Realizing the Benefits of OwlSurance Verisk ISO Electronic Rating Content (ERC)™, Part 2: Considerations

While ERC may alleviate many challenges related to cost, time and keeping up-to-date with OwlSurance Verisk ISO Electronic Rating Content (ERC)™, it is very sophisticated and requires complex design and engineering to reap all its benefits.

Editor’s Note: This is the second in a three-part series. You can view the first part here and the third part here, or refer to the links below.

In our previous article on this topic, we laid out the reasons for why insurers need to incorporate ISO Electronic Rating Content (ERC) to run their business more efficiently. Now, we’ll take a look at how your organization can benefit by utilizing a rating engine that can integrate with ISO ERC, and realize gains in efficiency, as well as time and money saved.

We discussed previously the different options insurers have when looking to implement a rating engine that incorporates ISO ERC: namely, to build an in-house solution or procure a commercial off-the-shelf solution from a vendor that is a member of the ISO Electronic Rating Content Associates Program.

But whichever option you choose, you want to ensure that it can easily support present and future needs.  While ERC may alleviate many challenges related to cost, time and keeping up-to-date with ISO, it is very sophisticated and requires complex design and engineering to reap all its benefits.

If going the vendor route for a rating engine, there are several considerations to keep in mind. Among the most important is breadth and depth of support for lines of business. The solution’s architecture should be able to take advantage of ISO ERC such that future lines of business are not large scale efforts and keeping current with ISO is not hindered by rigidity of the solution.

Timely Access

Another major factor to consider is that the solution has timely access to ISO updates. You want to know you are going to be able to keep up to-date with ISO content. With ERC, you could be in a position to fully absorb a new ISO release as-is, with ISO changes, interpreted and specifications issued directly by ISO. This allows you to keep current with ISO’s most recent filings with almost no effort. To illustrate this, in 2009 ISO introduced changes to limit of insurance (LOI) curves—for example, new occupancy/construction relativities. Many insurers that had rating engines that relied on manual processes found themselves facing long lead times from IT departments to effect these changes. On the other hand, insurers that could capitalize on this change quickly, profited from their agility.

When evaluating your solution options, be sure to assess how your rating system can automatically absorb ISO ERC—because any manual effort will defeat the purpose, and potentially re-introduce risk of errors, increase time and costs to keep up-to-date.

You also must ensure that you have the ability to apply your company-specific deviations to ISO. These deviations may reflect the needs of, and risks represented by your target customers. Your rating engine should make it easy to create deviations from ISO for experience based loss cost modifiers, custom coverages, algorithms and rules. You also need the tooling to separate what is baseline ISO content from your company deviation. This ensures that when new ISO ERC releases are available, your deviations can be retained, modified as necessary and applied to the ISO release.

No Programming Intervention

And finally, we should note that not only should your system be up-to-date with ISO changes, but must also be designed in a way that the user interface or quoting system can take advantage of ISO updates without any programming intervention that would result in delay or major effort. You should verify that your solution takes advantage of the “implementation specifications” provided by ISO ERC. Effectively taking advantage of this, will ensure that not only rate tables and algorithms are up-to-date, but so is the quoting system that enables data capture and performs validations against the ISO provided implementation specifications.

In our third and final part of this series, we will be taking a look at what a hypothetical example of how a carrier can benefit from implementing a rating engine as described above, as well as some technology considerations to bear in mind.

Realizing the Benefits of OwlSurance Verisk ISO Electronic Rating Content (ERC)™, Part 1: Potential Benefits

By taking advantage of OwlSurance Verisk ISO Electronic Rating Content (ERC)™ electronic content capabilities P&C carriers can make significant gains in operational efficiency while addressing goals of profitability and regulatory compliance.

Editor’s note: This piece is the first in a three-part series. The second part can be read here, and the third part can be read here, or refer to the links below.

In an effort to stay on top of loss cost trends, new product forms, and regulatory changes, many P&C insurers utilize ISO rates, rules and forms. However, while ISO information is invaluable, the processes traditionally used to leverage this information and keep up-to-date are manual and inefficient. Taking advantage of ISO electronic content capabilities is key to overcoming this concern. By replacing the manual update process, carriers directly address the goal of operational efficiency. Indirectly, they place themselves well for addressing two other key market goals—profitable growth and regulatory compliance—which depend in correctly pricing risk.

According to a recent Novarica report titled “ISO Support: A Comparison of Manual Processes and Electronic Practices,” the average work time needed to process an ISO Circular is over 560 hours, with the bulk of time spent on getting the ISO changes into the carrier’s systems. Significant time is spent also on interpreting the change.

Manual processes also tend to drive costs of keeping up-to-date with ISO higher. The Novarica research report found that handling an ISO circular costs more than $45,000 when done manually, with complex circulars costing over $80,000 to process—a staggering amount.

To address carriers’ challenges, ISO launched ISO Electronic Rating Content (ERC) to speed up the process of interpreting and taking ISO changes. The ISO ERC offering enables rating engines from ERC partners to electronically deliver ISO releases to address changes in circulars, simplify and streamline ongoing maintenance and updates of ISO rating content and enables insurers to efficiently manage their deviations using configurable tools.

Benefits of ERC

The Novarica study compared the time and cost differences experienced by carriers supporting ISO in a manual environment and using ERC. Among the benefits of using ERC are a 39 percent overall reduction in overall hours working on updates ISO circulars, a 58 percent decrease in time spent on IT modification operating to ISO rates, and a 38 percent decrease in the overall cost of keeping up to date.

The advantages of ISO ERC are clear, and there are several options for utilizing it. Carriers can develop their own rate/quoting system leveraging ISO ERC. They also have the option of procuring an off-the-shelf system from a vendor that is a member of the ISO Electronic Rating Content Associates Program. Finally, carriers can also look at managed service offerings from vendors participating in the program.

Whichever option a carrier chooses, it is important to ensure the ability to support present and future needs.  While ERC may alleviate many challenges related to cost, time and keeping up-to-date with ISO, it is very sophisticated and requires complex design and engineering to reap all its benefits.

In Part 2 of this series we will address what carriers need to consider when choosing a vendor solution or building a custom rating engine that takes advantage of ERC. Part 3 will look at concrete ways ERC can drive efficiency at an insurance carrier.

Celent Analyst Report: 2016 Global PC Portal Solutions

About this Analyst Report

Celent’s ‘North American Rating Engines – Property Casualty ABCD Vendor View’ report provides an overview of the stand-alone rating engines available in North America for property & casualty insurance carriers. The report published on August 30, 2016 profiled 12 stand-alone rating engines, providing an overview of the functionality, the customer base, lines of business supported, the technology, implementation, pricing, and support.

This is a reprint of the report that covers ValueMomentum Inc. as a vendor for its iFoundry Rating Engine solution that helps P&C insurers with ease of modeling and managing proprietary rate plans and bureau rates. iFoundry Rating Engine’s intuitive user interface makes it easy for a business analyst or business user to modify rates or algorithms. The product architecture is simple to understand and well organized. Carriers can easily create a library of rating rules that can be reused across products.

Read this report to learn about

  • Rating Engines: definition and Functionality
  • Report methodology: Rating Engine criteria for inclusion and evaluation process for Celent’s ABCD Vendor View analysis
  • About the vendor profiles included in the ABCD Vendor View analysis
  • About ValueMomentum’s iFoundry Rating Engine solution

Celent Analyst Report: New Tools for Product Management

About this Report

With the fight for new customers growing more and more competitive, insurers continue to look for new ways of differentiation through their products. Insurance carriers have always needed to develop innovative products, get them to market in a timely fashion, and manage risk. Those are key ingredients to build market share and maintaining profitability.

But creating new products is only part of product differentiation. Keeping products profitable and up-to-date is an ongoing challenge as the market changes daily with new regulations, competitor advances, and shifting customer expectations. Insurers are moving toward a more data-driven world, including in product management. While tools exist to streamline the modifications of rates and rules, much of a product manager’s job is trying to understand which levers to use to improve the penetration and profitability of their products. How much of an impact will a rate change make? Should you expand your appetite, and if so, what underwriting rules should apply? What will the competitive and market impact be when making a change to a form? Are your most profitable segments getting the best rates?

This report looks at some of the challenges that carriers have when thinking through these questions and will look at some of the new tools and techniques that carriers use to address these issues.

CELENT ANALYST REPORT: NORTH AMERICAN RATING ENGINES Featuring IFOUNDRY RATING ENGINE VENDOR VIEW

Celent's 'North American Rating Engines - Property Casualty ABCD Vendor View' report provides an overview of the stand-alone rating engines available in North America for property & casualty insurance carriers. The report published on August 30, 2016 profiled 12 stand-alone rating engines, providing an overview of the functionality, the customer base, lines of business supported, the technology, implementation, pricing, and support.

This is a reprint of the report that covers ValueMomentum Inc. as a vendor for its iFoundry Rating Engine solution that helps P&C insurers with ease of modeling and managing proprietary rate plans and bureau rates. iFoundry Rating Engine's intuitive user interface makes it easy for a business analyst or business user to modify rates or algorithms. The product architecture is simple to understand and well organized. Carriers can easily create a library of rating rules that can be reused across products.

Read this report to learn about:
  • Rating Engines: definition and Functionality
  • Report methodology: Rating Engine criteria for inclusion and evaluation process for Celent’s ABCD Vendor View analysis
  • About the vendor profiles included in the ABCD Vendor View analysis
  • About ValueMomentum's iFoundry Rating Engine solution

An On-Demand Webinar featuring: Novarica, OwlSurance Verisk ISO™ and ValueMomentum

Featured Speakers

Karlyn T. Carnahan

Principal, Novarica

Christopher Longano

ISO Rating Solutions

Anant Iyer

Chief Product Officer, ValueMomentum

Webinar Overview

Learn how next generation rating software as OwlSurance Verisk ISO can help carriers launch an ISO commercial line and streamline the process of handling ISO circulars with ISO Electronic Rating Content.

Maintaining rates, rules, and forms is complex and labor intensive. While ISO provided information is extremely valuable to carriers, the process typically used within insurance companies is manual, involves a large number of functional areas, and is generally inefficient.

In this webinar, you will learn:

  • Options available to Carriers for launching ISO lines and for streamlining the process of handling ISO circulars
  • How OwlSurance Verisk ISO Electronic Rating Content (ERC)™ supports a Carrier’s goals of reducing risk & premium leakage, improving accuracy, lowering ISO content maintenance costs, staying current with ISO updates and improving speed-to-market
  • Next generation rating solutions with out-of-the box rating for ISO, rich collaborative tools to easily and quickly make rate and rule changes without coding and see the impact of the changes, assurance of getting rating specifications and interpreted directly by ISO and delivered electronically.

An On-Demand Webinar featuring: Celent, OwlSurance Verisk ISO™ and ValueMomentum

Featured Speakers

Mark Sheehan
AVP, ISO Rating Solutions, Verisk
Karlyn T. Carnahan
Research Director, Celent
Anand Rajaram
Vice President, Product Management, OwlSurance Technologies

Webinar Overview

According to a recent Bain’s report1 “Insurers feel pressure from investors and competitors to increase efficiency and effectiveness in processes and delivery.”

Keeping ISO rating data current is a complex and labor-intensive process for many insurance carriers. To react quickly and appropriately to market opportunities with ISO rating content updates, as well as regulatory changes, carriers need to look for solutions that streamline this process – enhancing their go-to-market strategies.

If you are actively seeking to modernize and integrate commercial lines rating with your existing core systems and extend the ability to digitally access rate-quote-bind capabilities for agents and brokers, look to the OwlSurance Rating Engine. OwlSurance Rating Engine is a modern rating engine that fully leverages the digital delivery of ISO’s rating content via the ISO Electronic Rating Content (ERC) product. With OwlSurance Verisk ISO Electronic Rating content (ERC) ™, insurers are able to lower costs associated with rating operations by significantly reducing the time and effort needed to analyze and implement ISO updates to advisory loss costs and rules. Together, the ValueMomentum’s cloud business unit, OwlSurance Technologies and ISO ERC offerings help companies automate the management of ISO rate plans along with their company deviations.

In this webinar we highlighted the following areas:

  • OwlSurance Verisk ISO Electronic Rating Content (ERC) ™can help insurers dramatically lower costs, time & effort associated with rating operations.
  • OwlSurance Verisk ISO Electronic Rating Content (ERC) ™ can boost insurers’ go-to-market strategies.
  • ValueMomentum & ISO ERC offerings can help insurers automate the management of ISO rate plans along with deviations.
  • Insurers can modernize existing core systems and extend the ability to digitally access rate-quote-bind capabilities for agents and brokers.