Measures of Profitability in Life Insurance Product Management

Abstract

One important part of strategic management of any business is about how to make the business more profitable. For example, in life insurance business, the source of profit is life insurance products. One of them is also loan protection insurance or credit insurance as a special type of term insurance product. Although we know that there exist many business strategies to improve the profit, in this article we introduce profit test, the main idea of which is to determine the price of a product (premium) so as to meet company’s profit requirement. The aim of this article is firstly to describe credit insurance on Slovak insurance market and then, using method of profit testing, state a price of the model credit insurance product. At the end of the article we carry out sensitivity analysis for one special profit criterion - profit margin - varying in each analysis only one element of the pricing basis.