Although commercial insurers face a challenging market, some have managed to thrive in the current economy. Accenture identified three market leaders in commercial insurance. These Alphas excel in market share gains, combined ratio performance, and total return to shareholders. Consisting of one multi-line insurer and two specialty insurers, the Alphas continue to hold a strong lead over their competitors.
Between 2007-2011, the Alphas grew their market share by over 1 percent. At the same time, other leading insurers lost over 1 percent in market share.
More surprisingly, this growth did not come with higher combined ratios. The Alpha insurers consistently maintained a combined ratio of 100 percent or less. Instead of focusing solely on expense reduction, these leaders chose to acquire productive risks while avoiding negative underwriting. In fact, one Alpha actually increased its expenses to achieve its goals. Each leader made calculated and proactive decisions based on their key strategies and unique capabilities.
Predictably, these insurers also delivered excellent return to shareholders. While altering loss ratios can mask Total Returns to Shareholders (TRS), these three market leaders showed little change in their loss reserve.
Although their strategies for tackling this challenging market differ, the Alphas share four similarities in the way they operate. Join me next week to discover the Alphas secrets for success.
To learn more, download: Chasing the Alpha: How Commercial Lines Insurance Leaders Outperform the Market