If your goal for 2021 is to grow your book of business, you’ll certainly face challenges. If your goal for 2021 is to grow profitably, then you’ve just upped the degree of difficulty significantly. But at the same time, who doesn’t want profitable growth? Our customers certainly do, which is why they ranked achieving profitable growth among their top five strategic imperatives for 2021 when we surveyed them at Connections Reimagined in November 2020.
I’ve already shared the bad news: profitable growth isn’t easy. Profitability and growth are often seen as competing priorities and, at times, even seem in direct conflict with each other. But the good news is that you can attack this problem from many different angles.
Perhaps the most obvious place to start is with your underwriting processes. For example, automating simple, repetitive tasks can free up time to focus on more complicated underwriting decisions. And embedding predictive analytics into underwriting processes can make those decisions that much better.
Pekin Insurance made changes to its underwriting processes, and the results illustrate the significant impact that underwriting can have on profitable growth. Pekin applied predictive analytics to its auto book of business to help actuaries better assess risk and make more informed decisions. The benefits were almost immediate, with a near-20% reduction in the insurer’s auto loss ratio in the first year.
More broadly, many other strategic imperatives will ultimately support profitable growth as well. The ability to drive process improvements can lead to increased employee efficiency, which drives greater profitability. The ability to accelerate product launch means you can get to market faster to capitalize on new opportunities and grow your business. Put them together and, as you may have already guessed, you have profitable growth. These are only a few examples, but they demonstrate how different approaches can lead to the same result. For more details, check out our full report, “Top Five Imperatives of 2021: Insurer Priorities, Challenges, and Successes,” and watch the recent Connections Reimagined session “Insurers’ Top Five Imperatives for 2021.”