insurers can now update iso rating content digitally - a webinar presentation by celent, iso and...

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INSURERS CAN NOW UPDATE ISO RATING CONTENT DIGITALLYThu, Nov 3, 2016 at 2-3 PM

EST

Mark D. SheehanAVP, ISO Rating Solutions

Verisk

Karlyn T. CarnahanResearch Director

Celent

Anand RajaramanDirector, Product

ManagementValueMomentum

© CELENT

Karlyn Carnahan, CPCUResearch Director, [email protected]

NOVEMBER 3, 2016

INSURERS CAN NOW UPDATE ISO RATING CONTENT DIGITALLY

mailto:[email protected]

3© CELENT

• Global business and IT strategy research

• Ongoing advisory services• Vertically-oriented consulting• Staffed by industry experts – 15 FTEs

devoted to insurance • A division of Oliver Wyman – global

financial services consultancy with 1,400 consultants, offices in 40 countries

About Celent

“It's now common practice to use social media for investigating suspect claims,” says Craig Beattie, Celent Senior Analyst. “One possibility would be to use the information to create a social networking score. This could help insurers gauge risk, just as they use credit scores.”

If you get 70%, 80%, 90% of all the cars on the road being driverless, the need for insurance goes way down because the number of accidents go way down. Premiums could fall 80%-90%. [resulting in] substantial savings for the consumer.” Donald Light, Research Director, Celent

“Collaboration is a megatrend, a disruptive technology that is beginning to color everything that an insurance company does, whether on claims process, estimation, loss control and other areas.” Karlyn Carnahan, Research Director, Celent

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Growth

Efficiency

Diversification

Innovation

Cost reduction

Regulatory

Competitive Parity

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Significant Moderate

What is Driving IT Plans And Budgets In 2016?

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Growth Options

Product/UW Distribution

AcquisitionBranding

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Importance of Strategic Options to Carriers

Service Channels Product Differentiation Underwriting Low Costs2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

3.6

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What Is The Most Important Factor to Agents When It Comes To Choosing Where To Place Business?

Instant issue

Fast delivery of policy documents

Online application submission

Quick quote

UW Relationships

Fast underwriting decision

Competitive Price

Competitive Products

Claims Service

Responsiveness of Underwriting

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%

Importance of Core Process Capabilities

Must-Have

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Product Development/Management Trends

• Typical Practice– Standard products based on ISO– Internal data combined with industry loss costs– IT Coding required

• Newer– Expanded product set for rapidly changing new exposures– Products targeted for specific industries or users– Expanded product types

- Services embedded in the product – e.g. home monitoring- Parametric products – payment when events occur, rather than losses- Behavioral based rating and assessment– e.g. telematics

– Electronic ISO support– More complex rating schemes e.g. multi-variate rating algorithms, by-peril rating

Tiered Rating

Base Rate

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New exposures

3D PRINTING

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Expanded product types

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• Receive• Log and track• Review• Distribute

Receive and track

circulars

• Interpret• Size• Scope• Timing• Legal Impact• Rate impact

Analyze changes • Make form

changes• Make rate

changes• Handle filings

Finalize changes

• Business requirements

• System specs

• Test cases• Code• Test

Update System

Most Carriers Rely on ISO

12© CELENT

• Tracking tsunami of circulars• Insufficient lead time to react by filing date• Lengthy process to interpret, decide, file, code, and implement• Lead time needed for customers in some states• Premium leakage if out of date on rates• Loss leakage when behind on form changes re: emerging trends• Many people and departments are involved in managing ISO• Changes may need to go into multiple systems• Changes may impact multiple LOBs• Regulatory impact for doing this wrong

But Maintaining Rates, Rules and Forms is Complex and Labor Intensive

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• Electronic rating content• Provides electronic feeds for rates, rules,

forms attachment logic

Newest Option

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Importance of ISO Enablement Today and in the Future

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• Quickly roll out new products• Quickly roll out product changes• Higher productivity by automating manual processes• Reduced time to bring up new programs• Regulatory compliance• Lower cost of implementation

Benefits

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• Products will continue to change – frequently• Speed to market is critical • Flexibility is required for competitive differentiation• The ability to manage ISO easily is a key capability that carriers require.• ERC is a new option that carriers are increasingly interested in

Conclusions

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Webinar Poll Question & Result

© 2016 Insurance Services Office, Inc. All rights reserved. Confidential and Proprietary.

ISO ERC SuiteImplement ISO Circular UpdatesEfficientlyNovember 3, 2016Mark SheehanHead of ISO Rating Solutions


ISO Updates Announced via Circulars

Source: Novarica Research Partners Program Report, ISO Support: A Comparison of Manual and Electronic Practices


ISO Updates Published via ISO CLM


A Typical Manual Process for Implementing ISO Updates



Manual Process – Time and Staff


1 123

567

2

4

3

ISO circular info received, tracked, and disseminated

Product area analysis of ISO circular begins

Product area changes submitted

Systems analysis begins

Business logic built with product area input

Company deviations built and tested

Product area tests new logic to ensure correct interpretation

ISO circular received; ERC downloaded and integrated

Changes moved to production 8 Changes moved to

production

*Sample

With ISO ERC Suite, it’s 1-2-3


By using ISO content in electronic format, insurers have realized on average:


ISO ERC Suite – Time and Cost Savings


Suite

ISO ERC Suite vs. Commercial Lines Manual

© 2016 Insurance Services Office, Inc. All rights reserved. Confidential and Proprietary. 26

ISO Commercial Lines• Businessowners • Commercial Auto• Commercial Inland Marine (filed/non-filed)• General Liability• Commercial Umbrella• Commercial Property• Crime and Fidelity• Commercial Package Policy

Workers Compensation• Bureau States• Non-monopolistic (independent bureau) states

Lines of Insurance Supported


BOF Rule# NameRUL Primary Rule Liability Coverage Commercial Auto Vehicle Liability Coverage.PremiumTAB DBTablesUsed Commercial Auto Vehicle Liability CoverageBBB Total Premium Commercial Auto Vehicle Liability CoverageCOM Type Operator ValuePCH PremiumIFB CW1Condition IFIFM CW1 (IFM CW1 Vehicle TypeIFM CW1 Is Equal To "Truck"IFE CW1 )IFB CW1Condition IFIFM CW1 (IFM CW1 Trailer How UsedIFM CW1 Is Equal To "Not Applicable"IFM CW1 Or Trailer How UsedIFM CW1 Is Equal To "Used In Dumping Operations"IFE CW1 )CVS Assignment PremiumCVM CW1 =CVM CW1 ( Base PremiumCVM CW1 * Premium ILFDeductibleCVM CW1 * Liability Combined Rating FactorCVM CW1 * Fleet FactorCVM CW1 * Accident Prevention Discount FactorCVM CW1 * Hired Auto Factor

Premium Calculation Example


• Need to know the ISO Loss Costs for a specific Ratebook Release?

• Create a custom file with your company’s exceptions for development.

• Create a file for use with your company’s modeling tools.• Create a file for your actuaries as an analysis tool.

Rates & Valid Values Electronically…


Webinar Poll Question & Result

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ValueMomentum

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Agenda Company Overview Demonstration Discussion

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CORPORATE FACTS• Software & Services Firm • Insurance & Financial Services• Established in 2000 with HQ in NJ, USA• 100+ dedicated R&D team

iFoundry Rating Engine Customers

Worldwide

Customers leveraging ISO ERC in iFoundry

Rating EngineInsurance Carriers

Served in North America

Global employee strength with 20%

growth in 2015

Compound Annual Growth Rate since

2000

23% 3Industry Analysts

covering ValueMomentum

software & services

>50 1250+ 18 6

Corporate Factsheet

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iFoundry Rating - Highlights

Visual administration and monitoring

Rating Engine

PAS AgentPortal

ISO ERC (coverages, definitions, rates and rules)Out of the box rate

plans

Visual Design Workbench

Rating Deployment & Execution Engine

Integration

Ongoing Tracking

Rating Plan DesignInteractive Testing

Book Impact Analysis (What-If)

Collaborative Design, Development & approval

Track model dependencies, change history, versions

Rapid and Accurate Transaction Processing

Visual administration and monitoring of Plans, Plan Portfolios

Rating API, web-servicesRating Services Rate

Indications

On-premise Cloud

Available

BOP Auto Property GL Inland Marine Crime All TerritoriesWorkers Comp.

3434

ISO LOB CWISO LOB CW

WHAT THIS MEANS FOR CARRIERS?

FamiliarityActuaries and Underwriters know multi-state and state exceptions. Reviewing rates and rules in our system will feel like reviewing State Insurance ManualsReusabilityCommon rate and rule definitions are created only do not need to be cloned when creating state specific exceptions. This promotes reusability and creates efficiencies within carrier organization

ExtensibilityAdvance reuse capabilities enable quick and easy implementation of ISO, niche and company specific features all in one system without losing track of what’s ISO and what’s specific to a company

Change ControlEach Rate Plan in iFoundry is versioned and price of a policy is determined based on rates and rules that correspond to the effective date of the policyInsightful DecisionsOur software can help carriers make educated decisions regarding their future based on historical information

ISO LOB CW

ISO LOB CWISO LOB CWISO LOB AZ Exceptions

BASE ISO RATE PLAN

ISO LOB CWISO LOB CWISO LOB CA Exceptions

ISO LOB CWISO LOB CWISO LOB WY Exceptions

…………

Typical Rate Plan Structure

CARRIER RATE PLAN

ISO LOB CWISO LOB CWCompany LOB AZ

Exceptions…… ISO LOB CWISO LOB CWCompany

LOB CA Exceptions

ISO LOB CWISO LOB CWCompany LOB WY

Exceptions

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Demo

Design Workbench – Rates, Rules, Forms

Walkthrough on ERC Content in iFoundry

Carrier Innovation & Extension Capabilities

Change Management of Rates & Rules

THANK YOU!Email: [email protected]

ASIA PACIFICPlot No 36 & 37,

Gachibowli,Financial District, Nanakramguda,

Hyderabad – 500032, India

US HEADQUARTERS220 Old New Brunswick Rd,Suite 100,Piscataway 08854

T: 908-755-0048

THANK YOU!Email: [email protected]

ASIA PACIFICPlot No 36 & 37,

Gachibowli,Financial District, Nanakramguda,

Hyderabad – 500032, India

US HEADQUARTERS220 Old New Brunswick

Rd,Suite 100,Piscataway

08854T: 908-755-0048

