Seeking to help insurance carriers adopt new rates more quickly and eliminate redundant work in interpreting periodic updates, ISO has launched ISO Rating Service, an automated P&C insurance rating system and rate management solution based on technology from ISO's AscendantOne subsidiary.
Announcing the offering's launch at the ISO Tech 2004 conference in New Orleans, Scott Stephenson, executive vice president, ISO, described ISO Rating Service's four-component configuration, which includes a rating calculator tied to rate books preloaded with ISO-validated content; automated updates to that content, provided on a frequent basis; a toolset for customizing rating algorithms to individual carriers' needs; and a comparative reporting tool that analyzes the effects of different combinations of ISO programs and company-specific variations to enable carriers to determine which ISO revisions to adopt and which to deviate from.
ISO Rating Service is intended to support the P&C industry in two ways, according to Stephenson. "First, [it] will facilitate the timely adoption of program changes, thereby speeding up the adjustment of rating calculations and avoiding the substantial premium leakage that occurs in the industry today," he said. As an example, Stephenson asserted that a company writing $500 million of business annually that needs to adopt one change for every line of business, with each change implying a 4 percent upward revision in rates, would lose about $1 million in premium leakage for every three-month delay in implementation.
The second way the service would support the industry is through the elimination of redundant activity carried out by insurers attempting to interpret ISO circulars for the purpose of setting new rating guidelines, Stephenson asserted. "The Rating Service will provide to every carrier the interpretation of the ISO circulars presented in algorithmic form so that there is no longer the need for individual carriers to dedicate resources to this task," he explained.
Stephenson claimed that component-based architecture from ISO's AscendantOne subsidiary made the Rating Service available as a stand-alone solution that is capable of being integrated into any environment. "Insurers can either use ISO Rating Service as part of AscendantOne's suite of products, through a package of solutions through one of our 'Preferred Partners,' or as a service coming directly from ISO," he said. Stephenson identified those Preferred partners as Camilion Solutions (Markham, Ontario), a provider of insurance products management solutions; ePolicy Solutions (Torrance, Calif.), a Web-based policy administration solution provider for commercial and specialty lines; Sapiens (Research Triangle, N.C.), a solutions vendor for standard and specialty lines; SunGard Sherwood Systems (Armonk, N.Y.), a provider of integrated software and processing solutions; Tata Consultancy Services (Mumbai); and BPO solutions and services vendor Xchanging (Secaucus, N.J.).
Stephenson stressed that carriers did not need to discontinue using their existing policy administration system in order to be able to use the Rating Service. "All they need to do is provide a stream of data to the Rating Service in the required XML format and be prepared to receive back an XML stream with the results of the rating calculations," he said.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio