Four Ways to Grow Your Book
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23 April 2014Karlyn Carnahan
Coming off a year with record results, industry reports show that prices are starting a downward trend. That ‘hard-ish’ market was gone in a blink. With pressure on rates, carriers have to compete hard to keep their accounts and have to focus efforts on growth just to make up for the rate loss. When it comes to growing a book of business, there are several techniques to deploy. Growth by Managing the Distribution Channel. Carriers can focus their growth efforts on superior management of the channel. Those who use independent agents can redouble their efforts to manage agents more effectively in order to extract more revenue from them. Realistically, this may require investments in technology as research has shown pretty conclusively that agents place business where it’s easiest to get the job done. Carriers can explore adding additional distribution channels. Options include a direct channel to the policyholder, working with wholesalers and MGAs, developing group and association business, banks, payroll processors – or a whole variety of other options. Carriers can expand their channel to other territories – entering other states or geographies. Carriers can focus on retaining more of the business they already write by providing superior customer service and targeting their efforts – especially on vulnerable accounts. Growth through channel management generally requires technology investments in portals, automated underwriting to permit straight through processing, distribution management systems to ease the on boarding, licensing and allowing compensation schemes to drive performance. Growth Through Product Management Carriers can focus on cross selling additional lines of business and products to existing customers. New product development is an area we see a lot of carriers focusing on as well as modifying existing products. And of course, getting a better margin on the product by improving underwriting risk assessment and pricing is a key area that drives growth. Effective growth through product initiatives requires the ability to rapidly modify existing products, a heavier reliance on analytics to drive uw decisions, and automated workflow to assure customers are being handled consistently. Growth Through Marketing and Brand Management The stronger a carriers brand the easier it is to improve their competitive positioning and generate new business. However, it’s hard for a midsize carrier to compete against a large carrier’s huge advertising budgets. There are areas midsize carriers can successfully focus on. We see midsize carriers focusing on social media, lead management, sales support and CRM as tools to drive brand. Growth Through Acquisition Purchase of books of business or other carriers is a growth strategy that some have perfected. For those who haven’t, there are challenges in such a strategy. Whether it’s integrating the new systems, assuring the credentialing of the new distribution channel, or absorbing new staff, this strategy can present enormous efforts by an IT organization. When I talk with carriers about their growth strategies, most say – “We do all of that”. Each of them however, requires different skill sets for carriers. When a company is fighting to grow a book of business, different initiatives may take priority. It becomes more difficult to keep focus and resources on longer term initiatives, or initiatives that are focused on non-revenue generating activities. Data, infrastructure, and back end support initiatives can get side tracked. CIOs have to be thoughtful about understanding the relationship between the work they do and the value they generate so they’re not seen as a pure cost center – an expense to be cut when combined ratios drop.