Rating Systems Bolster Agent, Insurer Efficiency

Electronic rating systems are making the jobs of insurance companies and agents faster, easier and more efficient, experts say.

Martin P. Agather, vice president of rating and Internet technology for Applied Systems (www.appliedsystems.com), based in University Park, Ill., said that his company believes there are actually two users of an Internet rating product at the agency level: the insurance agent and the consumer. That is why Applied Systems developed “two different looks and feels of the same product,” he explained.

Applied-Rating.com, for the insurance professional, centralizes all major rating engines for personal lines on an Applied Systems-hosted Internet rating server. It provides comparative rating services for more than 1,500 carriers and allows agencies to perform real-time rating through their own systems or with an Internet connected device, according to Applied-Rating's Web site.

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

Mr. Agather also said that July 15 would be the release date for the Windows-based Applied Rating Desktop Edition. He stressed that neither the rate calculation engines nor the database that stores the customer information were changed. “All we've changed is how the user interacts with the product,” he explained.

He said that for someone in a call center environment or who issues 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 could include agencies that do not have the high-speed Internet connection that makes use of Applied-Rating.com practical.

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

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

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

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

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

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

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

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

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

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

NVision provides variant-based statistical analysis of imported or manually inputted rating data that tests the effect of territory, age, gender, marital status, vehicle type and any other rating factor.

Mr. Mellor said that with NVision, carriers “can take their current risk, run an analysis against other carriers in the states that they operate for those particular risks, or the book of business that they have in-house, and then make an educated decision based upon the variances that are within the product.”

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

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

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

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

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

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

Christopher H. Perini, ISO vice president of marketing, said that while ISO licenses its content to other vendors, with RateFocus, ISO actually interprets the algorithms and other information that it provides to its customers and to AscendantOne customers. (An algorithm is a step-by-step procedure for solving a problem.).

The benefits of RateFocus, according to ISO, include:

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

ISO interprets its own algorithms, which ISO also believes ensures accuracy. “We are the best ones to interpret our own algorithms and bring them to the marketplace,” Mr. Perini declared.

ISO ensures that the RateFocus rating calculations conform to published ISO manual rules.

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

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

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

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

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

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

Another desktop Windows-based comparative rater, QuoteWorks, utilizes a browser user interface, Mr. Bigda stated. It is currently in use in Arizona, Nevada and California. AMS expects to deploy it throughout western and central U.S., as well as other selected states, throughout the rest of this year, Mr. Bigda noted.

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

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

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

AMS also has what Mr. Bigda described as a 52-jurisdiction commercial lines desktop rating productQuoteWorks Commercial. The company expects to deploy a Windows version to its customers by the end 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 rating product for carriers uses Microsoft's .NET platform, which allows rating via the Internet.

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

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

The latest AMS product for carriers is NETRater, Mr. Bigda stated. It also can be used by “Internet portal type accounts,” he said. NETRater is an Internet rating engine that performs comparative quoting like the QuoteWorks desktop products do, he said. The purchaser puts NETRater on his or her Web site, and the product 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 software suite ProductXpress. Embedded within the Illustrator and WebIllustrator components of the suite is the Calculator.

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

The licensing fee for ProductXpress “is based on the way it is used,” Mr. Viola said. This is because the calculator component can be licensed independently from the designer and illustration components.

Computer Sciences Corp. (www.csc-fs.com), headquartered in El Segundo, Calif., boasts three new rating solutions. All of them allow the average business user to easily develop and maintain rating engines, said John Aurit, marketing manager for CSC's property-casualty solutions.

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

S3+ Rating Processor, in new release, is incorporated with a rating database, Mr. Aurit said. It is geared toward mid- to large-tier carriers and is used primarily by carriers' back-office administration systems.

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

Consequently, with the InsMaker tools, a carrier can build a rating engine that integrates with a back-office system that already 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-based applications targeted at the specialty-market and smaller-tier commercial carriers, Mr. Aurit said.

It is used in back-office systems but also allows the creation of a server-based rating engine. Among other things, it can store multiple-company rating information. This allows carriers to, for example, build a rating engine that their agents can use to obtain comparative 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 serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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Rating Systems Bolster Agent, Insurer Efficiency

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