In August 2018, AM Best surveyed its universe of rated entities to gauge where the insurance industry stands as a whole with regard to innovation. Although we received a wide range of responses to questions on the challenges, opportunities and need for innovation, the answer to one question was largely consistent and abundantly clear: Innovation is critical to the overall success of an organization.
Executive Summary
The pace of innovation is accelerating, and given its implications on insurers' future credit quality and financial strength, AM Best is adding criteria to its rating methodology to score and assess the innovation initiatives of every rated entity. Here, AM Best's Maura McGuigan and Kevin Varvaro discuss what executives need to know about the new innovation criteria, due to be implemented in 2020.With the pace of innovation accelerating, and given its implications on insurers’ future credit quality and financial strength, AM Best is adding criteria to its rating methodology to score and assess the innovation initiatives of every rated entity. The second comment period for the new draft criteria procedure and the corresponding changes to existing methodology concluded at the end of October. AM Best expects to implement the criteria in 2020.
Market participants are asking: What should insurance executives know about AM Best’s innovation criteria, and how will it affect their company’s rating?
