Document Type : Articles
Authors
Abstract
One of the most challenging problems in our country insurance industry is the phenomenon of increase of loss pay average time by insurance companies. A lot of research and analysis have been conducted on both the roots and possible solutions for this problem, none of which has had success in annihilating it. This paper presents a discrete model ) nonlinear mathematical model ( of insurance services chain based on the system dynamics approach. The studied services chain has multi levels and consists of insurance company, agents and customers. This chain model is simulated for analysing and quality improvment of insurance services, such as decrease of loss pay average time. The developed model is a nonlinear mathematical model which is simulated by the Vensim software. The purpose of simulation exercise is to analyze performance of the insurance companies and insurance industry in terms of service quality and to predict services’ performance improvements with proposed strategies. The result shows that two main factors that account for increase of loss pay average time are: Increased office paper work and increased number of company’s customers. Moreover, two main factors that are likely to decrease loss pay average time appear to be: performance improvement of human resource and betterment of IT efficiency.
Keywords
- Bagehot, W. (1991). A description of money market, Philadelphia: Orion Editions.
- Barkur, G.; Varambally, K. V. M., & Rodrigues, L. L. R. (2007). Insurance sector dynamics: towards transformation into learning organization. The Learning Organization, 14(6), 510-523.
- Barlas, Y.; Clrak, K., & Duman, E. (2000). Dynamic simulation for strategic insurance management. System Dynamics Review, 16(1), 43-58.
- Beaver, W. H.; McNichols, M. F., & Nelson, K. K. (2003). Management of the loss reserve accrual and the distribution of earnings in the property-casualty insurance industry. Journal of Accounting & Economics, 35, 347-376.
- Campbell, A.; LaBrrosse, J. R.; Mayes, D. G., & Singh, D. (2009). A new standard for deposit insurance and government quarantees after the crisis. Journal of Financial Regulation and Compliance, 17(3), 210-239.
- Central Insurance of Islamic Republic of Iran. (2009). (Statics annual rport of insurance industry), Design & plan management statistical surveys departement, Tehran (in Persian).
- Chen, A. (2008). Loss analysis of a life insurance company applying discrete- time risk-minimizing hedging strategies. Insurance: Mathematics and Economics, 42, 1035-1049.
- Dandapani, K. (2008). Growth of e-financial servives: introduction to the special issue. Managerial Finance, 34(6), 361-364.
- Fan, C. K., & Cheng, S. W. (2009). An efficiency comparison of direct and indirect channels in Taiwan insurance marketing. Direct Marketing: an International Journal, 3(4), 343-359.
- Hicks, J. (1969). A theory of economic history, Oxford: Clarendon Press.
- Jafari Samimi, A., & Kargar, E. (2007). Econamical growth and insurance development: empirical & theoretical analysis in Iran econamic. Iranian Journal of Trade studies (IJTS), 45, 85-113 (In Persian).
- Jafari Samimi, A., & Kargar, E. (2006). Does economics growth support by insurance development? The economic research (scientific research quarterly), 6(2), 63-81 (in Persian).
- Keshavarz, G. (2004). The importance of financial service section in econimcs. The economic research (scientific research quarterly), 21, 115-133. (in Persian)
- Khan, S.; Yufeng, L., & Ahmad, A. (2009). Analyzing complex behavior of hydrological systems through a system dynamics approach. Environmental Modeling & Software, 24, 1363-1372.
- Mathur, I. (2008). Dynamics of insurance markets: structure, conduct, and performance in the 21th century. Journal of Banking & Finance, 32, 1-3.
- Nasehi far, V., & Hagh Goyan, A. (2007). Quality loss pay system in mellat insurance from customer-oriented perspective and provide solution for improving. Insurance industry quarterly, 89-90, 31-52. (in Persian)
- Otto, P. (2008). A system dynamics model as a decision aid in evaluating and communicating complex market entry strategies. Journal of business research. 61, 1173-1181.
- Outreville, J. F. (1997). Life insurance markets in developing countries. Journal of risk and insurance7, 55-68.
- Quaddus, M., & Intrapairot, A. (2001). Management policies and the diffusion
of data warehouse: a case study using system dynamics-based decision support system. Decision Support Systems, 31, 223-240.
- Rahman, M. M., & Ara, L. A. (2009). Trade in financial services in developing countries: a case of the Bangladesh financial sector. Journal of International Trade Law and Policy, 8(2), 114-136.
- Schumpeter, J. A. (1911). The theory of economic development, Cambridge: Harvard university press.
- Sheremet, O., & Lucas, A. (2009). Global loss diversification in the insurance sector. Insurance: Mathematics and Economics, 44, 415-425.
- Smith, P. C., & Ackere, A.V. (2002). A note on the integration of system dynamics and economic models. Journal of Economic Dynamics & Control, 26, 1-10.
- Smith, P. (2007). The relevance of systems thinking and system dynamics. The Learning Organization, 14(6), 143-157.
- Stafford, M. R., & Wells, B. P. (1996). The effect of demographic variables on perceived claims service quality. Journal of Insurance Issues, 14(2), 163-182.
- Yim, N. H.; Kim, S. H.; Kim, H. W., & Kwahk, K. Y. (2004). Knowledge based decision making on higher level strategic concerns: system dynamics approach. Expert Systems with Applications, 27, 143-158.
- Young, A. T. (2008). Replacing incomplete markets with a complete mess: Katrina and the NFIP, International Journal of Social Economics, 35(8), 561-568.
- Zhou, C.; Wu, W., & Wu, C. (2010). Optimal insurance in the presence of insurer’s loss limit. Insurance: Mathematics and Economics, 46, 300-307.
)
Send comment about this article