JERSEY CITY, N.J., May 15, 2006 — Small “commoditized” commercial risks are ripe for automation with sophisticated analytical tools that can scrutinize databases of industry loss data and other information to predict future underwriting losses.
Predictive modeling and scoring challenges and solutions were discussed during a recent ISO web seminar on ISO ScoreSM Small Business Underwriting. The seminar also explored the viability of underwriting small commercial risks with an automated scoring tool that can analyze and improve loss predictability.
Offering both underwriting and rating capabilities, the ISO Score analytical tool links insurer policy and loss data with external data, including crime, weather conditions and business — and location-specific information, to produce a score between 100 and 1000 to measure the quality of a given risk. The information allows insurers to better predict the likelihood of underwriting losses on small business risks.
“Underwriting small business risks can be a hit-or-miss proposition if insurers rely exclusively on financial information,” said Beth Fitzgerald, ISO assistant vice president for specialty commercial lines. “What if the barbershop or the pizza parlor doesn’t have any business financial record? Do you pass up on the risk when, if the underlying exposures were properly assessed, it could be a profitable opportunity?” Fitzgerald asked participants representing 55 insurer groups.
In illustrating how predictive modeling can enhance underwriting and responding to participants’ questions, Fitzgerald’s presentation revealed the following:
To review the ISO Score webinar archive online, please visit: www.verisk.com/iso.
ISO is a leading provider of products and services that help measure, manage and reduce risk. ISO provides data, analytics and decision-support solutions to professionals in many fields, including insurance, finance, real estate, health services, government and human resources. Clients use ISO’s databases and services to classify and evaluate a variety of risks and detect potential fraud. In the U.S. and around the world, ISO’s services help customers protect people, property and financial assets.