Opportunities for profitable growth increasingly come down to who has better data and is better positioned to make good use of it. For an insurer, “good use” may mean benchmarking its own performance, deciding to enter or exit a market, or evaluating new opportunities.
ISO Market Landscape™ and ISO DataCube™ are two products that can help carriers do these things and more. Including the homeowners, commercial auto, general liability, businessowners, and commercial property lines of business, they can provide insurers with critical insights into their competitive positions and opportunities.
Emily Graetzer, director of data products for ISO, recently met with Fritz Yohn, Verisk's chief economist, to discuss the value these tools provide.
Tell us about the business needs these two products help address for insurers.
It’s a common practice among insurers to measure their underwriting success based on the past performance of their own book of business. Carriers that do this can tell if they’re doing better, worse, or staying about the same as they’ve done before. But what about relative to their competitors? How do they know what growth opportunities they’ve been missing?
It’s kind of like driving a car with your eyes glued to the rearview mirror.
ISO Market Landscape is an interactive dashboard that lets insurers benchmark their results against ISO’s property/casualty database—one of the largest in the world. Companies that report statistical data to ISO can compare their information to the aggregated data for all reporting companies.
The product’s power lies in its ability to visually highlight opportunities for improvement. Insurers can look at loss ratios nationally or on a state or substate level. They can generate scatterplots to show which classes of business have the best combination of volume and profitability.
In other words, ISO Market Landscape lets insurers easily see how their risk portfolio compares with those of their peers and look for areas where they might want to increase or reduce their presence.
ISO DataCube lets users get deeper into the nitty-gritty. They can drill down into premium and loss experience data and explore a combination of elements in ISO’s database. It’s a powerful analytical tool that can support critical functions, from ratemaking and underwriting to strategic planning and product development.
You get the macro and micro views?
Together, these two products let insurers zoom in and out and compare their own data to the rest of the industry—as well as evaluate lines or states where they currently don’t write business. Having a better view of information that’s been aggregated in a consistent format can help them make better decisions based on their risk appetite and other considerations.
Can you give us an example of how the two tools work together?
A carrier looking to expand into the special trade contractor business, for example, might identify carpentry as a profitable class group by using ISO Market Landscape, then drill down further into subclasses that offer profitable loss ratios.
ISO DataCube provides the granularity and flexibility to compare opportunities across subclasses at the ZIP code and specific peril levels with the addition of other metrics, such as severity and frequency.
Having said that, there are diverse use cases for both tools. ISO DataCube can be used to help with pricing, support in rate filings, or to reinforce credibility. It can be used whenever a robust data set would benefit a carrier versus leveraging only internal data or third-party sources that don’t offer the same granularity.
What’s new on the horizon?
We’re always looking to make enhancements to the products, whether it’s to include more classes of business or add additional fields. For example, in 2017 we added ZIP code to the Businessowners DataCube, and we went live in 2018 with cause-of-loss detail in the Commercial Property DataCube. ISO Market Landscape is being enhanced to include the severity and frequency metrics that currently exist in ISO DataCube.
These additional metrics can help decision makers see the full picture when evaluating various markets and geographies. A user can evaluate profitability and assess the likelihood of an event and the average cost of the claim.
Emily Graetzer, CPCU, is director of data product solutions at ISO. She can be reached at Emily.Graetzer@verisk.com.