Insights from BCG Insurance Profit Pools

As a competitor in the rapidly changing global insurance industry, you know there’s no crystal ball that can predict the future of your business. But you still need a clear vision for the future, informed by a detailed understanding of your markets, your products, and your sources of profit. Which market will be your company’s growth driver? What is the optimal product portfolio in each market? What will be the growth and profitability drivers for each of your lines of business? BCG insurance profit pools helps answer these questions.

BCG insurance profit pools is a proprietary market-sizing and forecasting model for life, property and casualty, and health insurance. It covers roughly 100 countries with extensive modeling for over 30 KPIs and more than 90% of global insurance premiums until 2025. Its database and analytics enable insurers to determine what major market shifts and scenarios they should prepare for and what geographic markets and product lines they should enter—or exit. With its unique range and depth, insurance profit pools delivers:

  • Profits by product (nonlife) and source of profits (life)
  • Driver-based forecasting
  • Customized client-specific scenarios

These capabilities enable insurers to profile a country or a specific insurance sector—say, personal auto, commercial property, or group savings and annuities—within that country, analyze how profitable that market is, and forecast its revenue and profitability outlook based on the factors most likely to transform it in the years ahead.

The insights to be gleaned go deeper than a regression-based approach, analyzing the underlying drivers of business. For nonlife sectors, insurance profit pools looks at such factors as employment, business performance, health-care spending, car stock, automation, loss frequency, inflation, and pricing cycles. For life, it analyzes old-age pension gaps, share of alternatives, maturity curves, cost profits, and investment yields, among others. Forecasting methodology varies by sector but embraces three basic sets of factors:

  • Premiums and losses
  • Other profit and loss items, such as administrative and acquisition expenses, investment income, and after-tax profits
  • Balance sheets, including total assets, investments, liabilities, reserves, and equity

The output is a clear analysis of the markets and products driving industry growth, which product groups can be expected to perform best in each market, and what factors will drive growth and profitability in each line of business. This comprehensive picture enables insurers to build a more robust forecast and conduct a more decisive, action-oriented strategic discussion at the C-suite level or, if required, at the expert level.

BCG insurance profit pools is part of BCG’s insights suite, which also includes the insurance excellence benchmark. The benchmark enables companies to assess their performance on a set of strategic priorities, identify performance gaps, and close them with targeted change initiatives that sharpen their competitive edge.