With the economy still hobbled, investment income eviscerated and premium growth stalled, life insurers are looking to operate more efficiently to boost their bottom line.
Yet, a new report from Hartford, Conn.-based
“In the current environment, it is more difficult to grow revenues,” the report states.
"An immediate aim for companies in this economic downturn is to protect their profits, and reducing expenses is one of the few ways to increase the bottom line in a low growth environment. However, companies that are reasonably up-to-date regarding computing and efficiency may already be close to the edge of efficiency, and may find it difficult to reduce expenses without impairing their ongoing capabilities.
In the study, Conning explores individual life insurance expenses, analyzes the degree to which economies of scale and product mix influence a company’s efficiency and how much is more directly under the influence of management.
"Conventional wisdom is that economies of scale play a large part in determining an insurance company’s level of efficiency," the report states. "If that is true, then there may be little insurance companies can do during the current slow-growth or no-growth environment, other than “ride out the storm” and wait for better times to come."
