ISO's Symbols for Individual Makes and Models of Cars
What's an ISO Symbol? How does it affect the automobile insurance premium for an individual car?
A Symbol is a code used in ISO's Vehicle Series Rating (VSR) program. The purpose of Vehicle Series Rating is to match premiums for each particular type of car to losses for that type of car.
For each vehicle within a vehicle series (defined by such characteristics as make, model, and body style), ISO assigns a Rating Symbol. ISO provides corresponding Symbol factors that insurers may use in determining premiums for individual policies. A vehicle with a higher Rating Symbol will have a higher premium than a vehicle with a lower Symbol if all other rating variables are the same.
ISO now offers two kinds of Symbols:
- Personal Auto Physical Damage Rating Symbols are codes that indicate the relative risk of loss for each private passenger vehicle for a given model year. Each Symbol has a corresponding Symbol relativity, or factor, that insurers can use to develop premiums for comprehensive and collision coverage.
- Liability and PIP/Medical Payments (LPMP) Symbols are codes that indicate the relative risk of loss for each private passenger vehicle series. Each Symbol has a corresponding Symbol relativity, or factor, that insurers can use to develop premiums for liability and PIP/medical payments coverage.
Like all ISO products and services, Symbols are advisory. Insurers may use them without modification, modify them, or choose not to use them.
How does ISO develop Rating Symbols?
For Personal Auto Physical Damage Rating Symbols, ISO starts by assigning a preliminary Symbol (price-new Symbol) based solely on the manufacturer's suggested retail price (MSRP) of the vehicle. Then, by examining actual loss experience for the vehicle series to which that vehicle belongs, ISO makes adjustments — either upward or downward — to modify the Symbol as necessary.
For Liability and PIP/Medical Payments (LPMP) Symbols, ISO assigns a Symbol based on two factors — the actual loss experience for the vehicle series and a predicted loss ratio relativity for the series.
First, ISO looks at the actual loss experience of a particular vehicle and assigns a loss ratio relativity to each vehicle series. Then, we supplement the loss ratio with a predicted relativity based on the results from a predictive model. The model uses a number of factors, such as curb weight and chassis type, to calculate the predicted relativity based on the physical characteristics of the vehicle series. Based on that analysis, ISO assigns each vehicle series two Symbols — one for Liability and another for PIP/Medical Payments.
After ISO assigns the preliminary LPMP Symbols, we examine actual loss experience for that vehicle series and make adjustments — both upward and downward — to revise the Symbols as necessary.
Why is it that two different vehicles with similar MSRPs can have different Personal Auto Physical Damage Rating Symbols? Why is it that two vehicles with different MSRPs have similar or identical Personal Auto Physical Damage Rating Symbols?
When developing the Symbol for a vehicle of a particular model and year, ISO starts with a Symbol based on the manufacturer's suggested retail price. We call that the price-new Symbol. We then adjust the price-new Symbol to reflect differences in the claim frequency and/or severity. There may be many possible causes for such differences. For example:
- Some vehicles are more attractive to thieves than others.
- Some vehicles are involved in more collisions than others.
- Some vehicles are more expensive to repair than others. (Since most collision claims result in repair rather than total replacement, repair cost may be a bigger factor in overall losses than the cost of the vehicle.)
Such differences can account for two vehicles with similar MSRPs having different Rating Symbols — or for two vehicles with different MSRPs having the same Rating Symbol.
By reflecting adjustments based on actual loss experience, ISO's Symbols promote equity.
How can I find out about the effect on premium of choosing a particular vehicle?
When considering the purchase of any new or used car, you can contact your insurer or agent to find out how the choice of vehicle will affect physical damage premium. Having that information may affect your purchase decision and help you avoid unpleasant surprises after the purchase.