ACORD’s most recent U.S. Property and Casualty Value Creation study provides insights into how insurance companies are driving value creation and sustaining performance over time amidst a challenging market.

Using a model that considered carriers’ statutory financial filings over the last 20 years as well as key strategic, operational and tactical operatives, ACORD grouped the evaluated insurers into three categories: Sustainable Value Creators, Hollow Value Creators and Value Destroyers.

Value Destroyers are described as insurers who failed to generate value over the study period. Hollow Value Creators are those who met minimum returns through investments, but failed to generate value through underwriting.

The majority of the report focuses on the activities of those deemed Sustainable Value Creators (SVC). These insurers were able to meet their required minimum returns through underwriting and investment opportunities.

According to ACORD’s analysis of those considered SVCs, there are consistent patterns in the initiatives and priorities where these insurers focus. In the study, they identify three interconnected “value levers” that these carriers consistently implement.

  1. Underwriting: SVCs focus on profitable, intelligent growth instead of just worrying about their market share. They leverage data, advanced analytics and new technologies to target the right customers for acquisition, retention and cross-selling. These strategies, combined with their technical expertise, ACORD says, help them deliver “actionable insights at the right touchpoints in real time, optimize operational efficiency, and drive culture- and behavior-based change across the organization.”
  2. Claims: When it comes to claims, the strategic use of digital resources to enhance human performance stands as a key differentiator for SVCs. ACORD notes that these insurers excel at striking a balance between loss payments and adjustment expenses, while still keeping customers happy. SVCs are able to apply new technologies thoughtfully to automate processes where it adds value, rather than letting them serve as a replacement for human judgment.
  3. Customer lifetime value: SVCs stand out for their ability to measure and influence long-term profitability and optimize customer lifetime value. These insurers utilize targeted cross- and upselling strategies in an attempt to consistently maintain at least two products per household — above the P&C insurer average of 1.5 policies per household. SVCs are able to align sales and service with customer expectations and their lifetime value potential. ACORD notes that technology, data and advanced analytics are central to this approach.

In the slideshow above, we’ll examine the four primary strategy categories utilized most among the insurers considered Sustainable Value Creators according to ACORD’s report.

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