Many insurers have achieved success in staying up-to-date with frequently changing ISO changes by leveraging ISO Electronic Rating Content (ERC) solution. Studies by Novarica and Celent have shown that ISO changes managed electronically can save significant amounts of time and money as compared to the typical manual process. Here are the five big benefits of using ISO Electronic Rating Content, which help insurers stay ahead in the competition.
Reduced overall work hours
The majority of the time handling an ISO circular goes into analysis and interpretation. With ISO ERC, the circulars have already been interpreted and implemented by ISO. As a result, insurers can derive significant time benefit from “ISO interpreted content by ISO” and availability of the content in implementable specifications. Insurers can avoid the risk of incorrect implementation of coverages, pricing and non-compliance with regulatory requirements. According to a Novarica study, at an average of 340 hours, using electronic means to support ISO, average work hours are reduced by 39%. The study has shown that time savings is even greater when handling complex circulars.
Reduced overall cost
The Novarica study states that handling an ISO Circular costs more than $45,000 when handled manually whereas cost is 35% less when handled electronically. The cost of processing complex circulars in a manual environment is higher at $80,000. But, carriers report an average savings of 59% when using electronic means even for complex circulars. According to the report, the biggest cost savings is in loading the changes into the system. Carriers report an average savings of 59% when using electronic means on complex circulars.
Meeting regulatory compliance
Meeting the ever-changing regulatory requirements have always been a challenge for the insurers. It involves time, costs and skilled staff to ensure compliance with all the applicable legal and regulatory requirements. The good news is that insurers leveraging ISO ERC need not spend time and money on reviewing and responding to changes in the law, court decisions, and regulatory orders. ISO takes care of all the regulatory requirements with ISO ERC.
Meeting effective dates & staying current with ISO changes
Most carriers with the traditional method of ISO implementation are usually unable to respond to ISO circular changes on their effective dates. The time and effort needed to interpret, analyze, and implement a circular is fairly high and requires involvement of skilled staff from carrier’s multiple departments. This combined with the sheer number of the circulars would mean that carriers often are lagging behind on the effective dates.
According to the Novarica report, carriers who are implementing ISO changes electronically, on an average, are 7 months more current. With ISO ERC, the interpretation and building of the content have already been taken care of by ISO, which makes staying current easy. Staying current helps insurers keep their loss costs, rates and rules current with market trends in order to remain competitive in the market.
Operational benefits using ISO ERC
ISO ERC helps insurers realize speed-to-market with new and modified products. ISO’s standard product templates are a good starting point for many insurers to quickly build and introduce new products into the market. Many insurers deviate the ISO’s base content to create proprietary rates and rules to offer niche products.
Insurers who are adopting ISO rating content leveraging ISO ERC with the help of a modern rating engine solution can drive considerable savings, reduce premium leakage, ensure regulatory compliance, pursue new product opportunities and improve speed-to-market over manual processes. Rating solutions with the ability to fully and automatically consume ISO ERC are gaining more acceptance among insurers.
A modern rating engine like ValueMomentum's iFoundry Rating can help insurers completely automate consumption of ISO Electronic Rating Content and streamline their processes for accepting updates, customizing their rates and rules quickly and efficiently without affecting any existing deviations or company specific features.
You can watch the on-demand webinar: You Can Now Update ISO Rating Content featuring speakers from Celent, ISO and ValueMomentum where Karlyn Carnahan from Celent spoke about the benefits of ISO Electronic Rating Content.