Innovation Update: Annual Benchmarking Results and Take-Aways
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Transcript of Innovation Update: Annual Benchmarking Results and Take-Aways
Innovation Update: Annual Benchmarking Results and Take-Aways
Edin Imsirovic – Associate Director, AM Best
Bridget Maehr – Associate Director, AM Best
Agenda
• Most innovative lines of business
‒ Reinsurance
‒ Health
‒ Auto
• After the first year, what is the data telling us?
‒ Key observations
• What does the future hold?
‒ Impact of COVID-19
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Distribution Centered on “Moderate”
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54
20
6
2
0
10
20
30
40
50
60
Minimal Moderate Significant Prominent Leader
(%)
Innovation Assessments
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Most Innovative Lines of Business – Reinsurance
• Innovative culture to address significant cat events and competitive pressure
• Structural changes driving innovation in the reinsurance segment:
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Third-party capital, insurance-linked
securities and sidecars
Data driven product design, risk selection
and pricing Vertical integration
Most Innovative Lines of Business – Health
• Health insurers embrace both new technologies as well as structural or process innovations
• Innovative solutions are sought after to manage both medical expenditures and administrative costs, as well as to improve quality and customer experience
‒ Integrated delivery models, value-based reimbursement models
‒ Advanced data analytics, predictive modeling
‒ Use of AI in customer service as well as medical cost management
‒ Wearable technologies for remote monitoring and data collection
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Most Innovative Lines of Business – Auto
• Emerging technological trends are having a big impact on less complex lines of business such as auto
• Auto insurers are increasingly employing a range of innovative solutions in areas such as:
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Telematics Process
automation
Usage-based
insurance
Output Score Lags Input Score
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11.6 10.78.8 7.7
6.1 5.74.0
10.08.9
7.06.0
4.8 4.8
4.0
21.6
19.6
15.8
13.7
10.9 10.5
8.0
0
5
10
15
20
25
Exceptional Superior Excellent Good Fair Marginal Weak
(%)
Output Score Input Score
Average Innovation Scores by Rating Category
It Starts with Leadership
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10 16 17 21
5659 54
57
2923
2519
5 2 5 3
0
10
20
30
40
50
60
70
80
90
100
Leadership Score Resources Score Culture Score Process & Structure
(%)
1 2 3 4
Innovation Input Component Score Distribution
Most Innovation Not Transformative … Yet
10
33
48
53
45
136
2 1
0
10
20
30
40
50
60
70
80
90
100
Results Level of Transformation
(%)
1 2 3 4
Innovation Output Scores
Higher Rated Companies Are More Innovative …
11
613
31
65 60
100
28
59
57
35 40
60
40
22
8
4021
5
45
2
0
10
20
30
40
50
60
70
80
90
100
Exceptional Superior Excellent Good Fair Marginal Weak
(%)
Leader Prominent Significant Moderate Minimal
Innovation Profile by Rating Category
… and Get More Results from the Effort
12
9
28
47
7280
100
20
47
58
49
2820
80
39
1245
2
0
10
20
30
40
50
60
70
80
90
100
Exceptional Superior Excellent Good Fair Marginal Weak
(%)
1 2 3 4
Output Results Score by Rating Category
A Clear Link with Business Profile
13
313
27
44
8
36
56
59
40
28
39
25
11 16
48
19
5
2
163
1 1
0
10
20
30
40
50
60
70
80
90
100
Very Favorable Favorable Neutral Limited Very Limited
(%)
Leader Prominent Significant Moderate Minimal
Innovation Profile by Business Profile Assessment
Innovation Is Not Just for Large Companies
1
14
51
48
27
22
19
6
2
2
4
47
46
64
63
59
70
55
47
28
1
4
9
11
18
21
28
37
43
1
3
3
3
13
20
2
1
1
1
1
2
4
0 10 20 30 40 50 60 70 80 90 100
II-IV (Less than $10 Million)
V ($10 Million to $25 Million)
VI ($25 Million to $50 Million)
VII ($50 Million to $100 Million)
VIII ($100 Million to $250 Million)
IX ($250 Million to $500 Million)
X-XI ($500 Million to $1 Billion)
XII-XIV ($1 Billion to $2 Billion)
XV ($2 Billion or greater)
(%)Minimal Moderate Significant Prominent Leader
Innovation Profile by Financial Size Category
It Is a Global Phenomenon
71
23
31
27
17
38
29
5
29
67
64
57
53
48
44
58
0
9
5
15
22
14
18
19
0
1
6
0
9
16
2
1
0 10 20 30 40 50 60 70 80 90 100
Sub-Saharan Africa
Caribbean
MENA
Asia
North America
Oceania
Latin America
Europe
(%)Minimal Moderate Significant Prominent Leader
Innovation Profile by Geographic Region
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Impact of COVID-19 on Innovation
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COVID-19 has accelerated digital transformation
initiatives for many insurers as digital experience is becoming the priority across all lines of
business.
Product innovation is becoming increasingly
important as consumers are seeking new types of products such as usage based insurance.
Future Drivers of Innovation
Evolving Use of Technology and Innovative Thinking Required to Address Need for
Contactless Interactions
• Remote workforce• Virtual sales • Automated underwriting• Virtual claims adjustment• Parametric coverages• Expansion of telehealth beyond
physician visits – vision, dental, diagnostics
Product Development to Meet Changing Coverage Needs
• Hybrid or combination products
• Usage based insurance
• Parametric coverages
• Virtual care focused health products
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