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Best’s Special Report: Insurer Innovation Accelerated by COVID-19 Continues Post-Pandemic

As the pace of innovation accelerates within the insurance industry, the top performers in more complex lines of business may be those that overcome the innate challenges of their segment to develop new products, processes, services, and business models, according to a new AM Best special report.

A new Best’s Special Report, titled “Insurer Innovation Accelerated by COVID-19 Continues Post-Pandemic,” takes a closer look at the insurance industry’s innovation efforts, with this installment evaluating innovation efforts by business segment. It also marks the third year since AM Best released its Scoring and Assessing Innovation criteria.

While COVID-19 propelled changes in the way live and work since 2020, subsequent technological changes have continued to alter consumer behavior and transformed the insurance landscape. These trends have created challenges and opportunities for insurers, accelerating the need for innovation and rewarding the most innovative insurers. The report notes that certain lines lend themselves more readily to innovative strategies than others.

“In response to the evolving risk environment, insurers accelerated their shift to digital technology and intensified their focus on product innovation,” said Jason Hopper, associate director, industry research and analytics, AM Best. “Certain lines lend themselves more readily to innovative strategies than others. Complexity influences innovation adoption. Because the auto/home and health insurance lines deal with large homogeneous risks, initiatives can be scaled and replicated relatively easily.”

The special report notes that applying innovative strategies can be difficult for some lines of business, such as non-standard auto. For others, such as credit life and accident & health, the arm’s-length distance between the insurer and the consumer, limited competitive pressures, and low-risk products have moderated the drive to innovate.

Other key findings in the report include:

  • Reinsurers are using the knowledge they gain from predictive modeling and artificial intelligence to develop new products that will help clients manage risk;
  • Advanced forms of visual computing are playing a greater role in property claims management, underwriting, and catastrophe modeling;
  • More homogenous lines of business such as personal auto are the furthest ahead in automated claims management.

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. In terms of leadership, reinsurers again recorded the largest presence in this category.

“Reinsurers are one or more steps removed from the ultimate policyholder and therefore have had to innovate in areas of enterprise risk management, portfolio construction, and risk accumulation,” said Edin Imsirovic, director, AM Best. “This has become evident recently with the series of significant natural catastrophic storm activity which has been exacerbated by secondary perils and heightened inflation.”

To access the full copy of this commentary, please visit .

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. For more information, visit

Copyright © 2023 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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