Predictive Analytics Helps Insurers Classify, Segment, and Price Personal Auto Risks
JERSEY CITY, N.J., July 20, 2010 — Twenty states have acknowledged or approved ISO’s optional personal auto rating plan rule filing that incorporates the environmental module of ISO Risk Analyzer® Personal Auto. These states are:
Insurance companies can now file to use the optional rating rule in those states. Acceptance of ISO’s filing will make it easier for insurers to incorporate output from the environmental module into their own filings. Or insurers can use the output of the environmental module in situations where filing is not necessary.
Developed with advanced predictive modeling techniques, ISO Risk Analyzer Personal Auto is a segmentation solution that helps insurers classify and price personal auto risks.
By predicting expected losses for personal auto risks at the policy level by major coverage, the environmental module of ISO Risk Analyzer Personal Auto helps insurers evaluate personal auto risks with better accuracy. The tool can support more productive marketing and underwriting, helping to boost competitive differentiation.
The environmental module analyzes the interactive effects of hundreds of variables and provides output for the following components:
“Using predictive analytics and statistical modeling along with actuarial expertise, ISO examined indicators in areas where people live and drive that affect personal auto losses,” said Marty Ellingsworth, president of ISO Innovative Analytics. “This effort led to the creation of the powerful environmental module of ISO Risk Analyzer Personal Auto.”
The environmental module is one of several ISO Risk Analyzer Personal Auto modules that insurers can use to fulfill their analytic objectives.
ISO Risk Analyzer Personal Auto is part of the ISO Risk Analyzer suite of predictive modeling tools. Leveraging the data and predictive modeling expertise of ISO and data from external
sources, ISO Risk Analyzer Personal Auto provides insurers the flexibility to assess and refine
auto policies with one set of analytic tools. The suite also includes ISO Risk Analyzer Homeowners for evaluating personal property risks and ISO Risk Analyzer Commercial Auto for analyzing two major classes of commercial auto risks: local/intermediate trucks, tractors, and trailers (TTT) and private passenger types (PPT).
“ISO has paved the way for individual companies to make their filings using the output of the environmental module of ISO Risk Analyzer Personal Auto,” said Kevin B. Thompson, senior vice president, ISO. “We are working with insurance departments in an effort to pursue implementations in additional states. No other model encompasses the amount and type of industry data and the interactive effects of as many external indicators.”
“By using ISO Risk Analyzer, insurers of all sizes can find new ways to improve their segmentation and positioning in the marketplace,” added Thompson.
About ISO Innovative Analytics (IIA)
IIA, an ISO division, is devoted to developing innovative analytic decision-support tools based on predictive modeling. Drawing on ISO’s vast resources and expertise in actuarial science, data management and integration, statistical modeling, and information technology, IIA delivers leading-edge analytic tools that reflect ISO’s broad experience and deep understanding of risk. Currently, the ISO Risk Analyzer® product suite includes Personal Auto, Homeowners, Commercial Auto, and ISO PreScreen™ Personal Auto. IIA is also working on several other initiatives, including additional modules for its personal auto model. For more information, visit www.verisk.com/iso.
Since 1971, ISO has been a leading source of information about property/casualty insurance risk. For a broad spectrum of commercial and personal lines of insurance, the company provides statistical, actuarial, underwriting, and claims information; policy language; information about specific locations; fraud-identification tools; and technical services. ISO serves insurers, reinsurers, agents and brokers, insurance regulators, risk managers, and other participants in the property/casualty insurance marketplace. ISO is a subsidiary of Verisk Analytics. For more information, visit www.verisk.com/iso and www.verisk.com.