The insurance industry faced unprecedented loss ratios in 2023, with underwriting losses reaching $21.2 bn. To help insurers, Verisk introduced the ISO Experience Index.
New innovative tool modernizes how actuaries analyze risk patterns by addressing the volatility and scale of loss patterns, providing a timely indicator of underwriting experiences.
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 clients to react quickly and effectively to changing market conditions, ultimately saving them time, effort and resources while driving profitability
Saurabh Khemka, co-president of underwriting solutions at Verisk
“Insurers can now confidently assess risk patterns and develop responsive strategies”, said Saurabh Khemka.
The ISO Experience Index acts as a benchmarking tool for insurers, offering frequent and responsive insights to speed up pricing decisions and boost market evaluation confidence.
Key features of Verisk’s new index:
- Quarterly releases and streamlined data adjustments, offering more frequent updates than traditional loss cost reviews.
- Consistent methodology across different states to ensure uniform measurement.
- Current information and contextual insights beyond annual review cycles.
Recent trends in the ISO Experience Index for Homeowners highlight its importance. The nationwide index rose 2.5% in Q4 2023, reversing a decline from Q3. It remains 3.4% higher than at the end of 2022 and 24.4% above the level at the end of 2021.
This index provides timely indicators for insurers to prioritize analysis, resource allocation, and pricing. It offers a comprehensive view of changing conditions in various geographic markets, enabling informed decisions.
The tool also reveals longer-term patterns with its multi-year view. A rolling five-year data basis shows a 17.2% increase in pure premiums for Q4 2023 compared to the previous five-year period, highlighting issues like severe convective storms relevant to property insurers.
The ISO Experience Index is now available on existing product delivery platforms for eligible subscribers of Verisk’s Core Lines Services.
The initial launch includes loss level metrics by state for Homeowners, with expansion planned for other key business lines.
Verisk is a strategic partner in data analytics and technology for the global insurance industry, helping clients improve efficiency, underwriting, claims outcomes, combat fraud, and make informed decisions about global risks, including climate change and political issues.
