ACORD Corp., an insurance data standards group, says it has data supporting the idea that life insurers that try to do something new with technology tend to offer shareholders better value than life insurers that simply try to use technology to run their companies better.
ACORD tried to measure the impact of five different technology strategies by developing a “total shareholder return ” index, then looking to see how the insurers with each type of strategy did.
The life insurers with ah “ Innovation” tech strategy did the best: They had a total shareholder return index of 137.1.
The life insurers with an “Operational Excellence” tech strategy had a total shareholder return index of just 45.
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Insurers that used technology mainly to increase “Customer Intimacy” had a shareholder return index of 95.6, and companies that chose a “Product Leadership” strategy had a shareholder return index of 54.2.
Insurers with a mixed strategy had a shareholder return index of 106.3.
Nuts and Bolts
ACORD says it based its results on six years of data from 50 publicly traded life insurers operating in 17 countries, with over 20 lines of business.
The company based the total shareholder return index on variables such as return on assets, return on equity, operating margin, and revenue growth.
A copy of a summary is available here.
The full results of the ACORD analysis are available only to ACORD members, not to members of the general public.
Another limitation is that the analysts based their work on just six years of data, with all of the six years occurring after the end of the Great Recession, in a low-interest-rate environment.
— Read ACORD Adopts DTCC File Format Standards, on ThinkAdvisor.