AM Best’s Innovation Criteria for Insurers
For years, Sapiens has urged insurers to embrace digital transformation and innovation, so that carriers can provide a unique customer experience, streamline processes, possess the agility to effectively launch new products and quickly respond to an evolving market, and go fully digital.
Way back in 2015 (which seems like light years ago when talking about technology), Yaffa Cohen-Ifrah, chief marketing officer and head of corporate communications at Sapiens, wrote a blog post for Sapiens Spotlight outlining how insurers could bridge the innovation gap:
“Today’s insurers also face an ultra-competitive environment and can’t afford to wait. One of the best ways for them to reconcile the gap between their desire to innovate with their lack of ability to do so is to upgrade their core policy administration systems and technology. Legacy systems simply weren’t designed to cope with today’s fast-moving market or unique challenges, making it difficult for insurers to obtain the agility necessary to stay ahead of competitors.”
Yaffa’s words remain true today, and of course, Sapiens was far from the only voice advocating for innovation over the years. AM Best, a U.S.-based credit rating agency that focuses on the insurance industry, has now officially joined the movement. The company announced it will likely be scoring and assessing insurers’ innovation results.
“Within its business profile building block, AM Best explicitly will consider whether a company’s innovation efforts, or lack thereof, have had a demonstrable positive or negative impact on its long-term financial strength. AM Best expects that all rated companies eventually will be scored and assigned a published innovation assessment,” wrote the company in a press release.
Scoring and ranking innovation certainly won’t be easy.
“Innovation would be hard to measure as a separate metric accurately, given the subjectivity involved and the difficulty in determining if a carrier is actually making the right [technology] decisions,” Manoj Jethani, vice president at Moody’s Investors Service, told Claims Journal.
“What if the technology you’re investing in today to modernize the infrastructure, or improve distribution or operations, is the wrong technology? What if it is replaced by something better in a short period of time? You’d end up artificially inflating one company’s rating to the detriment of another company that did not invest in that technology.”
That’s certainly a valid point. One needs to adopt the long-view when considering innovation and technology. Partnering with a trusted and proven advisor can help. Here at Sapiens, we’ve helped hundreds of top companies around the globe innovate and transform. Our success has been predicated on knowing what will work and what won’t. We’re intimately familiar with the insurtech scene and we’ve partnered with leading innovators, to ensure that our customers have access to the most cutting-edge technology.
But innovation is about much more than just having the shiniest new toys. It’s about obtaining the exact technology that is right for your organization, knowing how and when to apply it for maximum effect, and having a firm grasp of where your customers, regulatory bodies and a market that seems to be constantly evolving, are headed. Sapiens calls this “the art of innovation” and although one can never perfect it, we work hard every day to equip our customers with the best tools and knowledge.
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Eric Danis Eric Danis is a senior content specialist at Sapiens who manages Sapiens Spotlight and writes original posts. When not creating and editing content, or thinking about the Boston Celtics, Eric enjoys spending time with his wife and three energetic children.