Conning Study Finds P/C Expense Revolution Overdue

June 25, 2004

mparedConning Research & Consulting, Inc. has released a study which concludes that P/C insurers’ cost of doing business “has stagnated over the past 20 years, contrasting the remarkable efficiency gains achieved by many other industries.”

As an example Conning compared P/C insurers with the banking industry, which has reduced its efficiency ratio by 20 percent since 1982, “while the property-casualty industry has remained fairly flat.” The study, entitled “Expense Revolution: Is the Property-Casualty Industry Overdue?” found significant opportunities in each line of business for improvements in expenses and, by extension, overall financial performance.

“We identified these opportunities by using standard industry metrics and by creating nontraditional measures for expense performance,” stated Bruce Hale, a Conning Research analyst and the report’s author. “This more detailed analysis clearly indicates a long-term opportunity to fundamentally change the industry’s performance. Expenses are the crucial controllable element in driving toward much higher returns on equity.”

“We know that insurers cannot sustain high-margin premiums, and claim inflation is largely beyond the industry’s control,” commented Stephan Christiansen, Director of Research for Conning Research. “However, the stagnant expense situation detailed by this study indicates a huge opportunity for the industry. Insurers who are aggressive in accurately gauging their expenses and taking action will create a true, sustainable competitive advantage.”

The study is available for sale from Conning Research & Consulting, Inc., by calling (888) 707-1177 or by visiting the company’s Web site at:

Latest Comments

  • July 1, 2004 at 9:18 am
    Kevin Campbell says:
    The companies that figure it out will be around for quite some time. Competitors that can control the ratios on all sides of the equation and not just on the back of any one ... read more
  • June 29, 2004 at 4:41 am
    Sam says:
    I think what they are fundamentally talking about is the concept of overhead reduction. Most other industries have driven paper out of them. If we look at transactional proces... read more
  • June 29, 2004 at 7:25 am
    Jared says:
    Reducing underwriting talent or cutting commissions are not the only ways to reduce expenses. While I share the concerns that "bean counting" can do more harm than good, there... read more
See all comments

Add a Comment

Your email address will not be published. Required fields are marked *


More News
More News Features