As life insurers renew their focus on increasing revenue and market share, a new white paper by Deloitte & Touche USA LLP’s insurance industry group cautions the sector must make major breakthroughs to find profitable and sustainable top-line growth. Currently, most life insurers spread their efforts on a broad portfolio of initiatives and have not developed high-potential initiatives; instead, they must take a more targeted and systematic approach to formulating their growth strategies.
“While executives at life insurers recognize the importance of organic growth, it remains elusive,” says Kevin Sharps, a director in Deloitte’s insurance industry group and co-author of the white paper. “Over the course of three decades, industry growth has not outpaced inflation significantly, the industry has not increased its market share, and there have been few breakthrough products. Organic, top-line growth is key to creating shareholder value, and those insurers that don’t position themselves for organic growth risk falling behind their competitors.”In an analysis of top life insurance companies’ revenue performance and shareholder returns from 2001 to 2005, Deloitte found those companies that grew organically had much higher shareholder returns than those that grew through acquisitions, even when their revenue growth was less than that of their acquisition-driven competitors.
The report–Organic Growth for Life Insurers: A Playbook for Market Advantage–is based on a survey of 20 C-suite executives from top life insurance companies as well as an analysis of life insurance industry growth patterns.