Like many MGAs, coverholders and program administrators, your firm likely stays competitive by constantly scanning the horizon for new niche segments and capitalizes on them to become markets of choice for your producer partners. Naturally, to profitably design, package and launch products targeted at these niches, it’s imperative to correctly price policies for developing favorable loss ratios and to control operational expenses.Frequently, firms like yours leverage ISO, and other bureaus, for rates, rules and forms to stay current with the loss cost trends, new product forms and regulatory changes required for pricing policies. However, the traditional processes for implementing and maintaining such content have been manual, tedious and time-consuming.
In an era where customers, agents and employees are demanding digital products, processes and engagement, such traditional manual processes have numerous pitfalls. For one, this involves a manual process associated with accessing, interpreting, assessing the impact and implementing each ISO circular. Implementation itself involves making changes to administration systems, rating systems and also the systems of engagement with such products – used by agents, customers and employees.
As with any technology, you can either develop a rating system yourself or purchase a purpose-build solution from a technology vendor. But how to decide? This article examines the key considerations for evaluating rating solutions to ensure your firm makes the best choice.
Breadth, Depth and Agility
Whether developed in-house or by a vendor, your solution should provide the breadth and depth of capabilities you need today plus the agility to adapt to new needs as your lines of business, territories and other factors change. This includes the option to mix and match ISO, NCCI and content from other bureaus, along with proprietary products and rate plans, to create the appropriate packages for your target segments.
A good way to measure adaptability is by asking for estimates of how long adding new business lines or territories will take. Longer time estimates typically indicate less flexible solutions and can even signal architectural insufficiencies.
Timely & Complete Update Ingestion
Timely access to electronic updates is another attribute to consider, as the whole point of ingesting bureau updates electronically is to stay current more efficiently and cost-effectively than doing so manually.
In addition, it’s vital to have the capability to fully absorb new content releases as-is. This includes changes, interpretations and specifications.
Remember, any manual effort not only defeats the purpose of electronic updates, but also potentially re-introduces risk associated with human error, which, in turn, drives up costs.
Intuitive Business User Controls
Not only should your solution permit timely updates, but it should also do so with minimal intervention by software developers. A solution with a flexible, modern architecture and business-friendly management tools enables product managers to make configuration changes on the fly.
For example, a few years ago ISO introduced changes to the limit of insurance (LOI) curves. Rating solutions that required IT developers to align with the changes forced their firms to resort to slow, costly manual processes until developers could catch up. However, flexible solutions provided the agility adapt to ISO’s changes immediately, conferring competitive benefits.
Modern solutions also include self-service capabilities for adjusting bureau content within the quoting system as well. This ensures the appropriate data capture and validations against supplied bureau content.
Impact Visibility & Analysis
By nature, bureaus produce a deluge of information to reflect the myriad changes in the market. This means your rating solution must go beyond simply automating of bureau content ingestion to include business workflows for assessing new bureau content and correctly applying changes to your business.
At minimum, your solution should include the visibility to determine the following:
- What has changed from one release to another?
- What is the impact of the change on our business strategy and book of business?
- What is the impact on our proprietary rating and quoting variations?
In short, a robust rating solution can help you efficiently identify, analyze and manage changes and, in the case of your propriety needs, determine whether the changes are relevant to your product line.
Support for Proprietary Needs
It’s common for specialty firms like yours to apply proprietary variations to bureau-supplied content to reflect the needs of your target customers and accurately manage the associated risks with insuring them.
Broadly speaking, your rating solution must include tools that permit business users at your firm, or the companies you represent, to easily adjust bureau content to address proprietary needs such as loss cost modifiers, custom coverages, algorithms and rules.
Management tools must provide granular visibility into the differences between baseline bureau content and your proprietary variations. Further, they must permit easily retaining, modifying and applying your proprietary variations to each new bureau release.
Online Rating & Quoting Capabilities
Finally, it’s not enough for your rating solution to automate and streamline processes for applying electronic bureau updates. For your CSRs, underwriters and others to effectively leverage updated content, your solution must support the ability to enable your quoting system to reflect the changes as well.
Just as tools for modifying the impacts of bureau content should be available at a business user level – rather than requiring software development resources – so too should bureau content flow smoothly and instantly into your quoting systems. The same holds true for any resulting changes to your proprietary variations. Further, accessing bureau content and proprietary variations should be device-agnostic, as this empowers users regardless which desktop or mobile device they prefer.
A Comprehensive Solution for Success
No matter what rating solution you use, as a specialty insurer the key is staying focused on your core business competencies. That’s why it’s critical to evaluate and choose a modern rating solution for automating and streamlining bureau content updates. Giving your business users a robust and flexible solution, with intuitive management tools, is key to having the agility your firm needs to stay ahead of the rest.
Click below to view the on-demand ISO ERC Webinar to learn about the real-world deployment of a modern rating engine in combination with ISO ERC at Ryder System by Sue Tribby, Senior Director of Insurance Product Lines. You’ll also gain a deeper understanding of ISO automation with an actionable-information presentation by Mark Sheehan, VP and Head of Rating Solutions at Verisk.