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IAI Actuarial Core Principles · Business Management · Communicating strategy; culture and structure in decision making; strategy case studies

At Narmada Reinsurance, the chief actuary's team of 4 reports to her, while the head of claims supervises 25 staff directly. Claims quality has dropped because supervision is thin. Which concept explains the likely cause?

The cause is a span of control that is too wide. A head of claims supervising 25 staff directly cannot give each enough attention, so quality drops. Narrow spans like the chief actuary's four reports allow closer supervision but are not the problem here.

  1. AA span of control that is too wide for effective supervisionCorrect
  2. BA span of control that is too narrow
  3. CA flat structure that always improves quality
  4. DA product-based divisional structure
  5. Informal communication networks

Explanation

Span of control is the number of people a manager directly supervises. 25 direct reports is wide and can reduce the attention given to each, so quality suffers. The actuary's team of 4 is narrow, which is not the issue described.

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