Growth through cost containment and efficiency is a real possibility for life and annuity insurers that commit to identifying and executing on strategic opportunities, according to Deloitte consultants.
To illustrate, consultants at Deloitte, New York, point to how “low-cost performers” have fared compared to median-cost companies.
In life insurance, the low-cost performers have a new business processing expense of just $1.07 per $1,000 of new business face amount, they say. That’s 10% lower than the median.
Low-cost life insurance performers are also seeing shorter new business service-delivery times compared to the median, an 11% lower in-force administration processing expense per in-force administration transaction, and 29% less spend on finance, the researchers say. These firms are also “pioneering” in use of interactive voice response technologies.
In the annuity business, marketing, product and distribution expense now represents the largest share of adjusted line of business expense at 38%, the consultants say.
But the low-cost annuity performers spend five times more than the median on developing and maintaining products, and 11% less than the median on overall marketing, product and distribution processing expenses.