The past decade was volatile for personal lines insurers. However, during this period, 19 companies were standouts, leading their peers in both growth and profitability, according to a recent study by Conning Inc., an investment management company for the global insurance industry.
Conning found that successful insurers gained market share while maintaining profitable. And while no one route to success is apparent from the review, the most common feature of the top personal lines companies in the past 10 years is a specialty focus.
"As we analyzed these personal lines insurer results it becomes clear that, regardless of the significant market share advantage of large companies, size by itself does not appear to translate into a key differentiator for success. However, more than half of the members of the successful group have clearly identifiable product or customer segment specialties, while others have a regional specialization, sometimes in addition to a product niche," said Alan Dobbins, Director, Insurance Research at Conning, Inc.
Distribution channels
Another key finding of the Conning research is that the direct response distribution channel is growing more rapidly than the independent agency channel, and the rise of the direct response channel in personal auto has come at the expense of the independent agency channel. However, almost 80% of the top personal lines insurers use the independent agency distribution channel. No doubt, the independent agency channel is a good fit for the growth of these companies.
"Growth and Profit Leaders in Personal Lines Insurance: No Single Path to Success" is available for purchase from Conning.
Here are the 19 growth and profit leaders in personal lines for 2015:
1. Geico (Berkshire Hathaway)
Target market: Initially federal employees but expanded to broader personal insurance market.
Distribution channels: Primarily direct response.
Primary geography: District of Columbia and all 50 states.
2. Progressive
Target market: Broad personal vehicle insurance market (auto, motorcycle, recreational vehicle); acquisition of American Strategic expands efforts to add bundling options.
Distribution channels: Independent agency, Direct response, Aggregator.
Primary geography: District of Columbia and all 50 states.
Target market: Nonstandard, minimum limits auto with a focus on Hispanic community.
Distribution channels: Independent agency, affiliated captive.
Primary geography: Illinois, Nevada, Texas, Indiana and Arizona.
Target market: Non-standard automobile risks.
Distribution channel: Independent agency.
Primary geography: Maryland, Virginia, Florida and Pennsylvania.
5. Everest Re
Target market: Personal lines portion of the company has a non-standard auto focus.
Distribution channel: Managing general agent.
Primary geography: District of Columbia and all 50 states.
6. ASI Cos. (purchased by Progressive in 2014)
Target market: Personal property in wind-exposed states.
Distribution channel: Independent agency.
Primary geography: Florida, Texas, Louisina, Georgia and South Carolina.
Target market: Personal property in Florida.
Distribution channels: Manging general agent, independent agency.
Primary geography: Florida.
8. Milo Trust (Ocean Harbor)
Target market: Nonstandard auto and catastrophe-exposed property risks.
Distribution channels: Managing general agent, independent agency.
Primary geography: Florida, Hawaii, New York and California.
Target market: Manufactured homes and mobile home.
Distribution channels: Managing general agent, independent agency, manufactured housing dealers.
Primary geography: Texas, Arizona, New Mexico and Georgia.
10. Tower Hill
Target market: Personal property in Florida.
Distribution channels: Managing general agent, independent agency.
Primary geography: Florida.
Target market: Personal property in Florida and other wind-exposed states.
Distribution channel: Independent agency.
Primary geography: Florida, North Carolina, South Carolina, Georgia, Hawaii, Michigan, Maryland, Delaware and Indiana.
12. Germania Mutual
Target market: Members of the Germania Farm Mutual Insurance Association.
Distribution channel: Affinity group (Germania Credit Union).
Primary geography: Texas.
13. Nodak Mutual
Target market: Members of the North Dakota Farm Bureau.
Distribution channel: Affinity group (Farm Bureau).
Primary geography: North Dakota, Nebraska, South Dakota, Minnesota and Arizona.
14. Acuity
Target market: Regional insurer offering both personal and commercial lines.
Distribution channel: Independent agency.
Primary geography: Licensed in 36 states; more than 60% of business from Wisconsin, Illinois, Minnesota and Indiana.
15. Loudoun Mutual
Target market: Virginia-only multiline insurer.
Distribution channel: Independent agency.
Primary geography: Virginia.
16. Preferred Mutual
Target market: Regional insurer offering both personal and commercial lines.
Distribution channel: Independent agency.
Primary geography: New York, Massachusetts, New Jersey and New Hampshire.
17. North Star
Target market: Midwestern rural personal lines and small business accounts.
Distribution channel: Independent agency; one general agency.
Primary geography: Minnesota, North Dakota, South Dakota, Oklahoma, Nebraska and Iowa.
18. United Heritage
Target market: Personal lines with a rural focus.
Distribution channel: Independent agency.
Primary geography: Oregon, Idaho and Utah.
19. National Unity
Target market: Mexican tourists traveling in the U.S. and Canada.
Distribution channels: General agent, managing general agent.
Primary geography: Texas and California.
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