Study Examines Relationship Between Premium Growth and Value Creation Over the Long Term, Identifies Key Factors in Achieving Both Simultaneously
PEARL RIVER, N.Y., April 1, 2020 /PRNewswire/ -- ACORD, the global standards-setting body for the insurance industry, today announced the release of Intelligent Growth: Intent, Decisions, Outcomes, based on an intensive study sponsored by Duck Creek Technologies. The study leveraged 20 years of financial data, in-depth interviews with industry leaders, and proprietary analysis to answer key questions about the intersection of growth and value in the insurance industry.
"The insurance business is unusual in that there is an uneasy relationship between growth and value creation," said ACORD President and CEO Bill Pieroni. "Anyone familiar with our industry knows how challenging it is to both increase market share and create value simultaneously. This first-of-a-kind study identified the key strategies, tactics, and capabilities that make this achievement possible."
The study comprehensively analyzed the growth patterns of nearly 11,000 insurance carriers worldwide, examining how management decisions have driven success or failure in both premium growth and financial performance over the last two decades. The study found that, while over one quarter of the 200 largest insurers exceeded worldwide average performance in both growth and value, significantly more insurers failed to meet the benchmarks for either.
ACORD then grouped the insurers by performance against these metrics, and identified common threads in company characteristics and leadership decisions among each cohort, in order to uncover the most common barriers to "Intelligent Growth," and the capability imperatives most successful in overcoming these hurdles. Some of the key factors ACORD identified were:
- Composite Strategy – Intelligent Growth insurers were more likely than their peers to successfully execute across all fundamental strategic options: Operational Excellence, Customer Intimacy, Product Leadership, and Innovation.
- Focused Business Mix – Life insurers who largely avoided diversifying into property and casualty lines, and vice versa, were more likely to achieve Intelligent Growth.
- Informational Economies of Scale – Insurers large enough to have gathered a critical mass of data, but small enough to remain nimble, demonstrated superior performance.
"In light of recent market instability, it is more important than ever that insurers look to the key levers driving long-term success," Pieroni added. "The Intelligent Growth insurers identified by the study achieved shareholder returns materially in excess of their competitors, as well as all relevant indices. They not only understand how to balance value creation and growth, but also know how to execute and excel across the value chain."
Intelligent Growth: Intent, Decisions, Outcomes is available for download to ACORD members at www.acord.org/research. Pieroni will also present findings from the study as part of the ACORD CEO Webinar Series on Friday, April 3rd. To register, please visit www.acord.org/webinars.