The Top 5 Critical Changes ISO Made in 2017

By Michael Wayne

Throughout 2017, the Insurance Services Office (ISO) announced several changes. Considering that ISO collects some 2 billion records annually and has a database of nearly 20 billion records associated with risk management and insurance, its decisions are well informed. Here, in no specific order, are what can be considered ISO’s Top 5 Critical Changes of last year.

Enhanced Commercial Inland Marine Programs Announced for Builders Risk, Installation, and Contractors Equipment

In 2016, builders risk, installation, and contractors equipment generated written premiums of $6.4 billion—more than 40% of the U.S. commercial inland marine market. With the construction industry expected to grow during the latter half of 2017 and beyond, ISO took the step in July of greatly enhancing these three classes to address the risks and evolving needs of both contractors and property owners.

Besides a wide array of construction equipment, new coverages focused on site preparation costs, contractual penalties, and testing. Additionally, enhancements centered on:

• Amendments to coverage forms
• Replacement cost valuation
• Underwriting considerations
• Premium calculation worksheets
• Possible loss costs
• Loss control recommendations

Commercial Flood Insurance Program Launched

During the height of the 2017 Atlantic hurricane season in August, ISO established a program to allow insurers to set insurance limits and offer optional coverage for risks the National Flood Insurance Program (NFIP) typically doesn’t cover. This commercial flood insurance program’s coverage includes particular types of property damage to basements, building code change cost compliance, and business interruption.

The program’s scheduled sunset was September 30 of last year and featured actuarial sound loss costs that were based on internally developed models. Coverage could be based on actual cash value or replacement cost value. Essentially, insurers were able to use the program to offer a primary flood policy to provide coverage that exceeded what NFIP offered. ISO introduced a similar program for the personal property market in December 2017.

Predictive Analytic Tool for Commercial Vehicles Launched

Knowing that commercial auto losses outpace premiums annually, ISO created a tool to allow insurers to maintain profitability. Launched in September of last year, the ISO Risk Analyzer Commercial Auto Symbols gives insurers more than 100 unique rating groups, with the aim of providing carriers greater knowledge regarding exposures.

Delving deeper than make, model, and year, ISO’s new solution analyzes industry loss data and infuses other factors. These specific characteristics include engine type, axles, and vehicle cabins. In an era where commercial auto insurers have faced the struggles of experienced truck driver shortages, ever-rising repair bills, and increasing medical costs, the ISO Risk Analyzer Commercial Auto Symbols should prove to be a vital addition to the ISO Risk Analyzer suite of predictive analytics.

Alliance With IDP, Inc., to Expand Announced ISO Preferred Data Partnership Program

In announcing its partnership with IDP, Inc., last June, ISO also announced a new initiative: the ISO Preferred Data Partnership Program. The program allows ISO to receive native transactional data on premiums and losses directly from insurers. Collaborating with IDP, ISO can transform the data into information that is usable for U.S. regulators on the behalf of those insurers.

A major headache reliever for insurers, this new program will simplify the arduous process of staying abreast of reporting changes that states and data collection organizations require. Collaboratively, ISO and IDP can help carriers improve operations and institute best practices to redeploy resources through data management and optimizing reports.

Market Landscape Launched

Seeking to allow all insurance professionals the means to see and benchmark their organizations’ results with one of the world’s largest property and casualty insurance databases, ISO launched the ISO Market Landscape in April 2017. The Market Landscape identifies particular segments and areas that have growth potential. Armed with this knowledge, insurers can spot areas where they may be underperforming or experiencing the ill effects of adverse selection.

At launch, ISO Market Landscape was ready for the following lines of business:

• Businessowners
• Commercial auto
• Commercial property
• General liability
• Homeowners

Using the Market Landscape, insurance professionals can optimize their portfolios by identifying actionable insights. Possessing this knowledge, they can then figure out how to improve profitability and growth.