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Verisk Incorporates By-Peril Ratings into Rating, Underwriting Process

Staff Writer | November 14, 2014

Verisk Insurance Solutions - Underwriting announces the availability of property-specific by-peril rating data from the ISO Risk Analyzer Homeowners predictive model in its 360Value replacement cost estimator. Insurers using 360Value can get the ISO Risk Analyzer building characteristics data as part of the replacement cost estimation process, making it easier to add by-peril rating sophistication to their rating and underwriting with minimal impact on their workflow.

The module, released in 2013, provides risk relativities for 20 building characteristics in relation to nine perils that can threaten properties. Insurers can differentiate rates for two houses on the same block with the same replacement value based on how the risk changes by building characteristic in relation to hail, fire, wind, theft, and five other perils or all perils combined.

"This is an exciting enhancement because it's much easier for insurers to make rating decisions at a highly granular level," says Steve Lekas, vice president, property product management for Verisk Insurance Solutions - Underwriting. "360Value is a superior user interface for the building characteristics module because many of the data requirements are the same for both."

Insurers need property-specific building characteristics to estimate the replacement cost of a property. Seventeen of the 20 building characteristics in ISO Risk Analyzer also have fields in 360Value. Using those property-specific characteristics and predictive modeling on a by-peril level, ISO Risk Analyzer in 360Value delivers comprehensive views of how to rate a house.

"For example, different roof materials and ages will have varying effects on hail, wind, or liability claims," says Douglas Wing, assistant vice president, analytic products, ISO. "ISO Risk Analyzer in 360Value captures the interaction between those characteristics and each of the nine modeled perils. Capturing and quantifying the differences can help give insurers pricing confidence and competitive advantages."

In addition to enhancing rating information, insurers can use the output from ISO Risk Analyzer in 360Value to support underwriting decisions and even assist marketing campaigns targeting better risks with highly competitive offers.

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