Activity Based Costing For Health Insurance Provider

Activity Based Costing Image

Project goal

Implement an Activity Based Costing system for a world class Health Insurer so that the client could greatly improve financial controls across its entire product line.

Project details

During the course of the assignment an Activity Based Costing system was implemented at this major Health Insurance provider. This involved the following:

  • creating detailed models in Microsoft Excel and then reconciling those results against the results provided by Activity Based Costing software, which was EasyABC.
  • creating and conducting extensive Level of Effort Surveys for all staff Clerical and Accounting staff
  • deriving drivers for cost allocations for the many other services which contributed to the cost base of the organisation.

Common with most large organisations, many of these costs were not provided against the organisation's individual products, but as a service to the organisation as a whole. Using detailed drivers derived from the Level of Effort Surveys and other means, the actual costs for each of the organisation's product were derived.

The results were then presented back to Management.

Project outcome

At the end of the assignment the organisation was able to accurately assess the profitability of each of its products using the system implemented during the course of the assignment.

Tools and Technologies

  • Microsoft Excel
  • Activity Based Costing