We hold these truths to be self-evident: A shrinking insurance company will sooner or later run afoul of regulators, rating agencies, distributors and customers. It is virtually impossible to maintain profitability without growth. Growth is fueled by better capabilities, service, customer-focus, and products, which require ongoing investment in capabilities. The math doesn’t work unless you are finding ways to spend less in unimportant places so you can spend more in important ones.

Executive Summary

A recent PwC "Fit for Growth" survey of insurers finds them bullish about revenue growth—with more than three-quarters expecting average premium jumps of 5 percent or more in the next three years—but dissatisfied with their expense management progress. Looking ahead, two distinct growth and expense management strategies are emerging, with some companies content to grow market share gradually and others poised to participate in disruption through structural change.

We recently surveyed executives from 26 carriers to get a better sense of the industry’s attitudes about growth and expenses, and how these attitudes influence their behavior. Included were regional, national and global carriers, and carriers writing personal, commercial, life, as well as multiline carriers.

There is a realization that the insurance industry will undergo significant, disruptive change sooner or later. When asked to identify the greatest threat to their operating models, 44 percent of the participants cited “market disruption or technology.” That was the most popular response, outweighing “changing customer needs and offerings from new market entrants” (24 percent), as well as concerns about lack of customer insight, availability of talent, regulatory change, and the economic environment.

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