A new report from global ratings agency AM Best has highlighted how 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.
But, it appears that not all auto writers are at the same level, and carriers that are more innovative have a competitive advantage.
Best states that personal auto carries that are highly innovative capture greater market share, grow their business faster, and tend to have lower combined ratios than insurers that are not.
Moreover, within the U.S. property & casualty (P&C) industry, net premium growth (NPW) is highly correlated with higher innovation scores.
It is important to note that since 2018, the more innovative organisations have outperformed the industry, having achieved more than double the average NPW growth than the industry.
Helen Andersen, industry research analyst, AM Best, commented: “Personal auto as a line of business is well suited to innovation. Carriers deal with large homogenous risks, allowing initiatives to be scaled and replicated relatively easily.”
Best also highlights how 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 the agency’s personal auto insurers’ composite.
In 2023, 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.
A report released by AM Best in late 2023 highlighted how U.S. personal auto insurers faced another challenging period in the first half of 2023, as claims severity continued to rise.
