In the InsuranceManager simulation, the participants – in small groups – will act as the Executive Board of a fictitious insurance company. During the simulation each group will have to manage ‘their’ insurance company through different economic cycles, where the financial markets will change and with them e.g. interest rates and insurance claim behaviour. Each group is responsible for their own insurance company. Participants need to manage the insurance product mix (both life and non-life), determine insurance premiums, asset & liability management, interest rate risk hedging, comply with the regulators and manage the interests of all stakeholders.
The participants will gain an in-depth understanding of the most important factors influencing the balance sheet of an insurance company, as well as experience the influence of developments in the financial markets on the insurers’ balance sheet.
Key issues covered
- Determine the long term strategy for the insurance company
- The relationship between growth and profitability in the insurance industry
- Choose the right product mix - life vs non-life insurance
- Set the appropriate level of insurance premiums
- Manage the balance sheet through ‘normal’ economic cycles and ‘unexpected shock’ scenarios
- Manage the investment portfolio, risk versus return
- Interest rate hedging and duration management
- Balance the interest of all stakeholders (clients, shareholders, employees and regulators)
- Interpretation of macroeconomic data and news
- Decision making under economic uncertainty
- Comply with regulatory requirements
- Decide on re-insurance and re-investment issues
The InsuranceManager simulation is internet based. The minimum duration of a typical InsuranceManager simulation session is 3 hours. When running the simulation for 3 hours, participants need to have a reasonable understanding of the insurance industry. The simulation can also be extended to run over one or more days. This way there is more time available for training during the simulation so that more junior people can participate and gain a general understanding on how an insurance company’s balance sheet works and changes over time.
The simulated time horizon is usually a period of about 7 to 10 years where one ‘round’, being six months in the simulation, is approximately one hour in real time.
During the insuranceManager simulation session the trainer or instructor (optional) will interact with the participants by analysing their strategy and performance and give continuous feedback. During and after an InsuranceManager session the participants are reviewed both as a group (the Executive Board of a fictitious insurance company) and individually by a trainer or instructor on specific aspects including the following:
- Company strategy handling and meeting of stakeholder objectives
- Risk management
- Knowledge and awareness of economic developments
- Reaction to news and market changes
Insurance companies tend to be long-term investors that need to make long-term decisions. In practice it usually takes at least six months to a year before the impact of decisions can be seen on the insurance company’s balance sheet and maybe even longer before the consequences of the decisions can be evaluated.
By using the InsuranceManager simulation the participants will get the opportunity to see how their strategic and tactical management choices will have an impact on the financial situation of ‘their’ company almost instantly. This will enhance the learning experience significantly.