ISO Rating Enablement in Core System Vendors

by Karlyn Carnahan, April 6, 2015
Operations/ Benchmarking
North America


Celent surveyed 20 vendors that provide policy administration or stand-alone rating engines to understand the answers to these questions.

Maintaining rates, rules, and forms is a complex and labor-intensive process within an insurance carrier. Most commercial line insurance carriers use ISO as a resource to help them stay on top of loss cost trends, new product forms, and regulatory changes. Over the last few years, ISO has successfully launched a number of new electronic services that can significantly speed up the process of interpreting and taking ISO changes.

The most significant new option is the ISO Electronic Rating Content (ERC). With ERC, ISO offers its rating content in an electronic format. This service has many features — all of which are intended to streamline the process for carriers, allowing them to take revisions faster. Carriers can subscribe to ISO ERC, but to get full value, their policy administration or rating system needs to be able to absorb the XML stream or Excel files.

Will this be the wave of the future? Are vendors moving toward the ISO ERC product? Can carriers rely on their vendors’ investments in facilitating ERC?

Key Findings

Although ISO ERC is still a relatively new product in the industry, vendors report growing interest in ISO ERC from their customer base. Utilization of staff at a vendor site for analysis and interpretation is still a very common capability, and those who utilize ERC believe it gives them a competitive advantage. They also predict that usage of this option will increase. For most vendors, enablement of ISO ERC is seen as a competitive advantage today, and over time is expected to become table stakes.

“Whether a vendor believes the optimal way to support ISO is through ERC or through an internal team seems to be a matter of philosophy,” says Karlyn Carnahan, a research director with Celent’s Insurance practice and author of the report. “However, those who have enabled ISO ERC do report significant benefits. Vendors who have not yet enabled ERC either are committed to their current model, or have a sense of urgency to move to ERC and are planning implementations within the year.”

This 28-page report contains 15 charts.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary



Key Research Questions



Key Findings





Key Research Questions


Vendor Attitudes Toward ISO



Importance of Providing ISO Rating Support



Vendor’s Perception of Carrier Interest Today



Expectation of Future Carrier Interest



Competitive Self-Assessment



Value of Different Methods of ISO Rating Support



Maturity of Solutions



LOB Strategy for ERC



Staff Levels Necessary for Support


Results of Enabling ISO ERC



Reasons for Enabling ISO ERC



Impact on Success Ratio



Top Benefits of Enabling ISO ERC





Challenges with Initial Enablement



Ease of Ongoing Maintenance



How Is ISO Doing?




Leveraging Celent’s Expertise



Support for Financial Institutions



Support for Vendors


Related Celent Research


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