From a lower return on equity to unacceptable retention rates, market pundits recommend a single action: Grow.

However, growth without a solid strategy and the organizational and technical infrastructure to support it can lead to a disaster. Think about the insurer that expands its customer base only to find that the new additions do not have enough loyalty to justify the acquisition and underwriting costs. Similarly, imagine the implications for an insurance company that has fought to win a new market only to lose those customers to arcane processes and systems that cannot meet required service levels.

Rather than focus on growth for its own sake, insurers should strive for Smart Growth—the ability to selectively identify and target new profitable markets, that insurers are prepared to serve, engage them efficiently and ensure maximum growth. Next week I’ll explore Smart Growth in more detail.

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