Organizational Structure


Organizational Structure:

      Insurance companies usually have a complex structure, this is due to their size and the varied activities 

      undertaken as follows:

  1. Underwriting
  2. Claims investigation and payment
  3. Marketing
  4. Investment

      Every company will have some form of organizational structure. This should be in line with its stated business

      objectives in an efficient manner. There are usually the following structures:

  1. By Function eg: Claims, Underwriting etc.
  2. By Division   eg: Product, geographical area
  3. A blend of both

       Functional Structure:- This is the traditional structure and is best suited for smaller companies with a limited

                                                 range of products.


CEO ‚Äď Board of Directors ‚Äď Operational Head of Department ‚Äď HR, Finance, IT, Marketing, Underwriting, Claims¬†



  1. Employees can specialize in their job roles, same department, similar duties.
  2. Larger units may be more cost effective due to the uniformity of the procedures used.  



  1. a. Inflexibility where for example claims staff may see role as purely claims handling and may not recognize the need

                  for them to give back and communicate with their underwriting and marketing colleague.

  1. It is difficult to coordinate the different functions. This may also be because of a common interest between the functions


Divisional Structure:- This type of structure is adopted by most large multi ‚Äď product companies. Each division is¬†¬†

                                               partially autonomous to the extent of designing, producing and marketing its own product.  


  1. Home Country Commercial Division / / Home Country Personal Division  // International Division


  1. The degree of autonomy that each division is given depends on whether its operations are centralized or decentralized.
  2. Centralized organizations retain authority at the top, with little delegation.
  3. Decentralized organizations, there is more delegations with divisional managers making more decisions.
  4. An insurer may have a centralized or decentralized claims settlement policy when it comes to the relationship between

           its head office and its branch offices. 


           The choice of system will depend on:-

  1. The size of the company
  2. The type of business being written


  1. Very large claim settlements will be advised to head head office, even within a decentralized structure.
  2. This is because there are usually limits to authority delegated to branch offices. 



  1. The required level of expertise is available (which will not always be the case at every office location).   
  2. Accessing records (electronic and paper) and underwriting staff is easier



  1. a. There may be a lack of contact between policyholders and local which could have repercussion in respect of customer retention.
  2. There will be an inevitable delay involved in advising head office and waiting for response in respect of significant underwriting and claims.