05 A comprehensive analysis of AM Best data conducted by PS Advisory reveals crucial insights. The chart highlights insurers that are outperforming their peers with a combined ratio that is less than the competition. 60% of insurers outperforming the market average do this with a higher expense ratio than their competitors, indicating substantial friction despite strong performance metrics. This higher expense ratio represents higher overall operational expenses. These insurers have benefited from a Combined Ratio See Saw investment that has resulted in a lower loss ratio and lower overall combined ratio than the rest of the market. The friction gap of having a higher expense ratio puts these insurers at risk of doing worse than their competitors during any significant market change. Having a less efficient organization leads to the assumption that these companies are also less flexible (due to higher levels of manual processing and legacy infrastructure) and will not be able to adjust quickly to changes in the market or shifts in go to market strategy. Unknowingly, insurers have often resorted to a strategy we call the "Combined Ratio See-Saw," wherein insurers support higher expenses, usually in the form of staffing increases, to address operational or strategic challenges. The belief is that the increased expense investment will result in lower loss ratios. Unfortunately, this approach leads to temporary relief at best and permanent increased expenses at worst, rarely delivering lasting performance gains. This method traps insurers in a vicious cycle, balancing rising operational costs against inadequate improvements in loss experience.. The Costly Combined Ratio See-Saw Insights from Industry Analysis Source: AM Best data Bridging the Friction Gap: Revolutionizing P&C Insurance Operations 60% of insurers outperforming the market average do this with a higher expense ratio than their competitors