Best’s News & Research Service - April 04, 2023 08:27 AM (EDT)
Best’s Special Report: Insurers Continue to Innovate, Albeit to Varying Degrees
- April 04, 2023 08:27 AM (EDT)
Oldwick //BestWire// - Companies placing high importance on data quality to improve efficiency and profitability as well as leadership teams understanding the critical role of system and IT infrastructure upgrades are key examples of innovation efforts moving the insurance industry forward, according to a new AM Best special report.
The new Best’s Special Report, titled “Insurers Continue to Innovate, to Varying Degrees,” marks the third year since AM Best released its Scoring and Assessing Innovation criteria and reviews the relevant progress made by its rated insurers in this regard. Immediately after the criteria’s release, the world was transformed by the COVID-19 pandemic, which altered the way people live and work, and spurred immense changes and innovation throughout the insurance industry. Although our innovation capability assessments again skewed towards the lower range as of year-end 2022, some companies have demonstrably improved since their initial assessments in March 2021.
Challenges due to the pandemic continued in 2021, and persistently low investment yields and stagnant growth contributed to industry pressures in 2022. Technological change continues to alter consumer behavior, transforming the insurance landscape across product lines.
“These trends have created challenges and opportunities for insurers, accelerating the need for innovation and rewarding the most innovative insurers,” said Jason Hopper, associate director, industry research and analytics, AM Best. “In response to the evolving risk environment, insurers accelerated their shift to digital technology and intensified their focus on product innovation and policy language modifications.”
The report gauges the effectiveness of a rated insurers’ respective innovation efforts by scoring its performance with respect to leadership, culture, resources, and processes and structure. It also notes that leadership is key with more actions being guided by clearer vision, such as more companies creating chief innovation officer positions and more frequent discussions at board meetings. For many companies, developing an innovative culture has been an ongoing challenge, but a persistent leadership focus and employees transitioning through this environment first-hand have bolstered the innovative cultural shift.
To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=330247 .
For an overview discussion of this report with AM Best Associate Director Jason Hopper, please go to http://www.ambest.com/v.asp?v=ambinnovation323&AltSrc=182 .
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.