can be very useful because the earthquake has recently occurred. It is used in the
recent years of the incident where the paid/uncured claims valuation low compared to the future
expected claims.
Incurred claims projection
This method is seen to be more accurate compared to others because it estimates the
total number of claims more accurately as compare to the projection of paid claims. The base of
this method is in the incurred claims category as long as there is no remarkable change o the
process of handling claims or the claims level of awards.

13. Projection of paid claims
This method is the least difficult in light of the fact that it is the extrapolation of the paid claims
where no other data like brought about expense of claims is utilized . This method also assume
that the inflation of the typical claim experienced due to the earthquake can also happen in future
as all payments would be a subject to inflation.
Bornheutter-Ferguson
This is a simple method because it combines the method of loss ratio with either of the
projection's methods. To arrive at long term projection which is more accurate, it uses these
methods. For claims which are long term, this method can be the most accurate.
In general, because the earthquake is a big problem with volume of claims to the insurer, the
actuarial department team can consider involving actuaries from other insurance companies to
help them calculating the volume of claims caused by the earthquake. This work will guarantee
that adequate information are kept up to meet exceptional liabilities and that the records reflects
a 'fair and true' picture for all partners.
Question 7
You are a finance analyst who is considering an offer of employment from MC plc, an
insurer. While deciding whether to accept the offer, you review the recent financial
performance of MC plc.
MC plc's website has provided the following extract of their financial performance:
Income statement for the year ending 31 December 2017
(a) Calculate, showing all your workings, the four most relevant ratios to highlight the
financial position of MC plc when considering the offer of employment. Use one
profitability ratio and three non-profitability financial ratios. (8)
Analysis of financial ratios is regarded as one of the useful tools of comparisons and therefore
they can be very useful when highlighting the financial position of MC plc in consideration of
the employment offer. A well analyzed financial ratios can help the finance analyst establish
whether MC plc is a good company to offer employment.
Profitability ratios
Profitability ratios are used by a insurance company to show ability of generating profits from all
the operations which is acquired by a clear comparison between accounts of income statement

14. and its categories. Profitability ratios focuses on returns on investment in assets and inventories
of the company. In a given insurance company, the profitability level can be determined in a
number of ways but for this instance, I will focus on net Return on Equity (ROE).
ROE = profit after tax/shareholders equity x 100
Profit after tax=169
Shareholders equity= 10,817
=169/10817
=0.0156 x 100
=1.56%
Return on equity helps business owners to know how effective the invested money in the firm is
being used.
Non profitability financial ratios
Productivity ratios
This measurement is the ratio of outputs to inputs which show business operation efficiency in
relations to its sales and costs. Productivity ratios are highly applied in businesses which produce
goods which are tangible.
Productivity ratio = Trade receivables (debtors)/sales
Trade receivables (debtors)= 700
sales= 1,913
=700/1913
=0.366
The debt collection period = 0.366 x 365 days
=134 days.
The debt collection period shows how efficient the collection of debt is because companies
aspire collecting their debts as soon as possible which will enable easy running of the company.
Liquidity ratios
Liquidity ratios are non profitable rations which are used by debtors to determine their ability of
paying off their debt obligations without seeking for external capital. Liquidity ratios has two

15. measurements i.e. the quick and the current ratios. For this scenario, current ratio is appropriate
because it will show the financial position of MC plc.
Current ratio = current assets/current liabilities,
where current assets is the addition of trade receivables and cash and cash equivalents plus other
items and current liabilities are insurance broking creditors plus other items
Current Assets = Debtors =700
Other assets =831
Cash and cash equivalents =525
Total=2056
Current Liabilities
Reinsurance liabilities =361
Creditors and other current liabilities =1,052
Total =1413
=2056/1413
Current ratio =1.46
Gearing Ratios
These ratios measure the future of the company. Gearing ratio is calculated by dividing the long-
term borrowings with the shareholder equity which determines the company's reliance on
borrowing.
Gearing ratio
= long-term borrowings/shareholder equity x 100
=964/10877 x 100
=8.9%
(b) Analyze, based on your calculations in (a) above, whether MC plc is a financially secure
employer. (8)

16. As a financial analyst, a ROE of less than ten is not favorable for MC to be a secure employer. A
higher return on equity is a clear indication that a company is adequately utilizing the
contributions of equity investors in order to produce additional profits and give back the profits
to investors at an attractive level.The gearing ratio of MC plc is 8.9% is so low which can be
interpreted that MC plc is in a better position for employment. Low gearing ratio means that MC
plc does not rely much on debt finances therefore it does not take risks in business.
The liquidity ratio of MC plc is in a good position because it shows that they are able to meet the
cash demands. The company can be assumed to have other income sources which can be
depended upon therefore holding cash is not of much importance. The productivity ratio of 0.37
shows that MC plc is trading on extended credit periods which is not a attractive position
financially. Productivity ratios simply shows the living standards of the company. When the
productivity ratio is closer to 1.0 it indicates that the productivity of the company is high and
when the productivity ratio is closer to 0.0 it shows that the productivity ratio is low.
Overall, MC plc is reasonably healthy and a profitable company. The low gearing ratio and high
profitability somehow offsets the company. Therefore, more investigations of MC plc is needed
but with the analysis of the few ratios it is evident that the company can be a good employer to
me because it is profitable and liquid.
1. Identify, with justification, based on your analysis in (b) above, the two most
significant financial concerns you would discuss with MC plc, prior to accepting the
offer of employment. (4) Gearing ratio is one of the most significant financial concerns
the finance analyst can consider discussing with MC plc before to accepting the
employment offer. This will enable me to know if there is any possibility of expanding
the business by increasing the invested capital. This is because the environment of the
business will play a great part in any recruitment decision.
2. The productivity ratio of MC plc shows that the credit periods are extended therefore I
would consider discussing with MC plc before accepting the employment offer. This is
very critical therefore it would require further investigations.
Question 8
You are an actuary for TLW plc, a general insurer. TLW plc has an AA credit rating from a
recognized ratings agency.
TLW plc's board has informed you that the risk appetite for the maximum loss for
property insurance, any one incident, has increased by 25%.
You are aware there is a potentially unfavorable impact of future weather claims on TLW
plc.
(a) Identify, with justification, one significant process you would carry out to check the
adequacy of TLW plc's increased risk appetite. (2)

17. For TLW plc company, the notion of risk appetite is the core of their concern which lies at their
daily activities which has increased by 25% in any one incident. To check the adequacy increase
risk appetite of TLW plc, I would consider using Pillar 3-Reporting and disclosure process. I will
publish the details of the risks facing TLW plc, the management of the risk and the capital
adequacy. Giving open and transparent information about the company will help the market
forces in imposing good discipline.
(b) Discuss two methods TLW plc could use to maintain their current credit rating, given
the increased risk appetite. (8)
Insurers consider using more advanced agencies of credit rating, like Standard and Poor's, which
offers financial strength opinions where the strengths are graded, with AAA being the highest
which is extremely strong insurer.
Methods which can be used by TLW plc:
Enterprise Risk Management (ERM)
This is a method that TLW plc can use to maintain their existing credit rating given the increased
risk appetite. ERM gives a company the framework to access the severity and frequency, risk
mitigation, monitoring and reporting in case of a risk. It will also assess how an insurance
company identify measures and manage the risk which will be very applicable to TLW plc given
the increased risk appetite. The ERM of TLW plc will include the use of rating agencies and
internal model which will use the results of ERM in the analysis of the adequacy in the capital.
Given the increased risk appetite, an effective ERM will make TLW plc stick to their current
credit rating.
Corporate strategy and management method
The aim of this method is to look at the senior management team credibility and quality of the
insurer and the strategies set by the company. This method is a very important element because it
can be used to determine the future success of the TLW plc.
Question 9
You are a member of the strategy team within DW plc, a UK-based commercial insurance
broker employing 500 staff, operating from two locations.
DW plc has decided to acquire a smaller UK-based insurance broker. It has a choice of two:
YS Ltd is an insurance broker specializing in agricultural risks, whist PA Ltd is an
insurance broker specializing in professional indemnity risks.
You have been provided with information on the two potential acquisitions:
*Company criteria of a complaint: not as defined by the Regulator.
(a) Analyze which of the brokers is most suitable for DW plc to acquire. Your answer must
be based solely on the information above. (16)

18. From the data provided above, the most suitable broker which DW plc can consider acquiring is
YS Ltd.
Brokerage income
This is the fee which is charged by a broker to provide specialized services or execute
transactions. From the data provided above, the brokerage income for PA Ltd is higher compared
to that of YS Ltd, therefore it will be easy for DW plc to choose YS Ltd as their best broker.
Number of the staff
In YS Ltd the staff number is more and there is an increase in 2017 while in PA Ltd the staff
number is less and there is a decrease in 2017. A large number of staff in a company has
advantages like, performance and productivity enhancement, tackling of shortcomings,
satisfaction of insurance company and share a higher knowledge together. This means that YS ltd
offers great services that PA Ltd due to higher staff number and give the staff morale of working.
Salaries
Although PA Ltd salaries are a bit are high, the staff number is low hence DW plc cannot use
salaries as a comparison factor of the two-insurance broker.
Number of client complaints
Complaints of clients does not always show that something is wrong. sometimes negative
feedback of clients can be salvaged and turned back into an opportunity therefore the higher
number of client complaints the better the company.
Meeting Service Level Agreements (SLAs)
The percentage of SLAs for YS Ltd is higher compared to that of PA Ltd. This is a clear
indication that YS Ltd is highly committed to its work than YS Ltd. Before all other
considerations in a broker insurance company, the interests of clients should be placed first.
Client claims satisfaction
Delivering a quality services and customer satisfaction makes a very good sense in a business. to
win a new client, satisfaction of customers costs more than five times as it does to retaining
existing clients. The YS Ltd clients claim satisfaction percentage is good which means that they
offer good services to their clients.
Clients Retention rates
The percentage of clients retention rate is YS Ltd is high and it has increased in 2017 as compare
to PA Ltd which has reduced in 2017. This means that YS Ltd offers great practices of retaining
their clients after conducting a business with them. Retaining customers is more important than
obtaining them.

19. Number of clients who pay outside agreed payment terms
In YS Ltd, the number of clients who give their payments outside their agreed payment terms is
high compared to PA ltd. This indicates that YS Ltd insurance broker is more experienced in
serving their clients as compared to PA Ltd insurance broker.
Locations and clients number
Higher number of locations and client for YS ltd shows that the services they offer is of high
quality. Many clients show that YS Ltd has good relationship skills compared to PA ltd.
Overall, the most suitable broker which DW plc can consider acquiring is YS Ltd. From the
analysis of the data provided above, YS Ltd offers great services compared to PA Ltd insurance
broker.
(c) Identify, with justification, three additional items of non-financial business information
you would require to confirm your choice of broker. (6)
The following are the non-financial issues that I would require to confirm from YS Ltd am my
choice of insurance broker include;
Environmental objectives
These are the goals that YS Ltd would like to meet in the future. Confirming the environmental
objectives is necessary because there are many changes which takes place in a business
environment that may have a great impact on the normal function of the insurer. Business
environment analysis will enable me perform the SWOT analysis of the insurer which is
necessary for the growth and the survival of the company's daily activities.
Social objectives
The main social objectives in an insurance company is employment provision, tax payments,
quality goods and services provision, social welfare contribution and provision of a better
working environment. Understanding social objectives of YS Ltd will enable me know the type
of broker I will be dealing with.
Governance objectives
Confirming the government objectives of the company will enable me understand the
accountability, self-evaluation, shareholders equitable treatment, and transparency and full
exposure. For example, the aim of corporate governance is to ensure a higher degree of
transparency in a organization by encouraging the company to have a full disclosure of all the
transactions taking place.

20. (d) Explain, with justification, two significant strategic actions you would take, following
the acquisition of your chosen broker, to improve its performance. (8)
Request an access to the YS ltd records
It is very vital to access the records of the targeted company. Those records include; Cost, sales,
finance, regulatory status, claim profile and service contracts records of YS Ltd. This information
is very expensive therefore I will request for a data room is where all the information is kept.
Assessment of the acquisition cost
Acquisition cost is featured to be important in strategic consideration. There are different types
of techniques and tools that I can consider when bringing a company to a strategic planning like
performing the SWOT analysis of the YS Ltd company.
Question 10
NIH plc is a composite insurer based in the UK. NIH plc underwrites a diverse range of
commercial and personal products. NIH plc's well-established corporate strategy requires
moderate growth on a profitable book.
You are the newly appointed Manager of NIH plc's personal lines team and have been
asked to update the personal lines tactical business plan.
Having reviewed your team's performance, you conclude that for several years the focus
has predominantly been on aggressively growing market share, to the detriment of
profitability.
Your review also identified the following information:
• There is a lack of team cohesion.
• Previous business plans had been produced solely by the previous team Manager.
• Knowledge sharing within the team, and between the team and other departments, is
limited.
• There is no specific team budget for training.
• The team use a number of outdated legacy computer systems.
• Record keeping within the team is inconsistent and there is no best practice standard.

21. You must bring your team's tactical business plan into alignment with the corporate
strategy. You intend to use the balanced scorecard approach in your planning process.
(a) Explain, with justification, three significant actions that are needed to align your
tactical business plan with the corporate strategy. (12)
The aim of the balanced scorecard system is to measure the performance of a business on a more
extensive and holistic basis of a company, accounting for the the four key perspectives which are
customer, internal, financial, learning and growth, and financial perspectives (CII study text,
M92 Insurance business and finance, 2018).
The recently named Manager of NIH plc's has presumed that, for quite a long while the focus has
transcendently been on forcefully developing market share , to the inconvenience of the
company's profitability and the other data which has been identified. The manager therefore
considers the use of balanced scorecard approach in the process of process. The most actions that
can be utilized to align the tactical business plan with the corporate strategy include:
Learning and growth perspectives
Development of individual training programs
Due to lack of specific training budget for the team, coming up with individual training programs
which are integrated to the staff performance and the process of reviewing can be of great help.
This implies that the reviews can be set to be done regularly and taking the appropriate actions to
address the arising issues. A head of learning can be hired if individual learning programs is no
available. This action will align the plan in a positively.
Internal perspectives
In balanced scorecard, internal perspectives look at how NIH plc can innovate and bring up to
date its tactical business plan with the corporate strategy so as to offer a reliable process for all
customers. From the information identified above, the use of legacy systems of computers which
are outdated can be adjusted by:
Project management team
Having a project management team whose main duty lies in management and supervision of all
the projects is essential. This will make sure that the use of plan variance analysis and regular
updates is adhered to. Conducting meetings regularly to review the projects in order for the plans
to be updated will make the stakeholders know how the projects are progressing.
Customer perspective
Meeting of customers' needs can lead to the success of NIH plc. From the information provided
above, poor of team cohesion and inconsistence keeping of the company's records can become
serious issue. Therefore, it is important to monitor the level of the services by complete surveys
for satisfaction of employees in order to understand the changes which occurs in the workplace.

22. The outcomes from the conducted surveys can be used in the development of employee's
retention and strategies.
(b) Recommend, with reasons, how you would measure the success of each of the actions
you have explained in (a) above. Your success measures must be SMART – specific,
measurable, achievable, relevant and time defined. (6)
Measuring and controlling is a very essential part in business management. NIH plc needs make
sure that all day to day activities are meeting the targets, objectives and actions as well as being
SMART if it is to succeed. The success of the three actions could be measured as follows:
Development of individual training programs
Key performance indicators (KPIs) can be used when measuring the success of this action. This
will help the company know how far the training process is.
Project management team
Key risk indicators (KRI) would be the suitable measure for this action because it will ensure
smooth running of the projects. KRI will give a notification when mainly when things become
different.
Monitor service levels
Benchmarking can be considered as the best to measuring the success of this action. Gaining
more information about the competitors will make sure that they adjust their way of offering
services so that tey can be better as compared to their competitors. Explain, with justification,
three significant operational changes you would introduce in your business plan. (6)
Budgetary control
Introducing budgetary control to the tactical business plan of NIH plc will be an important
element. The aim of the budgetary control will be to define all the objectives, provide plans
which will be used to achieve the objectives, coordinate various departments activities, operate
various departments and cost centers efficiently and economically and eliminate activities which
will decrease the profitability.
introduction of responsibilities allocation
In any given organization, delegation of responsibilities is a key factor. To ensure successful
results of NIH plc business plan, responsibilities must be clearly assigned and allocated. order of
operation will enable smooth running of the company.
introduction of Effective resources allocation

23. Since NIH plc deals with multiple projects, effective resource allocation will be of great help to
the project managers to assign resources to projects and manage them effectively. Effective
resource allocation will help the boost the company's productivity and save money.
(c) Recommend, with reasons, how you would measure the success of each of the
operational changes you have explained in (c) above. Your success measures must be
SMART. (6)
Introduction of Budgetary control
To measure the success of budgetary control, NIH plc can be reviewing the budged every month
though the budget officer. This will enable the budget control department understand the budget
before the end of the financial year and make corrections if possible.
Introduction of responsibilities allocation
Use of key risk indicators (KRI) can be a good success measure for responsibility allocation.
This can be done weakly by the management team to ensure that resources are allocated
correctly.
Introduction of Effective resources allocation
Allocating a team leader in each and every project and conducting weakly project review
meetings can be of importance. This will enable the manager be in a position to question the
project team leader in case of any misunderstanding of the allocate resources.
References
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24. Leick, B., & Gretzinger, S. (2020). Business Networking in Organisationally thin Regions:: A
Case Study on Network Brokers, SMEs and Knowledge-Sharing. Journal of Small Business and
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CII study text, M92 Insurance broking practice, 2018