Verisk Launches New Insurance Index to Better Inform Pricing Decisions

Verisk’s ISO Experience Index can help the insurance industry quickly assess changes in risk patterns and the cost of insuring risk.

(Image credit: Mercedes Mehling/Unsplash.)

Verisk (Jersey City, N.J.), a global data analytics and technology provider, has launched its ISO Experience Index, a tool designed to modernize how actuaries in the insurance industry analyze risk patterns. The ISO Experience Index addresses the increasing volatility and scale of loss patterns in the industry, offering a responsive and up-to-date indicator of observed underwriting experience, according to a Verisk statement.

“Insurance plays a pivotal role in society and the industry has faced harsh market conditions over the last few years. Our new Experience Index is one more way we empower our clients to react quickly and effectively to changing market conditions, ultimately saving them time, effort and resources while driving profitability,” comments Saurabh Khemka, co-president of underwriting solutions,Verisk. “Insurers can now assess risk patterns and formulate responsive strategies with increased confidence.”

Saurabh Khemka, Co-President, Underwriting Solutions, Verisk.

As a benchmarking tool for insurers, ISO Experience Index provides users with frequent and responsive insights to help accelerate pricing decisions and bolster confidence in the evaluation of market conditions, the vendor says.

Verisk’s new index offers the following, as described by the vendor:

  • Offers quarterly releases and streamlined data adjustments, with more frequent updates compared to traditional loss cost reviews.
  • Is directly tied to specific points in time and maintains consistent methodology across different states, to support uniformity in measurement.
  • Provides carriers with current information and contextual insights beyond the annual review cycles.

Recent trends seen in the ISO Experience Index for Homeowners underscore the importance of this tool, demonstrating the fluctuation of loss levels throughout different markets, Verisk asserts. The countrywide Experience Index rose 2.5 percent in the fourth quarter of 2023 compared to the previous quarter, reversing course from the decline observed in the third quarter. The index remains 3.4 percent higher than the mark at the end of 2022, and 24.4 percent above the level at the end of 2021.

Timely Indicators

“This index provides insurers with timely indicators to prioritize in-depth analysis, resource allocation, and pricing activities,” adds Khemka. “It also offers a comprehensive view of changing conditions in various geographic markets, enabling carriers to make informed decisions.”

Beyond its responsiveness to the latest data trends, the tool also helps illuminate longer-term patterns with its multi-year view, Verisk says. By using the rolling five-year basis of data, the index reveals a 17.2 percent increase in pure premiums for the fourth quarter of 2023, compared to the preceding five-year period. This provides numerical context to issues such as severe convective storms that have become increasingly relevant to property insurers and present a new operating environment.

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Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at AnthODonnell@IIReporter.com or (503) 936-2803.

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