Modeling the Operation of a General Insurance Company with System Dynamics Approach

Haghighattalab, Peyman | 2017

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 49718 (01)
  4. University: Sharif University of Technology
  5. Department: Industrial Engineering
  6. Advisor(s): Kianfar, Farhad
  7. Abstract:
  8. Market share of some private insurance companies in Iran has demonstrated upward and then downward trends over the years . Due to the similarity of conditions among all companies, the internal structure of companies is the main reason for the creation such trends. The operation of insurance companies has a lot of feedback mechanisms and delay relationships. In this research for purpose of modeling a holistic and comprehensive view and understanding the structure of private insurance companies in Iran, feedbacks and delay relations System dynamics approach is used. The developed model structure consists of five interconnected modules, each representing a relatively detached sphere of insurer operations: Agents of an insurance company, Underwriting, Claims, administrative staffs and Cash. Cash is at the core of the developed model and has completed the liquidity and investment cycles. The dynamic model simulated in VENSIM software. The validity of the model under behavioral and extreme-condition tests was confirmed. Then the impact of the implementation of various policies on the operation of an insurance company was checked out. Rapid growth policy and targeting high percentage of market shares and then attracting a large number of agents do not lead to the success of insurance companies. Increasing the sale of third party and health insurance, in the short term will increase the liquidity of the insurance company but in the long term will have an unfavorable impact. With decreasing the sale of these types of insurance, the Iranian insurance company will boost its growth in the long term. Delaying in payment of claims will increase the pending reserves and their return of investments. But this study shows that the policy of timely claim payment in the long term will have more favorable effect on cash and operation of an insurance company. Increasing sales of life insurance and decreasing the third party insurance is a successful policy, But timely claim payment, decreasing sales of third party insurance and increasing the quality of management in the insurance company is the most effective policy
  9. Keywords:
  10. Policy Making ; Insurance Industry ; Dynamic Model ; Dynamic System Analysis ; Insurance Company Operation ; Insurance Company Management

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