The Productivity Imperative in Insurance

By McKinsey & Co

Most carriers are struggling to meet their cost of capital, and productivity has barely moved over the past decade. Taking a more structural approach to productivity is required to make significant progress.

The insurance industry is facing a serious structural challenge. While some lines of business have seen years of steady top-line growth, life insurance carriers in mature markets have been particularly hard hit by the low interest environment. As a consequence, the majority of carriers are not making their cost of capital. In fact, the industry as a whole is in the red by average economic profit, with huge disparities in performance among the profitable carriers and the rest of the pack. As insurers struggle to sustain growth, the pressure to boost performance has become an urgent priority. Unlike other industries, which have been able to capitalize on their investments in digital technologies, insurance hasn’t increased its overall productivity in the past ten years.

Read the full report here.

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