If Bill Pieroni were a Major League Baseball executive, he would be one of those sabermetric types like Oakland’s Billy Beane, heralded by the book “Moneyball.” His team’s manager would have spreadsheets on an iPad, and his team would use data to guide trades and lineups, decide how to pitch to hitters, and know where to position fielders for the best defense.

It’s not happening. There is little chance that Pieroni, CEO of the industry’s standards-setting and data organization ACORD, would be in a baseball park, let alone be working as a baseball executive.

“I am not a sports person. I’m not,” he made clear in an interview following his presentation at the recent ACORD Connect conference in Boston.

He is, however, a data person. RBIs, QB ratings and shots on goal are not Pieroni’s thing; rather, he’s a fan of combined ratios, returns on equity and premiums written.

“Effective leaders can do both. They can position for the long term and demand near-term results. They can make you feel very good about being proud of the organization but have you believe that it can end at any time.”

Pieroni presented findings from his organization’s latest study, “Intelligent Growth: Intent, Decisions, Outcomes,” a studybased on lots of data—20 years of data, in fact—from the 200 largest global insurance carriers. In other words, 4,000 carrier years’ worth of data. (See related article, “How ‘Intelligent’ Insurers Manage to Both Grow and Create Value: ACORD Study,” for details of the study results.)

Pieroni is not into sports, but he did take a class in sports marketing while at Harvard Business School an unknown number of seasons ago. He had no interest in the class, but the professor had interest in him being in the class.

“I want you in the business sports class,” the professor said. “Me? I don’t know anything about sports; I don’t like sports,” Pieroni countered. “No, no. You’re going to be in the class. You of all people we want,” the professor insisted. So, he enrolled.

He remembers one class in particular where the head of a large professional sports association who came to talk to the class asked, “What’s the most popular activity in the United States?” The answers came back: baseball, football, basketball, soccer. But it wasn’t sports. The professor called on Pieroni to share the correct answer, “Shopping. Going to the mall.”

“Everyone thinks marketing is this artsy, soft qualitative thing. Marketing is data, is grids, is information. It’s price elasticity of demand,” he says.

Pieroni is also a fan of insurance companies using data to inform their marketing and all of their efforts to grow and create value.

In another example, he recalls witnessing one CEO of a large carrier watching all the company’s advertisements and picking the ones he liked. He contrasted him with another CEO who looked at a spreadsheet with metrics on all of his firm’s ads. “Well, I guess we’re going with advertisements three, seven and 10,” this second CEO said. “Do you want to see them?” asked the advertising vice president. “No,” the CEO replied and walked out.

The CEO picked the ads straight from the spreadsheet. “Who cares what I think? We’re not in the evoked set,” Pieroni imagined the CEO said to himself. “There’s the difference. There it is.”

Do opinions matter at all in making decisions? “Absolutely. Sure, they matter. But tell me why you’re deviating from the data. Tell me why you don’t want it. Start with facts and then justify. I would be terrified if people solely relied upon data without any human intuition, but start with that and modify.”

The recent ACORD study of the 200 largest insurers that Pieroni headed explores the link between carrier growth and profits. The analysis reveals how difficult it is for carriers to both grow their premium writings and create value over an extended period. Of the 200 carriers studied, only 55 were able to do it. He calls them the “intelligent growers.”

Following his presentation of his findings at the ACORD conference, Pieroni sat for an interview with Wells Media’s Andrew Simpson. The following are edited excerpts from that interview in which Pieroni focused on data as a key player in insurance and why some carriers score better than others. Pieroni also took a few swings at the value of investment over buybacks.

Q: What message do you hope to send with this report to carrier CEOs, analysts and shareholders?

Pieroni: I would say to the CEOs, “Look, I understand that you could be experiencing relentless pressure to grow, right? I get that. But growth without superior economics is punished by the marketplace.” You can see the data. We always use that as a check in our studies. Those that actually grew but did not achieve superior economics had a total shareholder return over the last 20 years of 204.7 percent…versus an industry average in our study of 390 percent. That’s 186 percent reduction.

As a CEO, it must be incredibly difficult to go back to the analyst community and to the shareholders saying, “The rates just aren’t there and this organization can’t grow profitably in this marketplace, so we’re not going to. However, when in fact pricing becomes stable, consumer demand changes, whatever the inflection point that’s needed, then we will grow.” I don’t want to trivialize how difficult that can be, but I would encourage them, when you look to those carriers that are profitable and not growing, their total shareholder returns are 460.7 percent. That’s only marginally less than those that grew and created value of 558 percent.

The reality is the second best category to be in our study is profitable but not growing. That is a material difference; that’s almost 70 percent better than the industry average.

So, my message would be if you want to achieve growth and superior economics, you really need a purposeful strategic intent and investment behind it.

Q: You speak of a CEO being a steward. How does a CEO do that over years? What’s the average span for CEO?

Pieroni: Less than 10 [years]. Yes, less than 10. In some countries and lines of business that approaches five, right? It becomes very, very difficult…

How do you position for the long term while achieving near-term results? How do you increase earnings per share and dividends while simultaneously increasing investment capacity in order to position for the long term? That’s the real key, and that’s what I’m saying is hard work. Anybody, if you’re generating excess cash flow, can invest. But the trick of this is, how do you do both?

As real leaders and stewards, you have to manage those paradigms. They’re paradoxes. For instance,…you’re No. 1 in your market. How do you make your team continue to believe that you’re No. 1 but understand that at any moment it can be removed. How do you have that balance of paranoia?

Effective leaders can do both. They can position for the long term and demand near-term results. They can make you feel very good about being proud of the organization but have you believe that it can end at any time. That you have a constancy and a North Star, but by the same token, be open to new opportunities. That’s the real trick of all this and that’s hard work.

Q: Do you think the industry recognizes the leaders like that? The stewards?

Pieroni: You know what? The shareholders, the capital markets do. There’s the answer.

Those that are able to achieve both, deliver—to their customers, to their employees, to their shareholders. And those that only are profitable and don’t grow, they do quite nicely, too. The punishment starts where you grew and didn’t create value. I punish you. You did not grow and do not create value. So, you do in fact see this. Now the question, though, is as John Maynard Keynes said, “In the long run, we’re all dead.” Can you live long enough to do it?

Q: One interesting finding from the study is that the best group wasn’t the giant companies with all their data and resources, and it wasn’t the small, nimble players. It was the midsize category. It seems they had the data and the flexibility.

Pieroni: That is the first time we’ve seen that historically. Well, look, intuitively, if you’re a small carrier, you should be able to go fast in the market and you should actually have some better economics, and if you’re small, you could exploit niches…

But for the first time in many of our studies…what we’re finding is that third quadrant where their average premium is $8 billion a year, that somehow the use of data and analytics for insights around claims, around underwriting, on consumer experience, around markets, around where they can identify and leverage opportunities in the marketplace, that matters. It starts with the data.

Q: Wasn’t technology supposed to be an equalizer, giving the little guy a chance to play with the big players?

Pieroni: Right. And that’s an interesting point. We did a study [that showed] if you look at absolute IT spend as a percentage of premium dollars and you look at total shareholder returns, there was no correlation. If you tell me how much a carrier spends as a percentage of premium, not absolute, I can’t tell you about anything.

You just made an important point. Technology is wildly downwardly scalable. You can buy cloud computing capacity, whether it’s from Amazon or Microsoft or Google, where you can access world-class computing for pennies, right?…I think what has occurred, even though there’s been a democratization of technology by making it available, do you have the competency and capacity to use it?

Yes, you can access computing power of a scale that only the largest carriers could have been able to [previously]. Yes, you could now get access to data from a number of third-party sources. But that’s why I ended with saying do you have the organizational attributes?

We’re not lucky enough that technology is the sole answer. It’s the combination of process, organization and technology. And our study, where we looked at digitization, digital maturity, it wasn’t about the technology. Do you have alignment between your people, their skills, their competency, their culture, their shared values, their work norms and measures—in [a] sentence, the underlying business processes? [It] would seem that from this study there is a sweet spot of about $8 billion a year where you seem to be better. Because again, this is 4,000 carrier years’ worth of data; this isn’t five years. This is a 20-year study with the top 200 carriers worldwide representing 50 percent of the premium. Something’s interesting here. It’s not big. It’s not small. It has to do with talent and capability alignment.

ACORD’s study also found that E&S/specialty companies don’t fare well over the long term. Pieroni explains possible reasons why in a related article, “Why E&S Carriers Aren’t Winners Over the Long Term.”

In the second part of this two-part interview, Pieroni discusses carrier data strategies and the characteristics of data strategies that separate winners from losers among carriers and independent agents.

See related article, “How ‘Intelligent’ Insurers Manage to Both Grow and Create Value: ACORD Study,” for details of the study results.