Take the KBW Nasdaq Insurance Index (KIX). Despite the strong operational performance of U.S. insurers, the index has failed to consistently outperform the broader financial-services benchmark, XLF, in most of the past five years. The disparity is obvious:
Insurance firms are adding worth.
However, investors are not really understanding it.
Why is this long-lasting economic model, in which premiums can be paid out well in advance of claims, still misinterpreted?
The answer lies not in performance, but in perception.
The Investor Challenge: “Too Complex, Too Risky”
Industry icons like Warren Buffett celebrate the beauty of insurance floats yet many equity investors keep their distance. Insurance is often labeled as:
Overly dependent on interest-rate environments
Structurally complicated, thanks to regulation and arcane accounting
Risk-heavy, especially with long-tail commitments like annuities or commercial claims that linger for decades
So instead of owning the full value story, many investors simply avoid the sector or take minimal positions.
Interestingly, companies with capital-light portfolios such as supplemental employee benefits or small commercial P&C tend to command more investor love:
Faster, healthy top-line growth
Strong underwriting margins
High ROE with limited legacy drag
The market rewards simplicity.
Insurance, by nature, is not simple.
Which means insurers must become better storytellers.
The Opportunity: Rewriting the Investor Narrative
Insurers do not need to inflate their share price with hype. Instead, they must clarify, educate, and translate turning complexity into conviction.
The most effective investor messaging:
Focuses on long-term value creation, not quarterly noise
Connects strategic decisions to true business drivers
Shows why now is the time to invest
Corrects misconceptions before they calcify
Shockingly, only 25% of the 25 largest North American insurers hosted an investor day in the past year. Half have skipped one entirely for three years. That means fewer opportunities to tell the full story and more room for misunderstanding.
Let’s change that.
Five Ways Insurers Can Strengthen Their Investor Appeal
1 Spell Out Why the Business Deserves Attention
Highlight what makes your company unattractive to ignore:
Sustainable revenue expansion
Margin improvement
Strong risk-adjusted returns > cost of equity
Durable competitive advantages
When investors see the machine behind the numbers, confidence rises.
2 Share Long-Term Targets (and Ditch the Short-Term Theatre)
Quarterly guidance often attracts the wrong crowd traders hungry for short-term wins.
Instead, insurers should:
Communicate multi-year expectations
Show how earnings and book value per share will grow
Explain key revenue and cost drivers simply
Future value is the story investors actually want.
3 Treat Transformational Moves as Messaging Moments
M&A, portfolio shifts, modernization efforts these are proof points, not footnotes.
Investors need to know if a carrier is changing to increase growth and improve ROE.
Why the change is important
When will the benefits start to manifest?
The improvement in risk
If not, the change breeds uncertainty rather than assurance.
4 Hold Annual Investor Days and Update Investor Materials
Communicate in their language if you want to attract new investors:
Reduced use of acronyms
More lucidity
Specific KPIs that are easy for generalists to understand
Investor days offer a platform for showcasing:
Digital momentum
Credibility of leadership
Operational commitment
Consistent attention is necessary for an engaging story.
5 Take care of your fears before they become problems.
Avoid allowing skepticism to grow.
Take charge of the story:
Hedging combined with a fresh product mix can help life insurers demonstrate less rate sensitivity.
By using sophisticated catastrophe modeling and pricing discipline, P&C carriers may demonstrate their resistance to climate risk.
Misconceptions are fostered by silence.
Openness fosters trust.
