Press Release - MARCH 10, 2020
Best’s Special Report: AM Best Innovation Criteria Assessment Results Show Room for Growth Among Majority of Rated Insurers
FOR IMMEDIATE RELEASE
OLDWICK - MARCH 10, 2020
On March 5, 2020, AM Best formally adopted its new criteria procedure, “Scoring and Assessing Innovation,” for use. This new criteria procedure, along with the update to Best’s Credit Rating Methodology, outlines how AM Best explicitly will consider an insurance company’s innovation efforts into its rating process. In concert with the release of the new criteria procedure, a new Best’s Special Report, “AM Best Incorporates Innovation into Its Rating Process,” reviews innovation scoring and benchmarking trends as it pertains to currently rated insurers.
As part of the new criteria, insurers are placed into an innovation assessment category: leader, prominent, significant, moderate or minimal. According to the report, half of AM Best’s rating units were scored as moderate, versus 23% for significant, 9% for prominent and 1% for leader based on initial results from the preliminary testing of AM Best’s Innovation Score. The remaining 17% were assessed as minimal. Companies assessed as being more innovative (i.e., leader and prominent) differentiate themselves by credibly quantifying the results of their innovation efforts. Leaders further distinguish themselves by pushing the innovation ceiling of the industry and responding to market pressures by offering new products to solve emerging needs. Those companies assessed as significant recognize the need to innovate, but may not have yet developed deep connections between their investments, resources and behaviors that are necessary to drive results and tangible outputs.
Innovation may not be a priority for insurers deemed as moderate companies, owing to limited resources. “Moderate companies are not necessarily behind the curve. For these companies, there may be early signs of innovation outputs, but a longer track record is needed to determine their commitment to innovation,” said Edin Imsirovic, associate director, AM Best Rating Services. The least innovative insurers, or those assessed at minimal, frequently operate in heavily regulated lines of business or have fewer competitive pressures, leaving little incentive to innovate, as well as face resource constraints.
Other highlights of the special report include:
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=295274 .
To view AM Best’s new criteria procedure, “Scoring and Assessing Innovation,” please visit http://www3.ambest.com/ambv/ratingmethodology/OpenPDF.aspx?rc=295114 .
For a video presentation on this Best’s Special Report with AM Best Rating Services Associate Director Edin Imsirovic, please visit http://www.ambest.com/v.asp?v=innovationcriteria320 .
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.