U.S. personal auto insurers are the furthest ahead when it comes to innovative processes like automated claims management and the use of data to automate underwriting, according to a new AM Best report.

Not all auto writers are at the same level, and carriers that are more innovative have a competitive advantage and are reaping benefits, yet even some innovation leaders still struggle to transform their initiatives into underwriting profitability. These are among the key findings in a new Best’s Special Report titled, “Highly Innovative Personal Auto Carriers Have Significant Competitive Edge.”

AM Best has been scoring and assessing insurers’ innovation efforts since 2020, which reflects its important role in helping insurers keep pace with a changing market environment. “Personal auto as a line of business is well suited to innovation,” said Helen Andersen, industry research analyst, AM Best. “Carriers deal with large homogenous risks, allowing initiatives to be scaled and replicated relatively easily.”

According to the report, personal auto carriers that are deemed highly innovative capture greater market share, grow their business faster, and have lower combined ratios than insurers that are not. In the U.S. property/casualty industry, net premium growth (NPW) is highly correlated with higher innovation scores. Since

2018, the more innovative companies have outperformed the industry, having achieved more than double the average NPW growth than the industry. Accelerating changes in technology and in consumer tastes and preferences make innovation even more critical for greater returns.

Among insurers that primarily write personal auto business, carriers designated as an innovation “Leader”

have seen average NPW growth of 13.3% since 2018, compared with only 5.5% growth for AM Best’s personal auto insurers’ composite. AM Best downgraded the ratings of 18 U.S. personal auto carriers in 2023; among these, non-innovator categories (Minimal and Moderate) are overrepresented relative to the total population.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=342524.

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 www.ambest.com.

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