Best's Review


At Large
The Curious Case of Hypermature Markets

Insurers in these markets must accept competition.
  • Bill Pieroni
  • September 2022

This year in “At Large” we've been sharing insights generated by ACORD's Global Insurance Growth & Profit Pools study, which examined 94 of the world's insurance markets. Having explored developing markets, mature markets and the U.S. market in particular, I'd like to conclude this series by discussing an intriguing segment uncovered in our research: “hypermature markets.”

Types of Markets: ACORD's research classified “mature” markets as those demonstrating higher-than-average insurance penetration relative to GDP, but lower-than-average growth. Within this category, four markets emerged as hypermature: the U.K., France, Italy, and Australia. In each of these countries, insurance penetration—premiums written, as a percentage of GDP—not only failed to match the global average growth rate, but actually shrank.

Related: Mature Markets Are Still Important and Offer Both Value and Growth

Yet, these four geographies remain key markets for the global insurance industry. What do insurers need to take into account when doing business in these hypermature markets?

Characteristics of Hypermature Markets: While hypermature markets are similar to other mature markets in most respects, they are overwhelmingly dominated by buyer demands around price and convenience. Insurers in these markets are caught in a spiral of price competition and ongoing commoditization. Brand loyalty is almost absent, and customer due diligence across both personal and commercial lines is based almost entirely on price—how cheap can I get insurance, and how easily can I switch? The resulting market is characterized by:

Hypercompetition: Intense price competition forces insurers to constantly find ways of cutting costs—already lean operating models must be somehow made even more efficient. This is coupled with the nearly zero-sum nature of customer acquisition—insurance penetration in these markets is already so high that any potential customer will most likely need to be poached from a competitor.

Hypersegmentation: In an effort to find a non-price-based competitive advantage, insurers in hypermature markets often attempt to microsegment their brands to target extremely granular niche markets—perhaps policies for very specific types of vehicles, or for members of one particular profession. While insurers often spend material amounts of money and effort to differentiate themselves in this way, they often meet only limited success functions.

Hyperaugmentation: Another common tactic in these challenging markets is driving income through “add-ons” to existing policies. This is not just typical cross-selling—insurers in hypermature markets are often found inventing additional products, services, and enhancements for policyholders that are rarely found even in other mature markets. In fact, these additional offerings are often completely outside core insurance functions.

Related: The Deep Understanding of Value in the US Market

Dealing With Hypermaturity: Insurers in nascent hypermature markets must attempt to avoid Theodore Levitt's “commodity magnet” and avert the downward spiral of price competition. By adding value in non-price-based ways—and educating consumers accordingly—they may be able to achieve meaningful differentiation.

However, insurers in these markets must unfortunately accept the necessity of intense price competition. They must adopt a “price-plus” strategy that, while not ignoring product leadership, customer intimacy, and innovation, prioritizes operational efficiency. Success in these markets requires a lean operating model, a deep understanding of the relevant economics, and corresponding capability alignment.

Best’s Review columnist Bill Pieroni is president and CEO of ACORD. He can be reached at

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