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.
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.
- 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.