Continuing Education Program
In-house Manufacture vs. Enrollment in 2009
Relative Cost Analysis
In today’s world of tight budgets and demands for evidence that any given solution to a problem is more cost-effective than all other possible solutions, we have prepared a relative cost analysis for underwriter continuing education. This analysis compares the hypothetical costs of developing an in-house program equivalent to State of the Art™ CE, to the cost of enrolling in our program for 2008 or 2009 in a company with 10 or more underwriters.
We have tested this analysis by seeking out peer review feedback from several chief underwriters in both life and health risk management, as well as from a prominent consulting actuary. Their feedback on the validity of our assumptions encourages us to share these data with you.
Assumptions for Cost of In-house Manufacture
Based on typical insurer protocol for creating an in-house program, which would entail the services of one medical director and one experienced underwriter, with some administrative assistance.
Assuming 49 weeks x 40 hours = 1960 hours in 1 working year:
Medical Director: annual salary $150k x 1.5* = $225,000
Senior Underwriter: $75k x 1.5 = $112,500
Administrative Assistant: $30k x 1.5 = $45,000
* Note: most companies calculate potential productivity based on a 2000 hour work year, adjusting downwards for break time, sick time, holidays, personal development time, etc. This calculation is based on 1960 hours of annual productivity.
Hourly Salary ÷ 1960 hours/year =
Medical director: $115/hr
Senior Underwriter: $54/hr
Administrative Assistant: $23/hrProduction time per course =
Resource gathering: 10 hours
Reviewing material: 30 hours
Writing and editing: 15 hours
Administrative functions: 10 hours
Note: these are conservative estimates, as this is how long it takes us, on average per course, and we have extensive files at hand and years of experience organizing and writing course material. Quite likely, it would take a team of one MD and one underwriter 15%-25% longer, at least initially, to manufacture a course.
Total production costs per course, assuming time on all tasks, except administration, split 50:50 between MD and underwriter:
Resource gathering: $845
Reviewing material: $2535
Writing and editing: $903
Administration: $230Total cost per course = $4513
Total cost per course x 18 courses = $81,234
* The foregoing calculations do not include the costs of replacing the services of the medical director and underwriter while they are devoting their time to manufacturing this hypothetical in-house education program. If we added the costs of replacing both of them in terms of working on pending business and other regular activities, that would drive up the cost of the in-house education alternative to > 32 times the cost of SOTA CE.