Question

Classifying costs; value chain: insurance

Using the value chain classifications provided, classify the costs listed below for a major insurance company:

1. research and development
   (b) design
   (c) production/delivery
   (d) marketing
   (e) customer support.

Costs:
1. Salaries of the customer service staff who process customer insurance transactions in their branches.
2. Salaries of the managers who develop new insurance offerings.
3. Cost of IT equipment used by customer service staff.
4. Cost of the central computer systems used to manage and process all insurance renewals, claims and related insurance transactions.
5. Salaries of staff who deal with customer complaints.
6. Cost of operating self-service terminals in branches.
7. Cost of TV advertising.
8. Salaries of the head office team that monitors trends in the insurance industry.

Answer 1

(1) production /delivery

Where a person who process customer insurance transaction in their branch who posted or recruiting in the customer support cell of the insurance company . If any customer related issues who is handling , therefore these cost are fall under production / delivery costs .

(2) Reasearch and Development

Where a person or staff of the company recruitment or posting and the company gives salaries to him for new reasearch and development then these costs are covered under reasearch and development costs.

(3) Design

Where any cost or expenses incurred in IT equipment for used by customer service staff of smoothly running or providing services to the customers then these cost are categorised under design expenses.

(4) Design

If any cost or expenses are incurred of the central computer system used to manage and process all insurance renewal, claims and related insurance transaction . Therefore, these costs are fall under design expenses.

(5) Customer support

Where any staff are taken salaries for dealing with customer complaints then these costs are custumer support expenses.

(6) Design

Where a insurance company are expended if any cost for related to or operating self service terminal in the branch and no need for consultant then these costs are designed cost.

(7) Marketing

If any costs are incurred by the insurance company for sell of insurance products by way of TV advertising then these costs are marketing costs.

(8) Design

If any salaries paid by the insurance company to the head office team that monitors trends in the insurance industry for the problem of the customer and solved these problems by the team with the help of technology , then these costs are covered under design cost