Innovative private motor vehicle insurers win the race – AM Best | Insurance business America
Big benefits for those who use automation in claims and underwriting
Engine & Fleet
By Kenneth Araullo
According to AM Best’s latest findings, U.S. personal auto insurers that lead in innovation, particularly in automated claims management and data-driven underwriting, are gaining significant competitive advantages in the market.
The report, titled “Highly Innovative Personal Auto Carriers Have Significant Competitive Edge,” highlights the differences in the level of innovation among insurers and how this impacts their market performance.
The credit agency, which has been assessing insurers’ innovation efforts since 2020, notes that innovation is critical to keeping pace with evolving market dynamics. Helen Andersen, industry analyst at AM Best, highlighted the natural fit of innovation in the private auto insurance space.
“The personal auto business is well-suited to innovation,” Andersen said. “Carriers face large, homogeneous risks, making initiatives relatively easy to scale and replicate.”
The results show that private motor insurers recognized as highly innovative not only achieve greater market share and business growth, but also have lower combined ratios than their less innovative counterparts.
Insurers classified as innovation leaders in particular have recorded average net premium growth (NPV) of 13.3% since 2018, significantly exceeding the 5.5% growth rate of the AM Best group of private auto insurers.
The connection between innovation and net premium growth has become clearer with rapid technological changes and changing consumer preferences. The report suggests that leveraging innovation is becoming increasingly important for insurers to achieve higher returns.
Despite the benefits of innovation, the report finds that some leading innovators still face challenges in converting their initiatives into underwriting profitability.
Additionally, AM Best downgraded the ratings of 18 U.S. private auto transport companies in 2023, with those classified in the non-innovator categories (“Minimal” and “Moderate”) being disproportionately represented among the downgrades, reflecting the highlights risks associated with a lag in innovation.
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2024-05-03 14:52:49
www.insurancebusinessmag.com
