There’s a 15% difference between the best and worst performing insurers: study

Successful insurers trimmed business portfolios and adapted to new tech

UK insurers operating in similar businesses classes and under the same economic environment have delivered significantly different levels of returns over the last five years, a study by Willis Towers Watson found.

The financial returns of the Prudential Regulation Authority’s registered insurers suggest some companies were better at managing soft pricing and low interest rates in the industry.

“The aim was to investigate how companies performed against their peers during a period where below average natural catastrophe occurrences and strong competition have led to softening prices in a number of segments, and whilst interest rates have remained at historic lows,” Charlie Kefford, director at Willis Towers Watson, said in a release.

Read: 82 percent of insurers want to acquire, a third want to divest: Willis Towers Watson

Overall it found that the UK non-life insurance sector performed well, averaging an eight per cent return over the last five years. However, there was a marked difference between individual insurers, which in 2011 and 2013 meant that there was a 15 per cent difference in return between the best and worst performing companies.

Willis Towers Watson found that the successful companies tended to trim business portfolios, adapt to technology in the market, change investment strategies, and increase leverage and innovation in managing capital.

“There is of course no magic formula, but most companies should be able to make gains from re-examining approaches in core areas, including capital, investment, business mix and disposals, reinsurance and uses of technology and analytics,” Kefford said.

Read: Reinsurance rates continue to decrease: Willis

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Transcontinental Media G.P.