Remember when you were a kid and pretended to run a lemonade stand, but you were really just using it as an excuse to play with your parents' money?

Congrats. You now understand the business model of nearly half of America's largest insurance companies.

ACORD just dropped their annual "Who's Actually Good at This?" report, and holy moly is it a bloodbath.

Let’s break it down, Max Revenue style.

The Numbers That Make You Go "WTF?"

Out of the 100 largest property and casualty insurers in the U.S., here's how they stack up over the past 20 years:

48 companies: Destroying value (aka: failing at capitalism)

35 companies: Actually good at insurance

17 companies: Saved by their investment portfolios (we'll call them the "trust fund babies")

Now here's the fun part: In 2021, only 9 companies were in the destroyer category. By 2023, it jumped to 36. Now we're at 48.

The Pizza Shop Analogy Nobody Asked For

Imagine you run a pizza restaurant. Your job is simple: make pizza, sell pizza, profit.

But what if you lost $5 on every pizza you sold, and only stayed in business because you're really good at day-trading crypto in the back office?

That's not a pizza business. That's a hedge fund with an oven.

And that's basically what 17 of these "hollow value creators" are doing. They're so bad at the insurance part that they burned through $85 billion in underwriting losses. Luckily, their investments made $121 billion, leaving them with a net gain of $36 billion.

Cool, cool, cool. Totally sustainable. Nothing to worry about here.

What Actually Separates Winners from Losers

The 35 companies doing it right? They generated $324 billion in value, with $229 billion coming from (wait for it) actually being good at insurance.

Their secret sauce according to ACORD:

1. They're picky about customers. Using data and AI, they target the right customers instead of just throwing policies at anyone with a pulse and a checkbook. Novel concept.

2. They don't light money on fire. Their operating expense ratios are nearly 7 points better than the "hollow creators." Turns out, being efficient matters. Who knew?

3. They play the long game. Winners average 2 products per household. Some even hit 5+. The industry average? 1.5.

If you can't cross-sell a second policy to someone who already trusts you enough to buy the first one, what are we even doing here?

The Homeowners Insurance Trap

Here's another spicy data point we dug out for you:

The winning companies, according to the study, keep homeowners insurance to just 22% of their personal lines book.

The losers? They're at 34 to 39%.

Why does this matter? Because homeowners insurance has been getting obliterated by wildfires, hurricanes, and every other climate-related "act of God" that insurance companies suddenly have to pay for.

The smart carriers saw the writing on the wall (probably written in smoke and flood water) and stayed disciplined. The others? Not so much.

Yes, Size Matters

According to the study, the bigger the better.

Historically, bigger insurance companies were bloated dinosaurs that destroyed value through sheer bureaucratic incompetence. But this study shows the opposite: carriers writing over $6 billion in premiums are outperforming smaller ones.

ACORD's theory? It's not about operational scale anymore. It's about data advantage.

The big boys have more information, better AI tools, and can actually use their data to make smarter decisions. The smaller players? Still running on spreadsheets and gut feelings from 1987.

The Inevitable Trainwreck That’s Coming

Here's what should keep insurance executives up at night:

These hollow value creators (the ones limping along on investment income) are one market downturn away from total disaster. When interest rates drop or the market takes a dive, suddenly that $121 billion investment cushion disappears.

And then what? You're just a company that loses money on every policy you write.

Trainwreck of a business model right there.

The Four Pillars (That Everyone Forgot About)

ACORD wraps up by reminding everyone that you can't just pick one strategy anymore. You need all four:

1. Customer intimacy (know your people)

2. Product leadership (don't sell garbage)

3. Innovation (it's 2026, not 1926)

4. Operational excellence (stop hemorrhaging money)

Historically, companies could coast by being really good at just one of these. Not anymore. The market's too competitive, the risks are too complex, and customers have too many options.

Our $0.02 To Insurance Producers

Look, you're not underwriting these policies. But you ARE the face of these carriers to your clients.

When 48% of the top 100 carriers are destroying value, that's not just a Wall Street problem. That's a "your client's homeowners claim might not get paid" problem. It's a "surprise non-renewal" problem. It's a "carrier pulls out of your state" problem.

The winners are getting pickier about risk, investing in tech, and raising standards.

The losers? They're either tightening up (hello, stricter guidelines and more declinations) or they're the carriers you'll wake up to find in receivership one day.

Know which carriers you're dealing with. The ones crushing it on underwriting? Those are your long-term partners. The ones barely surviving on investment income? Maybe don't build your book around them.

Because when the market turns, the hollow carriers won't just hurt themselves. They'll hurt every agent and client caught in the fallout.

Want to download the full ACORD report and really ruin your day? Head here.