Automate routine intake and servicing
When it may fit: Manual work is common.
Evidence needed: Task volumes and time.
Trade-off: Implementation and change effort.
Insurance Intelligence Brief
How to Identify Opportunities for Operational Improvement
The expense ratio is a bundle of costs, each with its own opportunities. Breaking it into its parts, and valuing a point of each, shows where effort pays.
1. The business problem
Where in our operations is there room to improve, and how much is it worth?
Operational improvement tends to be pursued by instinct or by whoever has the most energy. The expense ratio can be split into claims handling, acquisition and other expenses, and each can be valued in dollars per point.
That makes it possible to rank opportunities by their size and ease before choosing where to start.
2. What the evidence can reveal
An opportunity scan has a few steps:
- Calculated Break the expense ratio into claims adjustment, acquisition and other expenses.
- Calculated Value a point of expense ratio in dollars.
- Calculated Compare trend and cost per policy or per claim over time.
- Information gap Process detail: where time and money are spent within each expense, and what could be automated or redesigned.
The goal is a short list of improvements with a dollar value and an owner.
3. Investigate the problem
In the synthetic insurer, Calculated the expense ratio was 29.1%, down from 29.6%, a good result in a year when the loss ratio rose from 63.2% to 68.4%. Each point of expense ratio is worth about $825,000 on this premium.
Calculated The pieces are claims adjustment at $5.90M (about 7.2% of premium), acquisition at $10.5M (about 12.7%) and other expenses at $7.60M (about 9.2%). A 5% saving in other expenses would be worth about $380,000 a year, and a 5% saving in claims adjustment about $295,000. Handling cost per claim has been steady at roughly $1,340.
Hypothesis The biggest lever on the combined ratio is not in expenses but in claims cost, which rose 20.5%. A full operational program would cover both: efficiency in service and handling, and claims management that limits severity. Information gap Process data are not in the demo. A practical start is to pick the two largest cost lines and map where time goes, looking for rework, manual handoffs and steps that add no value.
4. Explore the interactive experience
Investigate it yourself.
Insurance Portfolio Explorer: a portfolio dashboard with loss, expense and combined ratios, a scenario simulator for rate, volume, frequency and severity, evidence-linked answers from APIS, and a sample brief, all on synthetic data.
The experience below is built on a synthetic insurer, “Demo Mutual Insurance.” It uses no policyholder, producer or agency data of any kind, so it is used to show the portfolio economics that agency and brokerage decisions connect to. Every figure is illustrative.
- In the cost table, compare the four lines. Which is largest, and which is growing fastest?
- In the Scenario tab, lower frequency by 3%, a stand-in for claims management gains. Compare the profit effect with a 5% saving in expenses.
- Ask APIS which expense categories explain the underwriting margin change.
5. Evaluate possible solutions
Operational improvement works best as a short, ranked list.
6. What leadership should do next
Questions to answer
- What is each part of the expense ratio worth per point?
- Where is cost growing?
- Where is rework or manual work?
- What gives the best return?
Data to gather
- Expenses by activity
- Volumes and cycle times
- Vendor contracts
- Staffing
Steps to take
- Value each expense category.
- Rank opportunities.
- Pilot the top two.
- Track savings.
7. Engage Two Pillars
Investigate Performance Across Your Insurance Business
Two Pillars can help carriers, agencies and brokerages investigate portfolio, claims operations, agency economics and process improvement using your own data. This demo uses no policyholder data. A good first step is an operations opportunity scan that values each part of the expense ratio and ranks improvements.
Sources and data notes
- The organization, its figures, and every number in this article and its interactive experience are synthetic and illustrative. They are not real data, a benchmark, or a forecast.
- Reviewed October 2026. This article describes an approach to investigation. It does not replace review by qualified professionals.