NYCM Eases Estimation Process

Since the 1980s, New York Central Mutual's (NYCM; Edmeston, N.Y.) replacement cost estimation process for residential property was an in-house questionnaire populated with replacement cost data from an outside cost-estimating supplier. The carrier's independent agents completed the questionnaire based on conversations with homeowners and mailed it to the company's underwriters for approval. In the 1990s, to improve the process, NYCM developed its own software (for agents who requested it) to complement the system. The solution worked, but it was time-consuming, costly and paper-intensive.

When its current supplier introduced a Windows-based product that required NYCM to house its data on the vendor's system, NYCM decided to seek other options. "Our cost for purchasing their product would increase 350 percent," says Kathy Bell, vice president, NYCM. "Furthermore, we were told the new system was going to increase coverages by 16 percent, and to us, that meant the old system was inaccurate," she adds. "We needed to find a cost-estimating system that was accurate, easy-to-use and easy-to-maintain." Bell declines to name the previous supplier.

Focus On Collaboration

In 2002, Bell searched for a vendor to provide a solution that would enable NYCM's 1,000 New York State-based independent agents and 32 underwriters to collaborate in accurately determining property replacement values. She was close to selecting another product when ISO (Jersey City, N.J.) asked her to review its ISO HomeValue product. "I was hesitant because the company told me the data was coming from public information. Knowing homes weren't assessed for years, I wondered how this information could be accurate." Once Bell examined the product, however, she discovered that public record content was updated whenever permits were obtained to modify the property in question.

Before Bell and NYCM senior executives purchased ISO HomeValue, all of NYCM's underwriters reviewed the product. A sample of agents also tested the solution, and along with the underwriters, they responded favorably.

NYCM signed a contract with ISO in November 2003 and went live with the solution on Jan. 1, 2004. ISO HomeValue has since become a one-stop shop for all of NYCM's replacement value needs, as it provides values for all the property types that the carrier insures. The cost for ISO HomeValue was only 2 percent of the company's IT budget, according to Bell, who says she especially liked the product's detached structures information, which provides NYCM with information on barns and garages.

ISO HomeValue is powered by a database of detailed information for more than 50 million residential properties in the U.S. It incorporates proprietary advanced component technology (ACT) from ISO's subsidiary AIR (Boston). ACT determines the replacement cost of a property based on location, size, age, construction materials, exterior and interior finishes, and other variables. Agents access the system through NYCM's Web site; underwriters enter the system through the company's intranet.

According to Bell, underwriters and agents can now view the same cost estimator simultaneously and can collaborate on a property's final valuation. There is also a faster turnaround: As soon as an agent completes a home value, it's accessible to the underwriter, she continues.

Because ISO HomeValue is a Web-based application, NYCM's underwriters and agents did not require formal training. Since all replacement cost data are now found in one place, employees no longer waste time searching for CDs, charts, e-mails or faxes, adds Bell, who credits ISO HomeValue's ease of use and accurate replacement cost estimates for the implementation's success and contends that the solution has created a more streamlined workflow and greater efficiency.

Currently, NYCM's data is temporarily housed outside the company. The carrier expects to bring all its data in-house by January 2005, however, to be placed on its IBM servers.

CASE STUDY CLOSEUP

COMPANY NAME:

New York Central Mutual; Edmeston, N.Y.; $760 million in total assets.

LINES OF BUSINESS:

Personal lines, residential property.

VENDOR/TECHNOLOGY:

ISO (Jersey City, N.J.) HomeValue replacement cost-valuation solution with AIR Worldwide Corp. (Boston) technology.

THE CHALLENGE:

Implement an accurate, user-friendly cost-estimating system.