Are you implementing ISO updates efficiently?

Property & Casualty insurers are eager to improve their speed-to-market, improve operational efficiency, lower operational costs, respond to market changes quickly, and rapidly launch new products into the market. Many P&C insurers rely on ISO advisory loss costs, rules, and forms to achieve these goals for ISO-based insurance programs. The ability to manage ISO easily is a key capability that insurers require today. Let’s explore how this problem has been solved.

ISO has been a leading source of information for P&C insurance risks. P&C insurers adopt ISO rates, rules and forms to stay on top of loss cost trends, new product forms, and regulatory changes. However, ISO issues a tremendous amount of circulars (more than 75 circulars a week!) updating regulatory and judicial changes, loss costs trends, etc. The content in the circulars is descriptive in nature, which cannot be consumed directly into a product. It involves a lot of work converting this content into actionable information. If insurers’ existing process for handling ISO circulars is manual then a significant amount of time and effort would be consumed implementing even a single circular.

Adopting ISO rating content manually

A typical manual process involves tracking and receiving a circular, performing analysis, creating specification to implement the circular including the company specific deviations, IT department subsequently analyzing, implementing and testing the changes, and finally product department verifying the changes before releasing the changes into production. Each phase of manual implementation is complex, expensive, labor intensive, and requires skilled professionals.

According to a Novarica Report, titled “ISO Support: A Comparison of Manual Processes and Electronic Practices”, the average work time needed to process an ISO circular is over 560 hours with bulk of the time spent on getting the ISO changes into the insurer’s system. The report also cites that handling of an ISO circular costs more than $45,000 when done manually, with complex circulars costing over $80,000 to process. Below are some of the numbers published in the report from the manual implementation perspective.

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

Challenges with the manual implementation of ISO rating content

Some of the challenges that insurers usually face with manual implementation are:

  • Track a huge number of circulars
  • Availability of insufficient time to implement circulars by their filing dates
  • Lengthy process to interpret, decide, file, code and implement circulars
  • Loss leakage due to lagging behind on form changes
  • Premium leakage due to out-of-date in rates
  • Require highly skilled workforce to manage
  • Non-compliance with regulatory guidelines 

Adopting ISO’s rating content electronically

ISO launched ISO Electronic Rating Content (ISO ERC) with the goal of helping P&C insurers overcome the challenges of manual implementation. The solution simplifies ongoing maintenance of ISO circulars by providing ISO interpreted complete and current rates, rules, and form attachment logic for all major ISO lines in electronic format. Insurers with a rating engine that supports ISO ERC can significantly cut down on the time and effort needed to analyze, interpret, and implement the circulars.

The above-referenced Novarica report also revealed that insurers are experiencing significant improvement in their operational efficiency leveraging ISO ERC. The numbers below are the proof of what insurers are achieving today by enabling ISO ERC. 

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

Do you have the right technology to fully leverage ISO ERC?

By loading ISO Electronic Rating Content into a modern standalone rating engine solution that feeds any Quote or Policy Management System, Insurers can automate their rate or rule making processes, reduce operational costs, accelerate product development and maintenance. The rating engine should have the ability to automatically import and implement ISO based rate plans with just a few clicks without needing to intervene programmatically. This will enable insurers to keep current with ISO’s most recent filings with almost no effort. Insurers can choose to develop an in-house rating engine or procure a commercial off-the-shelf rating engine solution with the ability to leverage ISO ERC. Here are the key features of a modern rating engine solution with support for ISO ERC:

  • Provides timely access to ISO updates without any dependency on the IT department
  • Automatically and fully absorbs ISO rating content
  • Ability to extend ISO definition and create proprietary rates and rules easily
  • Ability to apply company-specific deviations on ISO-based content to create unique products
  • Ability to leverage ISO ERC without any programming intervention
  • Ability to keep the proprietary innovations intact every time insurers adopt a change
  • Ability to keep track of the changes from one ISO release to another 

ISO recently launched a new enhancement to ISO ERC suit, the Automated Maintenance Feed. By utilizing this feature, insurers can easily identify changes to ISO rating data and rating logic. Automated Maintenance Feed provides an XML file that will allow insurers to easily import just the changes to rating data, ISO loss costs and rating algorithms into insurers’ rating system.


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.

Click below to view the on-demand webinar Insurers Can Now Update ISO Rating Content Digitally where Anand Rajaraman, Director, Product Management, ValueMomentum, showcased how easily insurers can implement ISO changes using iFoundry modern rating engine in a live demonstration.
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