Conning: ‘Right States’ Approach Works for P/C Insurers

June 21, 2005

Statistics offer justification of the “Right States” approach utilized by property casualty insurers – to a point, according to a new study by Conning Research and Consulting Inc.

“Our analysis of data from 1998-2003 shows that for many lines in the property-casualty industry, right-state selection can allow an insurer to improve on the industry’s ROE by achieving typical industry results in a carefully selected mix of states and lines,” said Bruce Hale, analyst at the research firm. “Right state selection is not a focal strategy, however, but one of many factors that determine an insurer’s performance.”

The study, “Predicting State Performance: Is a ‘Right States’ Strategy Wrong for Property-Casualty Insurers?” looks at results across states by line in order to determine persistency at a granular level. Further, the study identifies implementation perils and operational insights that emerge from the analysis.

“Property-casualty insurers can cherry-pick the best states by line — with some notable exceptions — and feel confident that in doing so they have helped future performance,” said Stephan Christiansen, director of research at Conning Research. “However, we did not find evidence supporting those who use state performance to jump into a state market at what they consider a low point, expecting a performance lift from over-correction. Additionally, we identified a number of implementation issues that could have a profound effect on the Right States approach.”

The full study is available for purchase by calling (888) 707-1177 or by visiting the company’s Web site at

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