Sustainable expense ratio reduction through operating model change
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Gaining a competitive advantage has never been more critical for insurers in the current climate. By establishing an operating model that turns strategy into reality, insurance carriers can achieve that critical competitive differentiation whilst also reducing their expense ratio.
Operating model design involves aligning key elements of a business operation to deliver both the business strategy and service proposition.
Not only is operating model change important for delivering sustainable expense ratio reduction, it is also fundamental for enabling top-line growth, service improvement, operational resilience and control.
These benefits have never been more needed, as the last twelve months have been the most challenging on record for the insurance industry. COVID-19 has wreaked a devastating human impact, and in insurance it will be one of the biggest loss events in history. Low interest rates and challenging equity markets continue to depress investment returns. Many firms are urgently looking at ways to reduce costs across their businesses.
Reducing a firm’s expense ratio - the costs of acquiring, underwriting, quoting, handling renewals, endorsements, lapses, cancellations and claims handling – without significant strategic technology investment seems like an impossible stretch to many insurance carriers. But it is achievable through operating model change.
At Gobeyond Partners we have a proprietary approach to operating model design which was developed in partnership with one of the UK’s leading business schools. It’s been proven in over 50 organisations and solves these challenges by taking a holistic view of business operations, ensuring that your entire operation supports your strategy.

How to change your operating model to unlock expense ratio improvement
When delivering a programme to improve a client’s operating model, our experts will typically explore the following key areas – and here we have shown how that applies to insurance carriers.
- Strategy & service proposition. The operating model sits at the heart of an organisation’s business strategy and service proposition, which needs to be defined first ahead of the operating model review
- Customer (broker) experience. What is the true experience for your brokers? Are you over or under-servicing different segments?
- Customer journey and process. Are there ways you can standardise, simplify, and automate processes without large IT costs? Are there efficiencies you can create to remove unnecessary workload from your underwriters or handle them in a different way? How can we ensure better operational resilience?
- Locations, functions, and teams. How is work distributed and managed, particularly across remote teams? How well are handoffs between brokers, teams, partners and suppliers managed, and are they necessary?
- Technology and infrastructure. How does technology support the creation of value?
- People, culture and organisation. How does your organisational culture support capability and performance? How can collaboration and team working be encouraged?
- Management framework – How effective are your decision-making processes and are the right performance measures in place? How well is your data being curated and managed?
An example of the benefits of an operating model review
Gobeyond Partners was engaged to work with an insurance carrier who was operating with expenses significantly higher than their industry peers. The team carried out a holistic review of our client’s operating model across areas such as technology, organisational structure, culture, process and the customer journey.
A rapid improvement plan was implemented for our client, which delivered outstanding and sustainable results:
- 20% capacity created
- £1.3m savings delivered
- Improved broker NPS scores
In summary
An operating model redesign presents the opportunity to take a transformational look at the whole organisation, often resulting in substantial benefits for the business and its customers.
If you are trying to cut costs have you considered an operating model review? And if you are currently reviewing your operating model, how are you linking up all the elements?
Find out more about our expertise in insurance by clicking HERE.
Gobeyond Partners have delivered projects for many of the top insurance firms in the UK & Europe for the last 10 years. This includes over 100 insurance engagements, ranging from operating model design for global brokers and carriers, to releasing capacity in underwriting, broking, claims and supporting functions.