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S&P Says Global Insurance Is Becoming More Sophisticated

By Staff Writer

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NU Online News Service, October 28-Greater sophistication in the global insurance industry could lead to smoother, more consistent profitability, according to Standard & Poor’s Corp. Heightened sophistication is related to a greater willingness to take non-underwriting risks into account as well as to use more advanced modeling systems, the rating agency says.

However, the rating agency notes that failure to change could result in a downward trend in insurer financial strength ratings. Additional steps such as more sophisticated pricing also needs to be implemented, according to S&P. There is a movement away from the concept that a financial strength rating above an ‘A-’ is good, and below, bad, S&P says. Rather, the rating schedule can be used as a sliding scale to reflect the level of security that is being bought, it continues.