Premium growth, underwriting return and segment analysis

Joseph Calandro Jr (Financial Services Consultant and Professor of Finance at the University of Connecticut, Shelton, Connecticut, USA)
Robert Flynn (Executive Director of Insurance and Financial Services Cluster, Hartford, Connecticut, USA)

Measuring Business Excellence

ISSN: 1368-3047

Publication date: 1 December 2005



Many insurance companies vigorously pursue top‐line growth, even though it has the potential to develop unprofitably over time. The time lag (or tail) between when insurance is sold and when claims are paid generates risks unique to insurance companies. Furthermore, the insurance market is both mature and efficient (i.e. its level of competitive risk is very high), which means that profitable opportunities are both rare and untenable unless protected by competitive advantage. There is currently no practical measure available (of which the authors are aware) at the business unit level to evaluate insurance premium growth in the face of the industry's risks, impairing executives' ability to assess segment opportunities (and hazards), thus hampering strategic decision making. The purpose of this paper is to introduce a practical measure developed by the authors called Underwriting Return (UWR) which aims at helping to alleviate this situation.


The paper introduces UWR which was developed during the course and scope of the authors' work in the insurance industry, and their research into applying value‐based management to that industry.


The paper finds that UWR is a practical measure that property and casualty executives can use at the business unit level to help quantify market segments to grow, hold, harvest and abandon.


A variety of strategic analysis tools, such as the popular Boston Consulting Group matrix, are utilized today. In general, the application of such tools is hampered by an imprecision of measurement but each can add a level of insight to executives' resource allocation options. UWR can further aid insurance executives in strategic analysis by helping to quantify in which segments to compete, and which ones to abandon. The paper demonstrates the utility of the measure in an example based on an actual analysis.



Calandro, J. and Flynn, R. (2005), "Premium growth, underwriting return and segment analysis", Measuring Business Excellence, Vol. 9 No. 4, pp. 27-36.

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Copyright © 2005, Emerald Group Publishing Limited

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