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Business Management · Using data, company functions, people skills, influence and clear communication

Company Functions and How They Interact in an Insurer

Updated 11 October 2026 · Fact-checked

A company is split into functions such as finance, marketing, operations, HR, IT, risk and actuarial. Each does a specific job, but none works alone. To answer an exam question, name the function, state its role, then show what information it gives to or needs from the others.

Understand Company Functions and How They Interact

A function is a group of people with a common specialist job inside a company. Splitting work this way lets people build deep skill. It also creates a risk: each function may chase its own goals and lose sight of the company's goals. Good management makes the functions work together.

In an insurance company, the main functions are usually these:

  • Marketing and distribution: understands customer needs, designs the product offer, sets the message and manages sales channels.
  • Underwriting and claims: selects risks and settles claims. These are core operational activities.
  • Operations: runs policy administration, servicing, premium collection and customer service.
  • Finance: keeps accounts, manages budgets, reports results, handles tax and manages cash and investments with the investment team.
  • HR: recruits, trains, rewards and retains staff, and manages culture.
  • IT: builds and runs systems, protects data and supports analysis.
  • Risk and compliance: identifies, measures and monitors risks, and checks that the firm follows law and regulation.
  • Actuarial: prices products, calculates reserves and capital, measures profit and risk, and advises management.

The functions depend on each other through information flows. For example, the actuarial function needs data from operations and IT, assumptions from claims and underwriting, and sales plans from marketing. It gives back prices, reserves, capital figures and profit analysis. Finance uses actuarial reserves in the published accounts. Risk uses actuarial models to test the firm's resilience.

Interaction can fail. Typical causes are silos, unclear responsibility, conflicting targets (sales volume against profit), poor data and weak communication. Remedies include cross-functional teams, shared objectives, regular meetings, clear governance and common reporting. This links to the actuarial control cycle: the actuary works across functions to specify a problem, develop a solution and monitor results.

How to solve Company Functions and How They Interact questions

Use this method for any question on functions and how they interact. It keeps your answer structured and relevant to the scenario given.

  1. 1Read the scenario and underline the business event, such as a new product, a rise in claims or a system change.
  2. 2List the functions affected. Stay with those that matter, not every function you know.
  3. 3For each function, state its role in one short sentence, tied to the scenario.
  4. 4State what each function gives to and needs from the others, for example data, assumptions, approvals or decisions.
  5. 5Point out where conflict or poor communication could arise, such as sales targets against profitability.
  6. 6Suggest how to improve coordination, for example cross-functional teams, shared targets or clear governance.
  7. 7Finish with the actuary's role, linking to the question asked, and give a short conclusion.

Quickest way: Function, Give, Get, Risk

When to use it: Use this for multiple-choice questions and short written parts when time is tight.

  1. Write the names of the functions involved in the margin.
  2. Next to each, note one thing it gives and one thing it needs.
  3. Check for a conflict of goals between two functions.
  4. Pick the option or write the point that links the functions to the scenario.
  5. Add one remedy, such as joint planning or shared data, if marks are for improving interaction.

Common mistakes in Company Functions and How They Interact

  • Listing functions and their duties without any link between them.

    Students memorise definitions and forget the question asks how functions interact.

    Fix: For every function you name, add what it gives to or needs from another function.

  • Treating the actuarial function as only a calculation team.

    Study of formulas dominates, so the advisory and communication role is overlooked.

    Fix: Describe the actuary as an adviser to management, who also explains results and limits to other functions.

  • Confusing risk management with compliance or with the actuarial function.

    The three share tools and reports, so roles look the same.

    Fix: Risk identifies and monitors risks, compliance checks adherence to rules, and actuarial measures and prices risk. Say how they cooperate.

  • Giving generic answers that ignore the scenario.

    Students recall notes instead of reading the context.

    Fix: Use the product, channel or event in the question in each point.

  • Ignoring conflicts between functions.

    Notes often present functions as working smoothly together.

    Fix: State at least one realistic conflict, such as marketing wanting a low price while actuarial needs adequate margins, and a remedy.

  • Leaving out IT and HR as minor functions.

    Students focus on finance and actuarial work.

    Fix: Mention data quality and systems for IT, and skills, incentives and culture for HR where relevant.

Worked examples

Example 1

An insurer plans to launch a new term insurance product sold online. Describe the roles of marketing, IT and the actuarial function and how they interact.

Show the solution
  1. Marketing: studies customer needs and competitors, proposes the features and target market, and plans the online campaign.
  2. IT: builds the website and quote and purchase journey, links it to policy administration, and secures customer data.
  3. Actuarial: prices the product using mortality and expense assumptions, sets reserves and capital needs, and checks profitability.
  4. Interaction: marketing gives the actuary the expected target customers and sales volumes. The actuary gives marketing a price and feature limits that keep profit adequate.
  5. Interaction: IT needs the actuary's rating rules to code the quote engine. The actuary needs IT's data on online customers to refine assumptions later.
  6. Risk of conflict: marketing may push for a lower price, while the actuary needs sufficient margin. A joint product committee can resolve this.

Answer: Marketing defines the customer offer, IT delivers the online system, and the actuary prices and tests profitability. They exchange sales expectations, pricing rules and data, and use a joint committee to manage conflict.

Example 2

Claims costs on a health portfolio have risen sharply. Explain how the finance, claims, risk and actuarial functions should work together in response.

Show the solution
  1. Claims: analyse the rise by cause, provider and region, and check for fraud or process change. Pass the findings to the actuary.
  2. Actuarial: update claim cost assumptions, reassess reserves and prices, and estimate the effect on profit and capital.
  3. Finance: reflect the revised reserves in the accounts, update the budget and forecast and assess the cash and solvency effect.
  4. Risk: record the issue, check whether risk limits are breached, and report to senior management and the board.
  5. Coordination: hold a joint review meeting, agree a single set of data, and decide actions such as repricing, tighter claims control or reinsurance.
  6. Communication: the actuary explains the results and uncertainty in plain language to each function.

Answer: Claims supplies the cause analysis, actuarial revises assumptions and prices, finance updates accounts and forecasts, and risk monitors limits and reports. A joint review with shared data leads to agreed actions.

Exam tips

  • Always tie each function to the scenario in the question. Generic lists earn few marks.
  • Show interaction by naming what flows between functions: data, assumptions, approvals, reports.
  • Include at least one conflict and one remedy in longer written answers.
  • In multiple-choice questions, watch for options that give a function the wrong role, such as compliance setting prices.
  • Mention the actuarial function's advisory and communication role, not only its calculations.

Practice questions from Using data, company functions, people skills, influence and clear communication

Company Functions and How They Interact: frequently asked questions

What are the main functions of an insurance company?

Common functions are marketing and distribution, underwriting, claims, operations, finance, HR, IT, risk and compliance, and actuarial. Names and structure vary between companies. In the exam, describe the roles that fit the scenario.

How does the actuarial function interact with other departments?

It takes in data, assumptions and plans from functions such as claims, operations, IT and marketing. It provides prices, reserves, capital and profit analysis to finance, risk, product and senior management. It also explains the results and their limits.

What is the difference between risk management and the actuarial function?

Risk management identifies, monitors and reports risks across the company. The actuarial function measures and prices risks using models and advises on reserves and capital. They overlap and rely on each other, but their roles are different.

Why do functions in a company conflict?

Each function has its own goals and measures, such as sales volume, cost control or profit. These can clash. Shared objectives, clear governance and regular communication reduce the conflict.