There are exceptions to the ratings processing mandate. For esoteric lines of business, where there are few resources for agents to tap, ratings may be a peripheral business issue. But with mass marketing lines, like homeowners and auto, or BOP on the commercial side, the small- to mid-size p-c insurers need for rating capabilities that conform to growing demand among agents and consumers for ease-of-use is critical. So too is the need for a ratings system with the accelerated development ability necessary to address new markets quickly.

Smaller insurers need all the bells and whistles possible to compete effectively with the big guys. Simplified ratings processes can generate appeal to agents (with little or no ratings experience) and consumers, and accelerated ratings development can help the insurer compete for a share of emerging markets.

The insurance technology sector is responding to such needs with ratings system advances that include powerful ratings engines, intuitive screens, automatic pro-rated rating, out-of-sequence and around-the-corner endorsements, printing advancements, as well as many procedures that ultimately facilitate ratings efficiency. More is on the way, but as of mid-year 2002, small- to mid-size p-c insurers have both the technology and tactical business options to address many challenges.

So what is there that can make ratings a simple process for agents or consumers? High on the list are Web-based ratings pages that allow users to obtain a quote 24/7 from any location with online access, and an easy-to-navigate, intelligent screen. Having the minimum number of data entry fields on the screen for a quote helps, too.

No one wants to answer dozens of questions to obtain a quote. Request only the six to 12 essential pieces of information necessary to determine the rate for a policy so the process can be completed quickly. In factor-based rating, key elements would include such standards as location, protection class and value of property. On the liability side, prior claims will be a necessary line item.

Assisting in the task of reducing data entry requirements are intelligent screens that automatically call up related data when a key point is entered. For example, if the user enters a zip code, your intelligent screen could automatically call up the protection class and other geographic segmentation codes. This data entry efficiency, available through intelligent screens, can hold true for more complex ratings, too, including labor-intensive calculations done in-house. For example, such a system could pro-rate a single, out-of-sequence commercial vehicle, among dozens in a policy, thats replacing a stolen vehicle for the policys remaining time period.

Keep in mind that while easy data entry and fast quotes are key to a successful rating process, this cyber meeting with your customers can yield additional opportunities. A rating system capable of capturing information about the source of the contactor the frequency that someone has called for a quote, or the number of applications that have been rejected by an agentwill help an insurance company save time and energy when it comes to analyzing its business. If your ratings program can collect information that helps you understand and analyze your business, as well as manage your relationships with customers, you are ahead of the curve.

Equal in importance with speed and ease-of-use in the ratings processes is a systems ability to introduce new lines in a minimum of time. Such accelerated development provides a powerful competitive advantage. In the 1990s, when many employees migrated from work- to home offices, questions arose about home-based accidents on the job. Was it the responsibility of the homeowner or the employer? Companies with flexible ratings systems were able to quickly bring home office insurance to market. Today there are promising opportunities with other niche insurance markets. Insurers who move quickly stand a better chance to succeed.

The secret to ratings flexibility lies in the systems architecture. Many systems have separate databases, or sets of tables, that are specific to each line of business. But its the newer, more dynamic databasessuch as those that allow for one set of tables to handle all p-c lines, and quickly adapt to new linesthat can facilitate business growth.

Some of the technology advancements behind todays robust ratings system include multi-tiered systems with core processes that share code and, with assistance from N-tier design, improve system responsiveness and flexibility. This configuration increases productivity and reduces processing demand on the client side.

Also noteworthy is component architecture that allows for each system component to specialize in the most appropriate task. Applications built from components are easier to maintain and add into large-scale applications.

Printing, or distribution technology, produces more visible benefits. Distribution has come a long way. Where once there was a choice of either immediate- or batch-printing, technology today enables use of many distribution channels. Systems can be configured to send the agency and insured quotes via e-mail, hard copy or fax, or they can be sent to an imaging system (usually internally) for a completely paperless distribution.

In the future look for wireless devices to provide access to rating Web pages via the Internet, and more insurers to add a comparative rating capability. Service companies now exist that will obtain quotes by running requests through multiple insurers rating processes. As consumers become more savvy and explore competitive prices on insurance, more insurance companies will want to offer the comparative rating service and establish an easy-to-manipulate Web site for direct-to-consumer quotes.

Gary Gilbert is president and CEO of Insurance Data Processing Inc., based in Wyncote, Pa. He can be reached at [email protected]. For more information, go to www.idpnet.com.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, July 29, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.