In the quest to increase revenue and profitability, no industry is immune to the obstacles that emerge during an economic downturn. Leaders of businesses big and small must balance the desire to grow against the need to invest and must weigh the potential payoffs and pitfalls.

Insurance carriers are among those particularly challenged during recessionary periods, as underlying exposures typically shrink, freeing insurer capacity, which then can put downward pressure on prices for the remaining insurable values. There may be ways to derive greater value from unseen opportunities in current markets, for example, but discerning them requires extensive background data. New geographical markets may also beckon, but uncertainties ranging from regional and local competition to how insurance is sold make expansion in less familiar territories especially risky when finances are tight. And finally, acquisitions are often an effective path toward growth—and become particularly enticing when valuations of carriers are lower. But will the books of business and the culture of the company being purchased align with that of the acquiring carrier?

"Our experience shows that there are many opportunities for businesses to grow—even in a weak economy," says Michael R. Moran, managing director for Inpoint in Chicago, a consulting division of Aon. In all of the aforementioned instances, Moran says, three strategies that work for insurance carriers remain the best path for strengthening revenue—regardless of industry. They include: organic growth, optimizing pricing and acquisition.

Here, we offer real-world examples that use these strategies to best advantage.

Strategy No. 1: Drive organic growth by identifying untapped sources of revenue within your current customer base.

Real-World Example: A U.S.-based, personal lines property and casualty carrier tackled a strategy to differentiate its most profitable customers in order to give them enhanced service and increase their customer loyalty.

Identifying these individuals meant scoring all customers on a one-to-five scale based on certain attributes: the number of policies they already had, the length of time they'd been with the company, the frequency (or rather, infrequency) of claims, the cost of those claims and other metrics.

The insurer then devised a system to identify the customers with the highest scores when they called in, and tailored the service they received. Only specially trained sales representatives answered these calls and were required to pick up within a single ring.

The company used the same sys-tem to improve revenue. Supervisors listened in on the calls and, based on the customer's profile, coached the representatives about up-selling opportunities. It essentially created a virtuous circle: The more profitable the customer, the more services they purchased.

The Result: The company now has one of the highest customer retention rates in the industry, and, as it adds services, it has a ready population of potential customers.

STRATEGY NO. 2: Mine data to optimize pricing and target new customers.

Conducting the necessary analysis to determine optimal pricing frequently requires access to a wide variety of data. With the right level of business intelligence, carriers have been able to identify segments that may currently be underserved or where competing products might be overpriced.

Real-World Example: One innovative global insurer was able to optimize its pricing in an underserved market simply by challenging conventional wisdom. This casualty carrier realized that urban supermarkets were generally considered to be high-risk prospects. But the carrier also had a history of applying critical thinking to variables that other carriers dismissed or ignored. The carrier realized that gentrification and population shifts, for example, were changing the demographics of urban supermarket customers.

In bidding for the stores' business, the insurer requested supermarket inventory and sales data by product category in addition to historical claim rates. The results were unexpected—and, ultimately, beneficial for the insurer and market segment.