Press Release - SEPTEMBER 24, 2018
Best’s Special Report: Insurers Across the Globe Recognize Innovation Critical for Future Success, A.M. Best Survey Finds
FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 24, 2018
A.M. Best believes innovation is needed as the insurance industry rapidly changes and new risks emerge that require up-to-date service processes and coverages emerge. Nearly nine out of 10 respondents from more than 450 insurance companies globally said that innovation was moderately to extremely critical to their organization’s success. Key reasons for innovating varied, but most companies said they wanted to better address customers’ needs (22%); to gain a competitive advantage (21%); or to realize operational efficiencies (16%). At the same time, more than half of the respondents’ companies have allocated between 1% and 5% of their budgets toward innovation, while 17% of insurers have allocated more than 5%.
“As the pace of innovation picks up, insurers who do not innovate successfully may have to contend with adverse risk selection,” said James Gillard, managing director, credit rating criteria, research and analytics. “Other challenges owing to significantly higher expense ratios compared with companies’ more innovative competitors, or lower growth because more innovative peers may have access to lower-risk customers, are distinct possibilities as well.”
Companies also were surveyed on the challenges innovation can help them overcome, as well as the technologies in which they expect to invest. Other sections in the Best’s Special Report examine key trends that are expected to impact the major industry sectors in the near to midterm, and identifies implications for the industry and for future operational and policy initiatives:
Other report sections focus on the impact of innovation on regulation, as well as 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.