US Property/Casualty Rating Solutions: The Key Components

Karlyn Carnahan

I’ve just published the  latest Novarica Market Navigator  -  an overview of the available stand-alone US Property/Casualty Rating Solutions for 2012 Q4. As in our other Market Navigator reports, I’ve provided an overview of the rating solutions and vendor profiles.

I’ve also laid out the key components carriers look for when exploring rating solutions.  Rating solutions vary in the capabilities they offer,  but systems generally include the following features:

  • Rule Definition and Management: The heart and soul of a rating system, rating algorithms are typically defined and maintained separately from rating tables. Many vendors have multiple or infinite rate tiering options.
  • ISO/NCC Support: More and more solutions are designed specifically to support ISO rate and many include support for ISO Electronic Rating Content.
  • Product Design and Development Tools: Solutions generally include templates that can be leveraged for building new lines or insurance products. The solution should be able to handle versioning and update management with date-based product definitions to ensure the correct rates and forms are being utilized.
  • Testing, Modeling and Product Analysis: One key factor is a testing utility that supports debugging, modeling, and displacement testing to analyze the impact of changes in your pricing structure. Debugging reports should show the details used to create rates, allowing business users to identify those areas to tweak and refine as well as to find any errors.
  • Compliance: Change control functions track and document all the changes that have been made, when, and by whom. Look for the ability to audit rate creation, rules creation, and versioning.
  • Business Intelligence Analytics: These capabilities vary widely, but all solutions have some level of pre-build standard reports and ad hoc analytic tools to deliver operational and performance reports.
  • Workflow: Most of the solutions in our report include some level of workflow, allowing tasks to be generated and assigned manually or automatically.
  • Web Quoting Tools: Common capabilities are agent-focused and web-based quoting options. Less common are consumer-focused web-based quoting options.
  • Multicarrier Comparison Functionality: Some rating engines are designed as comparative raters, returning multiple premiums from multiple carriers. An insurer should consider how many states are supported and the number of carrier rates available through the comparative rater.
  • Forms Design and Production: The system should support custom applications and forms including editing and upload. One key factor is an application and forms library that can support both standard and customizable applications and forms.

A preview of the report is available online here.