Define costs and in the context of an insurance company

Reference no: EM132214023

Question

Great Eastern Holdings Limited is a leading insurance company in Singapore, Malaysia, and other Asian countries.

The company operates through Life Assurance, General Assurance, and Shareholders segments. The Life Assurance segment provides life, long-term health and accident, annuity, and unit-linked insurance products.

The General Assurance segment offers short term property and casualty products, including fire or burglary insurance contracts and/or business interruption contracts, and public liability insurance contracts; and short term medical and personal accident general insurance products.

This segment distributes its products through bancassurance, agents, brokers, financial advisors, and direct channels. The Shareholders segment provides fund management services for various products, such as the Asia Pacific equities, and Asian and global fixed income securities portfolios for Singapore statutory boards, government-linked corporations, public and private companies, insurance companies, and charity organizations. The company is also involved in the asset management, and property investment.

In its 2017 Annual Report, the Chairman and Group CEO stated that they were glad to announce a set of sterling results that showed improvement in profitability. This clearly showed that the company has been able to deliver values for their shareholders and customers based on clear and consistent strategies and the harnessing of technology to further improve overall productivity and operational efficiency without accompanying increased in costs.

In an article issued by McKinsey & Company, Successfully reducing insurance operating costsâ€, it was observed that â€œcosts at the bottom-quartile players can be more than double of that of top performers.

Required:

(a) Define costs and in the context of an insurance company like Great Eastern Holdings Limited, give four examples of costs.

(b) Explain why in the study of management accounting, so much attention is focused on costs and efficiency.

(c) Define cost objects. Give four examples of cost objects from the case above. Explain why managers might be interested in knowing the costs?

Reference no: EM132214023

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