Faster classification for small commercial underwriting

May 7, 2024 / 2 min read

Keeping pace in the fast-moving small commercial insurance market may start with the first customer contact when insurers determine eligibility for a quote. With no time to waste, knowing the precise nature of an applicant’s enterprise—quickly and reliably—has immediate potential to accelerate workflows. Insurers can kick-start automated underwriting while screening out business that doesn’t fit their risk appetite.

Many insurers rely on North American Industry Classification System (NAICS) codes, which can capture what a business does with surprising granularity. But the correct NAICS code isn’t always immediately clear, and discovering it through manual processes can be inefficient and introduce errors.

Public corporate records and even policy applications may contain incorrect or incomplete information that leads to misclassification and undermines the purpose of NAICS. Risks taken in error can lead to claims from unexpected hazards. And mispricing can drive away desirable business or lead to premium leakage. Still, getting the NAICS code right is fundamental to effective underwriting.

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Getting to the NAICS faster

Insurers can use manual workflows, home-built automation tools, and a patchwork of sources, but these approaches may be unnecessary. Verisk’s LightSpeed^® Small Commercial draws on curated proprietary, public, and third-party data sources to generate more accurate NAICS codes. A proprietary prioritization logic validates NAICS codes across all data sources to more credibly and accurately capture the primary operations of a given business. Verisk can even help to map Standard Industrial Classification (SIC) codes to and from NAICS codes.

Verisk continually upgrades its classification capabilities; recent improvements significantly raised the percentage of classifications that precisely capture the insured’s main business operations. In 2024, Verisk plans to boost transparency and credibility with confidence scores and sourcing information for the top three NAICS codes returned on a risk.

Learn more about increasing the power and reliability of NAICS codes—and read about real-world examples of NAICS in action—when you download the latest Verisk white paper, A Firm Footing for Small Commercial Underwriting