Deploying ISO rates - what are my options?

I've been speaking with insurers across the United States who are gearing up to launch new products, and one topic that often comes up is how to effectively incorporate Verisk's ISO offerings into their pricing strategies.

When an insurer decides to develop a new product using ISO rates, they're accessing extensive industry data and expertise. Verisk provides detailed loss costs and rating factors covering a wide range of risk characteristics, offering a solid foundation for accurate pricing. The challenge is integrating this information into pricing models and operational systems.

Traditionally, insurers have had to manually enter ISO rates into their systems—a process that is time-consuming and prone to errors. Verisk's "Rating-as-a-Service" solution offers an alternative. This cloud-based platform provides real-time access to the latest rates and rules, integrating via APIs with existing systems. This reduces manual effort and speeds up time to market.

However, relying solely on Verisk's system has pros and cons. On the positive side, insurers get up-to-date information and a reduced manual workload, ensuring compliance and efficiency. But there are limitations in flexibility. Using a standardized system may restrict the ability to customize models to fit unique business needs, and there's a dependency on a single provider, which could pose risks if their platform has issues or changes in pricing. Also, ongoing subscription fees might be higher over the long term compared to investing in proprietary systems.

Alternatively, platforms like Swallow offer more flexibility. Swallow provides a pricing platform that allows insurers to incorporate ISO data while building and deploying their own proprietary models. This is appealing for teams eager to innovate beyond standard models. With Swallow, insurers can integrate data from various sources, experiment with advanced analytics, and iterate quickly, all whilst recording changes for compliance.

This presents a choice. Do insurers opt for the convenience of Verisk's ready-made service, or do they embrace the innovation potential that platforms like Swallow offer? There isn't a one-size-fits-all answer—it depends on an organization's capabilities, resources, and goals.

What's clear is that the industry is increasingly embracing data science and advanced analytics in product development. By adopting platforms that support modern modeling techniques and foster collaboration between actuaries and data scientists, insurers can create more responsive and competitive products. Whether choosing Verisk's service, Swallow, or a mix of both, the key is to use tools that enhance the ability to assess risk accurately and efficiently.

Integrating these new technologies and platforms will be essential for staying ahead in the insurance sector. There's a wealth of opportunities for those ready to embrace these advancements.

Sources:

• Verisk Analytics (2023). Discover How Cloud-Based Rating Can Deliver Speed and Value.
• Swallow Pricing Platform (2023). Modernizing Insurance Pricing Models.
• Insurance Journal (2023). "The Future of Insurance Technology and APIs".