Chapter 22: Expenses

Question 1

The steps of an expense analysis CFTIL

Answer 1

Class - Fixed/variable or Direct/Indirect
Function - Initial, Renewal, Termination
Components/Type - Salaries, Rent, Computing etc.
Identification of costs - Time sheets, floor space, etc.
Loading method - Once off, recurring, premium proportion

Question 2

Different types of expenses: RAPID COST

Answer 2

Renewal admin (M)
Asset management (M)
Profit Loading (M,S,T)
Initial Admin (S)
Design costs (S)
Commission (S)
Overheads (M)
Sales and marketing (S)
Termination admin (T)

Question 3

New business expense allocations: PUMaCR

Answer 3

Processing 
Underwriting
Marketing and Sales
Research
Commission

Question 4

Reasons for carrying out an expense analysis PALS PFC

Answer 4

Profitability of a product better understood
Areas of inefficiency identified
Loading of expenses done accurately
Sources of surplus found
Financial planning
Provisions set
Cash flow management (enough liquidity kept to pay expenses)