If there’s a pain point in our industry we’re hearing about most of often these days, it’s business user frustration around existing rigid processes when needing to devise product and rating strategies for addressing new opportunities or competitive threats.
What’s more, the urgency to respond faster is accelerating given the disruptions in our industry. Whether it’s shifts in the nature of risks, such as ride sharing and gig economy relationships, changes in risk exposures and assessments, including pay as you go and metered premiums, or evolutions in alternate capital sources, like peer-to-peer (P2) insurance, the importance of empowering business users, with flexibility and agility, only increases.
To meet such challenges, business users need the ability to quickly model new strategies and instantly gain insights from them in order to extract meaning from loss costs, rules and actuarial data produced internally or extracted from external ISO circulars.
But carriers aren’t just seeking solutions that promise to streamline and automate rating processes. Instead, insurers consistently tell us they want to adopt technologies in 2018 that address the following three specific goals:
Empower Business Users
Mobility and, more recently, the rise of digital assistants (also known as bots) have raised the interactivity bar as everyone now expects modern experiences that we can customize to our needs. As this relates to rating, it means business users have no appetite for the traditionally rigid and lengthy development processes for making basic modifications to enable modeling options. By the time the systems are reconfigured, opportunities have frequently changed or new ones are on the table.
Speed Product Digitization
Rapidly evolving business models and distribution channels are placing enormous pressure on insurers to accelerate their time to market. This, in turn, requires improving the digitization of rating inputs. However, the same development delays that constrain empowerment also restrict digitization.
A New Way Forward
Many carriers have come to rely on ISO circulars for rating inputs. However, with average of 75 complex circulars released per week, insurers tell us they’re frequently weeks behind. Meanwhile, their businesses continue selling related products that frequently put insurers at competitive and revenue disadvantages, once the updated ISO implications are known.
Fortunately, there is a proven way forward. It involves adopting a modern rating solution specifically designed to empower business users, infuse agility and speed product digitization, complimented by utilizing electronic bureau circulars, such as ISO Electronic Rating ContentTM (ISO ERC), which supplies digital feeds for advisory loss costs, rules and forms.
Combining a modern rating solution and ISO ERC not only jump-starts your product design and rating needs, but also provides you with exceptional visualization capabilities. In addition, the best rating solutions go beyond ingesting electronic bureau information to enable you to apply proprietary adjustments and ensure you can quickly run advanced simulations for uncovering competitive opportunities.
By using such combinations, we’ve already seen insurers gaining the benefits of faster, richer rating and product insights, coupled with the agility and speed to market that comes with the digital distribution of their products.
Although the ISO ERC choice is relatively simple, selecting the right rating solution is more involved. To help you decide which rating engine is the best fit for meeting your empowerment, agility and digitization goals, we’ve compiled a list of attributes you should expect from a leading solution.
- Quick to deploy. Expect an advanced rating solution to be purpose-built with ISO ERC integration for a fast deployment, out of the box, with minimal resources required from your IT department. Such solutions aim to get you up and running with ISO-based lines of business and updates in a matter of days or weeks, rather than a year or more. Because these solutions are so easily deployed, barriers to including them in IT deployment plans are reduced or eliminated.
- Fully automated. The best rating solutions fully ingest ISO ERC feeds in their entirety, with absolutely no human intervention. This includes ISO manuals and circular information, including advisory loss costs, rules and forms, as well as all the validations and edits inferred from the manuals and circulars. But that’s not all. ISO also supplies automated maintenance feeds and release notes. In other words, a leading solution should enable fully absorbing all types of ISO data and be ready for business users, right out of the box.
- Easily customized. While ingesting ISO updates automatically is great, you’re likely thinking the real differentiator for your company is the ability to apply proprietary information. That’s why leading rating solutions enable your business teams to do just that, including exceptions, rates, rules and forms, in any combination, to formulate whatever is considered your “secret sauce” for creating new products and coverages.
- Seamless API-enabled integration capabilities. From a systems integration perspective, innovative solutions leverage APIs and microservices to interact across any front, middle or back-end system. A modern, API-based architecture is critical for making information available across digital channels, whether already existing or the next big thing to come along. It ensures you can rapidly meet today’s user experience expectations – whether it’s your internal staff, members of your distribution network or your policyholders.
- Promotes collaboration across business lines. Rather than taking a legacy, siloed approach, state-of-the-art rating solutions enable you to develop products and coverages across business lines. This, in turn, helps you answer customer demands for new types of offerings, including – but not limited to – bundling traditionally-separate coverages, whether your firm is an entrepreneurial market disruptor or a well-established insurer seeking to remain competitive in a changing landscape.
- Provides robust, business-friendly toolsets. For your business users, and your firm’s bottom line, the biggest advantage of a robust, modern rating solution is the tools it provides. Your actuaries, product managers and compliance teams, among others, all want to experiment with how an ISO update, internal idea or competitor’s action impacts your business. Further, as everyone expects today’s analysis tools to provide visual representations of data, not just numeric results, insist on sophisticated “what-if” modeling abilities. Further, these toolsets should help business and systems analysts with rapidly adopting new ISO updates – whether via automatically ingesting all new data or individually selecting items appropriate for your firm.
- Can-do partnership approach. To get the most from any leading rating solution requires working with a vendor that takes a positive, partnership-based approach. Such suppliers have engineered flexibility into their platforms, enabling them to listen to your unique situation and deliver swiftly. Instead of a vendor who says “we’ll consider adding that feature to our development roadmap,” an innovative partner will always say “we understand your needs and will develop the capabilities you require near-term.”
Getting There From Here
Regardless of the solution you choose, what’s most important is successfully addressing your company’s goals around empowerment, agility and digitization to help you compete at today’s speed of business.
Watch Abhijeet Jhaveri, CMO ValueMomentum presenting recently in a webinar on the considerations that insurers need to bear in mind when adopting a rating system for faster rating and product insights, coupled with agility and speed to market.
Click below to watch the complete recording of the ISO ERC Webinar to learn about the real-world deployment of a modern rating engine in combination with ISO ERC at Ryder System led by Sue Tribby, Senior Director of Insurance Product Lines. In addition, you’ll gain a deeper understanding of ISO automation with an actionable-information presentation by Mark Sheehan, VP and Head of Rating Solutions at Verisk.