“Increased alignment across strategic intent, digital capabilities, and resource allocation is the key differentiating factor separating sustainable value creators from the market,” Bill Pieroni, president & CEO of ACORD, said.(Credit: Song_about_summer/Shutterstock)
During the past 20 years, half of value-creating property and casualty insurers did so through investment income alone, depending on this stream to offset poor underwriting results, according to the Association for Cooperative Operations Research and Development (ACORD).
These findings come from a 20-year study of the top 100 P&C insurers conducted by the association, which reported that the companies studied generated $446 billion in value during the review period.
“The 20-year performance of the insurance industry as a whole speaks to its strength and economic importance,” Bill Pieroni, president & CEO of ACORD, said in a release. “However, it’s not just a question of the bottom line on the income statement. Sustainable value creation is driven by core competence in underwriting and claims. Top-performing insurers increasingly leveraged digital capabilities to support improved outcomes in these areas.”
To determine this, the association examined two decades worth of value-creation data from the top 100 P&C insurers. ACORD then looked at companies it deemed “sustainable value creators,” or those that generate excess cash flow through both underwriting and investment, to pinpoint strategies and capabilities that lead to continued high performance. What follows are three communalities ACORD found among the top-performers:
3 key value levers
1. Underwriting with deep insights: The leading value creators leverage information scale, data collecting abilities and advanced analytics to unlock deep insights that guide acquisition, retention and cross-selling efforts to target the ideal customer. Coupling advanced technology with entrenched technical expertise allows these insurers to hit the right touchpoints at the moment of value, in real-time, according to ACORD, which noted this also helps manage overhead.
2. Digitally enhanced productivity: Another key differentiator is the application of digital capabilities to boost productivity, the study found, particularly when balancing loss payments, adjustment expenses and customer satisfaction. Insurers that found sustained success deployed technology throughout their organizations, automating where it made sense and leveraging data and insights across the claims value chain.
3. Focus on customer lifecycle: Aligning sales and service with customer expectations and their lifetime value potential is another key driver of value creation, ACORD reported. Again, technology is playing a big role as winning carriers are blend existing sales and service channels with emerging options, using customer expectations and behaviors as the guide.
“Increased alignment across strategic intent, digital capabilities, and resource allocation is the key differentiating factor separating sustainable value creators from the market,” Pieroni added. “We are finally seeing the true impact of decades of thoughtful technology investment on performance.”
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February 16, 2021 at 05:00PM
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3 keys to sustainable value creation for P&C insurers - PropertyCasualty360
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