A recent AM Best report says that the digital innovation momentum created by the COVID-19 pandemic continues with the use of technology in the evolving risk environment. 

The report, entitled Insurer Innovation Accelerated by COVID-19 Continues Post-Pandemic, says that reinsurance has been the leader in innovation. 

“The relatively straightforward composition of most reinsurance contracts lends itself readily to innovation, given that ceding companies manage much of the complex underwriting and claims functions,” write the experts. 

They write that reinsurers are using predictive modeling and artificial intelligence to develop new products to manage risk, such as using supplemental information in addition to the standardized catastrophe-peril model used. 

The report also says that certain insurance lines and trends lend themselves more readily to innovation, such as auto/home and health insurance.

These lines are furthest ahead in using innovation because of the homogeneity of the risks. For example, users can use automated systems to file claims. 

Advanced forms of visual computing are playing a greater role in property claims management, underwriting and catastrophe modeling, says the report. For instance, drones, planes and satellites improve response time in catastrophe claim cases. 

Health insurers are placing greater emphasis on shifting to more efficient care delivery through innovative plan and product design, for example by using benefit plans that provide significant incentive for members to engage in preventive care. 

Some low-risk products with limited competitive pressure and arm’s-length distance between insurer and consumer, such as credit life and accident and health insurance, have faced less drive to innovate. As a result, the report says, insurers that do find ways to innovate in these fields may reap performance rewards. 

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