After watching information technology (IT) reshape the rest of the financial services sector for years, the insurance industry is finally having its own IT epiphany. Start-ups are promising to disrupt the entire industry, investment capital is being thrown around like confetti, and the hype is reaching histrionic levels.
But putting aside all of the hopes, dreams, promises, and big ideas—how is the digital revolution actually changing the way companies transact insurance? Let’s examine just one example of the current disruption.
Proper Digitization of ISO Content Saves Hours of Analysis and Programming
Since 1971 the Insurance Services Office, Inc. (ISO), a subsidiary of Verisk Analytics, has provided rating information for insurers to analyze, interpret, and incorporate into their insurance products. The amount of manual work involved in this process is truly mind blowing; According to a Novarica report, ISO publishes over 75 Circulars (updates to the products) in an average week and each one takes insurers over 70 days to manually process. More than 30% of this time is spent analyzing and interpreting the change and developing the technical specifications to implement it, and over 40% is dedicated to implementing the changes into the insurer or their vendor’s policy administration system.
ISO has been working hard toward the goal of fully digitizing the content of their Circulars so that carriers and vendors can implement changes faster and more consistently. This library of digital content is called ISO Electronic Rating ContentTM (ERCTM). By using ISO ERCTM carriers and vendors have been able to reduce the amount of time spent analyzing, interpreting and developing technical specifications for each Circular by an average of 38%.
But what about the average of 28 days dedicated to implementing the changes into the carrier’s policy administration system? The goal of reducing this burden by using ISO ERCTM has been more elusive to insurers and software vendors serving the industry. There are two primary reasons why it continues to be a time consuming and difficult task:
Most Insurer and vendor systems were not designed to natively import ISO ERCTM, so the information in the digital ISO ERCTM files must be extracted and translated into code that the system can understand and use.
Until recently ISO only published complete ISO ERCTM versions and not “Diff” files that contain only the changes. It was up to the insurer or vendor to figure out a way to identify the changes—a daunting task considering the amount of data involved.
Solartis “cracked the code” on how to natively consume ISO ERCTM—giving the Solartis Insure Platform game-changing advantages in enabling insurers to bring products to market faster, with less cost and risk during development.
This technological breakthrough occurred in late 2016 when ISO introduced an automated maintenance feed for their ISO ERCTM Suite. The new feature enables ISO changes to be natively consumed directly into the Solartis Insure Platform—eliminating the need to manually document business requirements, develop technical specifications, and implement coding and acceptance testing cycles. With Solartis, the only configuration required is the carrier’s deviations and exceptions from the pure ISO content.
This breakthrough has resulted in a staggering impact on insurance sales and policy administration technology projects as it shortens time to market; ensures rate, rule, and form accuracy; and minimizes project risks because the ISO rating content and the Solartis sales and policy life cycle microservices (APIs) are pretested and readily available.
For example; implementing a 50-state ISO based commercial package program goes from a painful 9 to 12 month project to an easy 90-day configuration exercise of just the carrier specific exceptions. And once the program is in production, the latest releases of ISO ERC™ are available for use in the Solartis Insure platform within 24 hours of their publication.
At Solartis, our mission is to simplify insurance administration. Our focus is exclusively on insurance. Our customers are insurance carriers, managing general underwriters/agencies, brokers and captives. Today we have over 700 employees in multiple onshore and offshore locations. Every Solartis customer is a Solartis reference.
All data referenced in this article was sourced from ISO Support: A Comparison of Manual and Electronic Practices, A Novarica Research Partners Program Report underwritten by ISO; 2010.