Life insurers’ 2009 results underscore the need to better understand and more consistently take action to control their expenses, according to a new study.

Unveiled by Conning Research & Consulting, a unit of Conning Inc., New York, the study explores individual life insurance expenses, analyzes how much economies of scale and product mix influence a company’s efficiency and how much is more directly under the influence of management.

“In analyzing individual life companies, we identified the low-cost companies and reviewed their approach to expense management,” says Stephan Christiansen, director of research at Conning. “Our analysis indicates that scale appears to matter less than management may believe. Instead of trying to grow out of their inefficiencies, insurers that outperform use a rigorous and consistent approach to expense analysis and control to ensure long-term profitability.”

Terence Martin, an analyst at Conning Research & Consulting, adds: “Life insurer profitability has been squeezed by declining premiums and low investment yields. Of course, in this environment, expense analysis and control are of paramount importance to senior management. Yet our analysis indicates that those insurers who focus on expense management consistently through up and down markets are the consistent high performers.”