Rating Systems Bolster Agent, InsurerEfficiency

Electronic rating systems are making thejobs of insurance companies and agents faster, easier and moreefficient, experts say.

Martin P. Agather, vice president of rating and Internettechnology for Applied Systems (www.appliedsystems.com), based inUniversity Park, Ill., said that his company believes there areactually two users of an Internet rating product at the agencylevel: the insurance agent and the consumer. That is why AppliedSystems developed “two different looks and feels of the sameproduct,” he explained.

Applied-Rating.com, for the insurance professional, centralizesall major rating engines for personal lines on an AppliedSystems-hosted Internet rating server. It provides comparativerating services for more than 1,500 carriers and allows agencies toperform real-time rating through their own systems or with anInternet connected device, according to Applied-Rating's Website.

A private label version of eShopInsurance.com allowsApplied-Rating customers to link their agency Web sites to aversion of eShop that bears their logo and lists the carriers thatthe agency represents. All leads generated by the private labeleShop site are referred to that specific agency.

Mr. Agather also said that July 15 would be the release date forthe Windows-based Applied Rating Desktop Edition. He stressed thatneither the rate calculation engines nor the database that storesthe customer information were changed. “All we've changed is howthe user interacts with the product,” he explained.

He said that for someone in a call center environment or whoissues quotes every day, the Desktop Edition is a “very powerful[tool] because the data entry has been streamlined.”

He suggested that other users of the Desktop Edition couldinclude agencies that do not have the high-speed Internetconnection that makes use of Applied-Rating.com practical.

Pricing for Applied-Rating.com and Applied Rating Desktop isbased on a one-time license fee that varies according to the numberof subscriptions to the rates that are selected, Mr. Agather said.Licensing fees range from $600 to $1,000. The user also pays amonthly maintenance fee for each rating engine selected.

For private label e-shop, there is a one-time fee of $500 perstate represented, plus a discounted subscription fee for everyrating engine that is put up on the site, Mr. Agather said.

The latest rating product from Superior Access Internet SoftwareInc. (www.sais.com) is also “the first instance of comparativepersonal lines in a wholesale environment,” according to companypresident Michael Mayo. He also serves as executive vice presidentof sister company Superior Access Insurance Services, an onlinewholesale insurance broker. Both firms are in Irvine, Calif.

“An agent can come to our site, enter some basic informationabout a client, and receive up to 12 homeowners quotes or six autoquotes in five seconds,” Mr. Mayo said. Agents can then place thatbusiness through Superior's insurance arm.

“What good are 100 quotes if you don't have an appointment withany of the carriers?” he asked. “We only give the agents quotesthat they can actually place.” The wholesale broker serves 8,500agencies, he stated.

There is no charge to agents for access to this service, Mr.Mayo noted. “We make our money the good old-fashioned waywe movepolicies,” he stated.

Superior Access boasts more than 100 other rating systems,“quoting everything from personal lines to commercial toprofessional liability and workers compensationyou name it,” hesaid.

Mr. Mayo added that his company has “automated wholesalers foras little as $60,000 and insurance companies for as much as $1.5million.”

David Mellor, vice president of Priority Data Systems Inc.(priority-data.com), of Omaha, Neb., said his company offersPriorityRate for Windows and PriorityRate.com, the Internetversion, for agents and managing general agents.

Typically, there is a one-time license fee as well as an annualmaintenance fee, which can range from about $1,000 to $3,000,depending on the size of the agency, the number of insurancecompanies for which rates are sought, and the number of agencylocations, Mr. Mellor said.

At the insurance company level, Priority recently announced thelaunch of its batch-rating tool called PriorityRate NVision Auto.The product allows subscribing insurance companies to compare theirautomobile insurance rates with those of competitors.

NVision provides variant-based statistical analysis of importedor manually inputted rating data that tests the effect ofterritory, age, gender, marital status, vehicle type and any otherrating factor.

Mr. Mellor said that with NVision, carriers “can take theircurrent risk, run an analysis against other carriers in the statesthat they operate for those particular risks, or the book ofbusiness that they have in-house, and then make an educateddecision based upon the variances that are within the product.”

He added that the product helps carriers determine pricingopportunities and how their pricing models stack up against thoseof competitors within a particular marketplace.

Mr. Mellor said that the fee for licensing NVision depends onthe number of states for which an insurer chooses to havecomparative company data.

A new rating-engine product for insurers called RateFocus is theresult of content from Insurance Services Office Inc. (www.iso.com)and technology from AscendantOne Inc. (www.AscendantOne.com), aNashua, N.H.-based insurance technology and services firm.

“Several companies came to us over the years and said ISOprovides the rates, the forms, the loss costs, so many elementsthat go into the pricing ofproperty-casualty insurance. The onlypiece that's missing is the rating engine,” said Christopher L.Guidette, assistant vice president of Jersey City, N.J.-basedISO.

“Since we're the company that provides three-quarters of thoseitems,” he continued, “it makes sense to provide it all.”

Launched July 1, AscendantOne's RateFocus integrates ISO losscosts, manual rules and forms information with the AscendantOneXML-based technology solutions, according to ISO.

Christopher H. Perini, ISO vice president of marketing, saidthat while ISO licenses its content to other vendors, withRateFocus, ISO actually interprets the algorithms and otherinformation that it provides to its customers and to AscendantOnecustomers. (An algorithm is a step-by-step procedure for solving aproblem.).

The benefits of RateFocus, according to ISO, include:

Elimination of manual input of ISO information into rating andpolicy-administration systems.

ISO interprets its own algorithms, which ISO also believesensures accuracy. “We are the best ones to interpret our ownalgorithms and bring them to the marketplace,” Mr. Perinideclared.

ISO ensures that the RateFocus rating calculations conform topublished ISO manual rules.

Insurers can more quickly expedite regulatory filings andimplement rate changes by using RateFocus.

Only ISO-AscendantOne customers have access to the RateFocusproduct. ISO declined to reveal the fee amount that the customersmust pay to AscendantOne to purchase the product, although Mr.Perini indicated that it is in line with that of other ratingvendors.

Currently, RateFocus is available only for commercial lines ofinsurance, Mr. Perini stated, although ISO plans to eventually addother lines of insurance.

Mark Stroop, executive vice president of Rackley Systems Inc.(www.rackley.com), said that his Pulaski, Tenn.-based companyrecently launched PolicyRater, a product for MGAs and smallinsurance companies. The 32-bit operating system rates commercialautomobile and property, general liability, workers compensationand other commercial lines.

AMS Services (www.ams-services.com), headquartered in Windsor,Conn., is in the process of replacing its DOS-based rating softwarewith Windows-based products, said Mike Bigda, senior vice presidentin AMS' rating division. The AMS Web site indicates that theupgrade for current customers is free.

One such Windows-based product is QuoteWorks Solutions, adesktop comparative rating system available in 13 states for agencyuse. QuoteWorks Solutions also can be used by carriers that,through an arrangement with AMS, distribute the product to theiragents, Mr. Bigda said.

Another desktop Windows-based comparative rater, QuoteWorks,utilizes a browser user interface, Mr. Bigda stated. It iscurrently in use in Arizona, Nevada and California. AMS expects todeploy it throughout western and central U.S., as well as otherselected states, throughout the rest of this year, Mr. Bigdanoted.

With both of these productswhich apply only to personal linestheuser keys in information about a particular risk, then obtainscomparative quotes from various carriers, Mr. Bigda explained.

The AMS-hosted QuoteNETWorks, “an Internet-based solution tiedto those desktop solutions,” allows consumers to go to an agent'sWeb page, enter their risk information and obtain comparativequotes, Mr. Bigda stated.

If the consumer indicates an interest in a particular quote, theconsumer's information is downloaded to the agent, eliminating theneed to re-key the data, Mr. Bigda said. QuoteNETWorks is currentlyavailable for personal lines auto and home insurance, as well asfor business owners property insurance.

AMS also has what Mr. Bigda described as a 52-jurisdictioncommercial lines desktop rating productQuoteWorks Commercial. Thecompany expects to deploy a Windows version to its customers by theend of this year. “The commercial lines product will mimic[QuoteWorks Solutions] in look and feel,” he said.

Rackley's Mr. Stroop said that his company's latest ratingproduct for carriers uses Microsoft's .NET platform, which allowsrating via the Internet.

The “rate/quote/submit/bind system” lets a carrier offer itsagents the ability to generate a quote, then print andelectronically submit an application for underwriter review fromthe carrier's Web site, according to Rackley.

Mr. Stroop explained that the .NET rating system can work in oneof two ways. Rackley can either build a carrier's Web site and thecarrier then essentially outsources its rating to Rackley, “or wecan take that and embed it in the company's Web page,” he said.Rackley can store the data, allowing the carrier to later take thedata and process it further, he added.

The latest AMS product for carriers is NETRater, Mr. Bigdastated. It also can be used by “Internet portal type accounts,” hesaid. NETRater is an Internet rating engine that performscomparative quoting like the QuoteWorks desktop products do, hesaid. The purchaser puts NETRater on his or her Web site, and theproduct is hosted either by AMS or the purchaser.

Tony Viola, senior director of product management for SOLCORP(www.solcorp.com), an EDS company headquartered in Toronto, Canada,said that the latest technology from his company is the softwaresuite ProductXpress. Embedded within the Illustrator andWebIllustrator components of the suite is the Calculator.

Among other things, the Calculator can be used as a quote andrating engine, and it provides ready updates and revisions.“ProductXpress is a central repository for all of the productcalculations including premium that can be executed by a commoncalculation engine,” Mr. Viola stated.

The licensing fee for ProductXpress “is based on the way it isused,” Mr. Viola said. This is because the calculator component canbe licensed independently from the designer and illustrationcomponents.

Computer Sciences Corp. (www.csc-fs.com), headquartered in ElSegundo, Calif., boasts three new rating solutions. All of themallow the average business user to easily develop and maintainrating engines, said John Aurit, marketing manager for CSC'sproperty-casualty solutions.

The three products support all personal and commercial lines ofinsurance in all 50 states, he added.

S3+ Rating Processor, in new release, is incorporated with arating database, Mr. Aurit said. It is geared toward mid- tolarge-tier carriers and is used primarily by carriers' back-officeadministration systems.

InsMaker, launched in the past six months, performs like S3+Rating Processor, Mr. Aurit stated. Its principal difference isthat it is easier to integrate into back-office systems that dorequire a rating logic, but not a rating database.

Consequently, with the InsMaker tools, a carrier can build arating engine that integrates with a back-office system thatalready has a database for rating, premium and policy information.This product also is targeted at the mid- to large-tier carrier,Mr. Aurit said.

iSolutions, in new release, is a suite of browser-basedapplications targeted at the specialty-market and smaller-tiercommercial carriers, Mr. Aurit said.

It is used in back-office systems but also allows the creationof a server-based rating engine. Among other things, it can storemultiple-company rating information. This allows carriers to, forexample, build a rating engine that their agents can use to obtaincomparative quotes online and in real time.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, July 29, 2002.Copyright 2002 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.