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The commercial auto world is changing rapidly. We’re staying updated.

Meet Bob. He’s the fictional owner of Bob’s Hardware Store in Cincinnati, Ohio, and he’s planning to insure a light truck on a commercial auto policy. It’s a brand new $60,000 pickup truck, which will replace his old clunker. Bob doesn’t drive very much and mostly uses his new truck to travel the one mile to and from his store, but sometimes he does load it up with large tools and materials for delivery.

A staggered line of various white commercial vehicles.

Learn about updates to the new ISO Commercial Auto Class Plan.

Until now, an insurer might have used the ISO Commercial Auto Class Plan to price Bob’s new truck and give it a rate of $365, based on loss costs and other factors. But if the same insurer had been an early adopter of the new ISO Commercial Auto Class Plan during its optional phase, they would have seen that there is actually a higher-than-average risk for this truck, and Bob’s rate becomes $509 as a result.

Here’s why:

  • Fleet size: The new plan recognizes that since this is the only vehicle on Bob’s policy, the loss experience is typically worse than the average light truck’s losses. That could be because this one vehicle is driven more often or differently than a vehicle in a large fleet.
  • Vehicle Age: The new plan also reflects that brand new trucks have worse loss experience than the average truck, possibly because the new vehicles are unfamiliar to the drivers.
  • Vehicle Original Cost: The new plan recognizes that more expensive trucks have worse loss experience as well. It could be that more expensive vehicles tend to be at the heavier end of their weight class, or that companies with expensive vehicles are more attractive targets for lawsuits.
  • Industry use: The plan also uses the NAICS system for providing the policy with an industry classification. For Bob’s truck, classified under NAICS code 444, Building Material and Garden Equipment and Supplies Dealers, the risk level is a little higher than, for example, a car driven by a real estate agent to show people homes.

Using characteristics the old plan ignored, the new plan assigns Bob a rate that is 39% higher than it would have been on the old plan.

Why is this new plan needed?

Typically, auto class plan rating factors require refreshing every few years to stay current with the changing risk environment. But so much has changed about the commercial auto industry, and the tools insurers can use to rate risks, that it became clear that a new and improved structure was needed. We at Verisk fundamentally changed the formula and rating elements underlying the older plan, allowing for much more accurate risk assessment.

Another bonus? Right now, our standard manual can seem somewhat complicated to users who might be unfamiliar with it. It can require significant time and expertise to use effectively. That’s why we’ve rewritten and reorganized the instructions from our current manual in a more straightforward, accessible way that can be easily integrated into insurer workflows. The new presentation style that debuted in the Optional Class Plan is about to arrive for the entire Commercial Auto Manual.

What’s new about the new plan?

Different industries can pose different levels of risk. The new plan uses NAICS (North American Industrial Classification System) – which groups businesses into industries to help calculate the rate.

The new plan also incorporates fleet size more precisely into the rating process. While our old plan only divided policyholders into two categories, those with 0-4 vehicles and those with 5+ vehicles, our new plan has added a fleet size factor, which allows insurers to more accurately rate policies by the exact number of vehicles a policyholder owns. That’s because the use cases, safety procedures, and risk levels are different if a car is one of 5 or one of 500. An owner of a small fleet may not carefully monitor their employees' driving, may have different standards for driver history when hiring new employees, or may have different policies for how often maintenance is conducted on their vehicles.

The new plan also factors in vehicle cost and age for liability coverage, as we’ve found these variables to have significant predictive power.

What’s happening to the old plan?

Our goal is to eventually have one auto class standard and rating algorithm, but if you’re still using the old plan, don’t worry. You’ll have until 2023-2024 (depending on jurisdiction) to phase it out, and we’ll keep on updating it until then.

After that, the old class plan will become our legacy plan. We’ll take the unusual step of continuing to support the old plan for two additional years by updating it with loss costs for companies that choose to delay adoption of the new plan. Those loss costs will still reflect inflation and industry trends, so companies can adopt on a timeline that works for them. And we’re not changing the features you loved; we only made our rating instructions more accurate and easier to understand, with an improved style of rating instruction. We’re increasing predictive power to forecast risk and do a better job of separating good risks from bad. For small to midsized insurers that have struggled to remain profitable, having a better baseline of predictive accuracy can be a huge boon.

When Will the New Plan Go into Effect?

Beginning in March 2022, we'll be filing the new class plan state by state over the course of about a year, with the ultimate goal of replacing the current ISO manual in every state by early 2024, and sunsetting our loss cost support of the Legacy Class Plan by 2026.

Learn more about the new ISO Commercial Auto Class Plan.

Kevin Hughes

Kevin Hughes is the Commercial Auto Actuarial Director at Verisk. Kevin can be reached at

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