(Traffic hazard near the Bruneau River in Elko County, Nevada. Photo credit: F.A. Martin.)
Driving-related hazards can vary significantly by location and time. For example, at certain times of day, urban drivers may be at greater risk for fender-benders, vandalism and theft, while rural drivers may be more likely in twilight hours to run into a ditch on a poorly-lit road or run into a herd of cattle on the open range. To address the challenges these hazards present in the insurance rating process, ISO, a Verisk Analytics company (Jersey City), has released the next generation of its ISO Risk Analyzer Personal Auto Environmental Module, which the vendor describes a predictive analytic tool insurers can use to improve territory rating of their personal auto business.
“With the availability of new and updated data sources, we’ve been able to add new variables, refresh and renew our data sets, and refine our methodology accordingly,” comments David Cummings, senior VP, ISO Insurance Programs and Analytic Services. “This enhanced environmental module builds on the strengths of ISO Risk Analyzer, offering insurers even more accuracy in classifying, segmenting, and pricing auto risks to improve their positioning in the marketplace.”
The environmental module analyzes the interactive effects of hundreds of variables in the area surrounding a vehicle’s garaging address and provides output for a number of components that reflect the risk factors, according to ISO. The module helps predict expected losses for risks at the policy level by major coverage. The enhanced version incorporates new variables, such as extreme weather information, average daily traffic volume, road classifications, and elevation variation, to provide insurers with more accuracy in determining a risk’s loss potential.
Value of More Granular Information
“Our customers tell us they find significant value in the more granular information, for example, when evaluating their territory pricing, establishing rating factors, and assessing risks as part of the underwriting process,” Cummings adds. “They’re also using the solution in their own predictive modeling efforts, including projects that involve consultants. With these improvements, the module has evolved to produce even stronger predictive results.”
The full suite of modules within ISO Risk Analyzer Personal Auto analytic includes an environmental module, vehicle modules for liability and physical damage, and a driver history module.