Press Release - SEPTEMBER 25, 2018

Best’s Special Report: Newer Technologies Finding Differing Levels of Acceptance in Insurance Industry, A.M. Best Survey Finds


CONTACTS:
 Edin Imsirovic
Senior Financial Analyst
+1 908 439 2200, ext. 5740
edin.imsirovic@ambest.com

Sridhar Manyem
Director, Industry Research
and Analytics
+1 908 439 2200, ext. 5612 sridhar.manyem@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - SEPTEMBER 25, 2018
The use of artificial intelligence, big data, Internet of Things, cloud computing and blockchain technology all have the potential to reshape the industry’s value chain, but are experiencing differing levels of acceptance in the insurance industry. According to an A.M. Best survey of its rated entities on innovation, a majority of insurers are aware that technology is not one of their core competencies and are willing to make investments and form partnerships to get up to speed.

The survey results are part of an extensive Best’s Special Report on innovation, titled “Insurers Agree Innovation Is Critical for Future Success,” which incorporated responses from more than 450 insurers. Nearly nine out of 10 survey respondents said that innovation was moderately to extremely critical to their organization’s success.

The use of machine learning and artificial intelligence techniques in predictive modeling for better risk selection, pricing, and claims are being incorporated at different rates across the property/casualty, life and health segments. When it comes to actual implementation, 61% have invested or are planning to invest in cloud computing, which was a major factor in the increased growth and importance of big data and continues to gain momentum ever since Amazon introduced its Amazon Web Services in 2006, while 13% have made or are planning to make investments in blockchain.

“Insurance companies recognize that their expertise lies not in technology, but in insurance,” said Edin Imsirovic, A.M. Best senior financial analyst. “However, they also realize the power of technology to transform the insurance industry on a large scale, and have thus partnered with or invested in insurtech companies that are more attuned to the development and monetization of new ideas.”

Survey responses regarding new technologies include the following:


  • Insurers appear to be optimistic about the prospects of big data and machine learning/artificial intelligence, with 41% of respondents saying big data would have a significant impact over the next three years, followed by artificial intelligence/machine learning at 30%.

  • Blockchain ranked last among the technologies insurance companies thought would have a significant impact over the next three years, at 8%, reflecting a lack of maturity compared with the other newer technologies and concerns over security and performance.

  • Survey respondents expressed cautious optimism toward the Internet of Things, or IoT. More than one-quarter of all respondents thought it would have a significant impact over the next three years. However, health insurers are ahead of their peers in other sectors as they recognize the utility of preventive care and monitoring through telehealth devices and other innovative products and processes.

Other report sections focus on overall survey results on companies’ innovation efforts and plans; how respondents from each of the primary industry sector, as well as emerging markets, view innovation; how innovation may impact insurance regulation; and answers to frequently asked questions regarding A.M. Best’s innovation initiative. As a next step, A.M. Best will be developing a new criteria procedure focused on evaluating innovation and also will be reviewing where a more explicit assessment of innovation fits into Best’s Credit Rating Methodology.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=278448 .

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry.