Benchmarking Innovation: why is it important in 2021

Benchmarking Innovation the meaning and benefits:

In a recent tipping point analysis, a new addition to a credit card, AM Best found scores slightly lower than a year ago. According to him, the fall is due to the challenges of the pandemic. In calibrating innovation inputs (such as leadership, culture) and innovation outputs (results and levels of transformation) on the scoreboard, the rating agency reported that insurers have difficulty making innovation efforts and translating them into results.

The innovation criterion is a relatively new phenomenon. Innovation, as usual, refers to the ability to measure and the willingness to change, not the results of the business. It tends to emphasize input innovation factors (or capacity) above the product (new products or new services). Rather than focusing on beginners as a true shutdown mechanism, they look at possible structural consequences, such as high-capacity mobile telecommunications or high-performance corporate platforms.

In a context of rapid innovation, market participants need quantifiable structures to understand and measure innovation, which in turn leads to the assessment of factors such as:

• Orientation towards the renewal of corporate culture and mission

• Resource allocation for innovation

• Success in implementing your innovation scenario.

Using their own approaches, innovation indices quantify these drivers, providing market participants with the tools to navigate the dynamic landscape.

Innovation indices

The S&P Kensho Moonshots Index, one of these indexes, is made up of 50 listed companies, with the highest score on previous innovations and best positioned to provide the next generation of products and services. The score assesses a company’s commitment to disruptive technologies based on an assessment of the processing of words and phrases in natural language based on annual innovation results.

As with the S&P Dow Jones Indices, the market has consistently positioned the Moonshots Index annually on established innovators, indicating that there is an award for early-stage innovators. The main participation is a mix of SMEs with themes oriented to the future, distributed in 17 thematic sub-sectors. Despite focusing on relatively smaller assets, the Moonshots Index and established innovators showed similar levels of volatility, with a higher price due to greater risk.

The MSCI ACWI IMI Fintech Innovation Index is another index that includes stocks of large, medium, and small companies in 23 developed and 27 emerging markets. This represents the performance of a group of companies that are expected to earn significant revenues from the development of new products and services.

Best AM scores

Developing a culture of innovation is difficult for entrepreneurs, but COVID-19 has accelerated the pace of the industry and insurers need to adapt quickly. Despite the progress made in increasing their contribution to innovation, most achieve poor innovation results.

Operators are left behind to establish clear links between inputs and the results of innovation, especially during crises, as noise obscures quantitative evidence. However, large insurers have effectively used advanced processes and technologies to transform innovation initiatives into results comparable to those of leaders outside the industry. The best companies focused on investing in innovation and were better prepared for the challenges of the pandemic.

In the study, it was reported that some lines are more effective for changes in direction caused by innovation. Reinsurance, health, and automobiles were the most sustainable innovations. Since adoption affects complexity, the tools and techniques available are subject to less complex arrangements and management, such as auto and health insurance. Many serious events have forced the reinsurance industry to be innovative in order to remain relevant and profitable. Examples include revolutionary disaster modeling and the use of risk models for capital management.

AM Best found differences in the APAC markets. Although geographic and demographic factors determine innovation

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