Instec Announces Support for ISO Commercial Auto Optional Class Plan
Staff Writer | February 27, 2017
Instec announce it will integrate the new ISO class plan for commercial auto into its flagship policy system two years ahead of the anticipated required effective date.
Commercial auto class plans currently used by much of the industry are based on actuarial methods that are over 40 years old. Much has changed in that time, and ISO’s new optional class plan accounts for new uses, types of vehicles, and exposures that have emerged over the past four decades.
The new ISO plan provides much more granularity in a variety of rating variables, including vehicle age, cost, commercial segment, and vehicle purpose. ISO has also added a pricing factor based on the NAICS (North American Industrial Classification System) designation, to reflect the variety of vehicle uses across different industries.
“There’s a difference between a 12-year-old truck and one that’s 24. There’s also a difference between insuring a company with five trucks and one with 200. And it’s those differences, along with the growing and diverse use of vehicles in business, that have informed ISO’s new optional class plan,” says Patrick Woods, vice president of actuarial products and operations at ISO insurance programs and analytic services.
Instec’s support of the new class plan will include all the new rating equations, and changes to statistical coding and input screens to accommodate the new variables ISO is adding. Since ISO is offering the new class plan as optional, Instec will maintain both the current and new plans in its system until the current plan has been permanently replaced.
“We typically release ISO updates to our users 90 to 120 days before the effective date. We’re offering this one much sooner because we want to give our clients’ actuarial and pricing teams as much time as possible to assess the impact on their products and their books of business,” says Kevin Mason, executive vice president at Instec.
Instec anticipates the changes will be available for evaluation in the summer of this year, and will be included in a new product release sometime in the fourth quarter.
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