Best’s Special Report: Property/Casualty and Life/Health Insurers Agree on Need to Innovate, Differ on Focus Areas, A.M. Best Survey Finds

While more than half of property/casualty (P/C) and life/health insurance companies surveyed on innovation view it as extremely or very critical to their organizations future success, respondents to an A.M. Best survey also believe these segments need to make greater strides in this area.

Life products require a more active salesmanship and longer durations, leaving the segment less driven to make abrupt shifts in product offerings. P/C writers have used technology to make inroads into distribution and claims handling, but face new challenges in adapting to risks and opportunities posed by cyber and driverless transportation. Biometric data in the health segment can be strategically useful, but also must adhere to strict privacy rules, which can complicate data sharing.

These survey results are part of an extensive Bests Special Report on innovation, titled Insurers Agree Innovation Is Critical for Future Success, which incorporated responses and feedback from more than 450 insurers. Nearly nine out of 10 survey respondents said that innovation was moderately to extremely critical to their organizations success.

For P/C insurers, overcoming inefficient technology systems and processes are a top priority. Companies are still trying to move past the issues associated with outdated legacy systems are looking toward innovation to help provide strategic responses for emerging risks such as cyber, increasingly devastating natural catastrophes and shifting customer demographics. Almost one quarter of P/C respondents believe that addressing customer needs is the primary reason that innovation is important to their organization, slightly more than gaining a competitive advantage (20%) and realizing operational efficiencies (19%).

Many life/annuity writers are striving to penetrate the underserved and often elusive middle market and millennials. Millennials in particular are a major challenge, as the younger generation often does not see the long-term value in life insurance products in the face of increasing student debt and other priorities. Direct-to-consumer distribution is a growing trend in achieving penetration of these markets, but requires significant investments and could conflict with existing distribution channels.


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Although survey responses on how well the health segment has adopted and implemented innovation vary, nearly three-quarters of respondents believe the industry has done the job at least somewhat well. However, adopting innovation can be challenging, as the medical community and providers tend to be more conservative when it comes to embracing change, particularly with regard to reimbursement models and moving away from the traditional fee for service.

Other report sections focus on the impact of innovation on regulation, as well as answers to frequently asked questions regarding A.M. Bests 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 Bests Credit Rating Methodology.

To access the full copy of this special report, please visit

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit for more information.

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