Properly classifying risks is an essential component of general liability underwriting. Assigning risks to their correct classification helps ensure you’re charging adequate premiums and that you understand the nature of the risk you’re adding to your books. The more granular and responsive your classification system is to the risk environment, the better your underwriting can be.
To help insurers more accurately classify today’s general liability risks, the ISO General Liability classification system is undergoing significant enhancements.
New technologies, industries, and of course, the COVID-19 pandemic, have contributed to a rapidly evolving emerging risk landscape. Given this, it’s imperative to modernize these all-important classifications to reflect shifts in business liability risks.
Best in class
To help insurers more accurately classify today’s general liability risks, the ISO General Liability classification system is undergoing significant enhancements, including:
- 58 entirely new classifications
- 249 classes discontinued
- Premium base changes to 17 classes to help improve policy rating
- 214 class revisions with potential rating impact
- Splitting 20 existing classes into 40 for added granularity
- Streamlining 136 classes into 61
Some of the new or updated classifications can help insurers more accurately underwrite risks in emerging technologies, while others address new business trends, including several that have been accelerated by the pandemic.
Here are just a few highlights:
The evolution of retail: While the on-demand economy was growing before COVID-19 forced many into their homes, the pandemic has unleashed an unprecedented demand for delivery services.1 New and updated classifications in the ISO General Liability program can help insurers address alcohol deliveries, food trucks, and mobile retailers that operate solely from a vehicle (or cart).
The evolution of transportation: Sales of electric vehicles (EVs) are expected to surge over the next few years, so we’re adding classifications for electric vehicles and EV charging stations and broadening the gasoline station classifications to include fuel types other than gasoline.2 Additionally, while autonomous vehicles (AV) may not yet be ready for primetime on American roadways, the ISO General Liability classification system will add several new classes for AV manufacturers and software developers. Other transportation trends, such as ridesharing and e-scooters, will also be addressed in new or revised classifications.
The evolution of alcohol: Today’s wineries, breweries, and distilleries may do far more in their facilities than simply produce their (delicious) beverages. They may offer large tasting rooms, package and merchandise sales, and hospitality services. To help insurers address these risks, we’re revising 17 classifications and adding several new ones tailored to how these facilities operate today.
The evolution of technology: The scourge of ransomware, and the pressing need for cybersecurity more generally, has fueled new services singularly devoted to helping customers protect their technology assets.3 Our new "Technology Security Services" classification will address those risks. And as more drones fill the air, we’re introducing five new classes to help insurers classify drone risks.
The evolution of entertainment: Video games (aka e-sports) are big business. What’s more, watching other people play video games has also become a big business. Our new “Competitive eSports Programs or Leagues” classification will apply to amateur, semi-professional or professional e-sports competitions.
The evolution of manufacturing: Everything from human tissue to personal protective equipment and even houses can be 3D printed.4,5 The ISO General Liability program will offer two new classifications for 3D printing. We’re also adding a new classification for businesses that manufacture personal safety equipment, a business category that has experienced intense interest thanks to the pandemic.
Evolve a faster workflow with a new classification section
In addition to the classes themselves, we’re enhancing the class section format to deliver more relevant information up front when an insurer is reviewing classifications. The updated class section will not only provide information about premium base and how the classification should be applied, but also details about mandatory endorsements under the ISO General Liability program, and what elements of the risk need to be separately classified and rated, all in a new, easy-to-read format.
How to learn more about the new classifications
For a deep dive into the classification changes, we’ve developed five ISO Education e-learning courses available free to Verisk customers (log-in required):
- Revisions to the mercantile business group classes
- Revisions to the contracting or service businesses classes
- Revisions to the manufacturing and processing businesses clases
- Revisions to technology-related businesses classes
- Revisions to miscellaneous risks and liquor liability classes
We expect to begin filing the new classifications in the second quarter of 2022. To learn more, please contact me at KD’Auria@Verisk.com.