ISO Expands Predictive Analytics Offerings with By-Peril Building Characteristics Model

ISO has launched the ISO Risk Analyzer Homeowners Building Characteristics Module, the latest addition to its line of predictive analytic modeling tools to help insurers more precisely segment and rate their risks. The building characteristics module incorporates property-specific features, including age of roof, number of rooms, square footage; lot size; amenities such as pool and finished basement; and other construction-related variables to project highly refined loss cost relativities by peril.

ISO is a member of the Verisk Insurance Solutions group at Verisk Analytics.

“Even homes of similar age, size, and replacement cost value located on the same street can vary widely from each other in their susceptibility to certain perils and the associated loss potential,” said David Cummings, senior vice president, ISO Insurance Programs and Analytic Services. “The building characteristics module is a powerful tool that relates losses – at the peril level – to objective and identifiable building characteristics and provides highly refined estimates of loss potential based on those specific characteristics. Insurers using the module can see how individual building characteristics affect loss potential so they can price or underwrite their policies appropriately.”

For an individual risk, the module determines which property characteristic variables matter, how much they matter, and how the interaction of variables affects the overall risk of nine major homeowners peril categories. The major peril categories are fire, theft and vandalism, lightning, liability, wind, water (nonweather-related), water (weather-related), hail, and all other property perils (excluding hurricane and earthquake).

The building characteristics module is the latest tool in ISO’s analytic arsenal that an insurer of any size can use to enhance its risk segmentation efforts and differentiate itself from the competition.

“The building characteristics module is a significant addition to the ISO Risk Analyzer Homeowners suite that enhances risk segmentation and pricing accuracy by taking into account numerous variables that have a demonstrated effect on homeowners loss exposure,” said Douglas Wing, assistant vice president, Analytic Products, ISO. “The new module provides insurers with a more sophisticated way to analyze loss potential and identify the key drivers of loss costs so they can develop premiums or take underwriting actions more appropriate for particular homes. Insurers can use the module by itself or with our existing environmental and rating factors modules for even greater segmentation and pricing refinement.”

ISO is filing the building characteristics rating rules for insurers to use if they elect to license and adopt them. ISO Risk Analyzer Homeowners is part of the ISO Risk Analyzer suite of predictive modeling tools. Leveraging the data and predictive modeling expertise of ISO and data from external sources, ISO Risk Analyzer Homeowners provides insurers the flexibility to assess and refine homeowners policies with one set of analytic tools. The suite also includes ISO Risk Analyzer Personal Auto for evaluating personal auto risks and ISO Risk Analyzer Commercial Auto for analyzing two major classes of commercial auto risks: local/intermediate trucks, tractors, and trailers (TTT) and private passenger types (PPT).

Source: ISO