North American Industry Classification System (NAICS) codes are a crucial element in establishing a solid foundation for successful underwriting in small commercial insurance. NAICS codes offer a detailed picture of a business's operations, enabling insurers to identify and assess inherent risks with precision. With a clear understanding of the risk profile, insurers can make informed decisions on policy coverage and pricing that best suit the specific needs of the business.
However, obtaining accurate and precise classifications can be a challenge, exposing insurers to:
Unintended Risk Exposure: Insurers may unknowingly take on risks exceeding their appetite.
Pricing Discrepancies: Underpricing can lead to premium leakage while overpricing can deter desirable business.
Learn how to achieve accurate business classifications to avoid these potential negative downstream impacts and create a strong foundation for profitable and sustainable small commercial insurance programs.