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ISO update burden threatens insurers’ pricing efficiency

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ISO update burden threatens insurers’ pricing efficiency

For commercial insurers, keeping pace with ISO updates is a necessary part of maintaining compliant products and pricing. But as ISO expands its Commercial General Liability, Commercial Auto and Commercial Property programmes, the workload associated with adopting those changes is also increasing. For insurers, the issue is becoming less about whether updates can be implemented and more about how much specialist pricing capacity is consumed in the process.

Earnix principal solutions consultant Chip Stubbs argues that many insurers have invested in sophisticated pricing capabilities while continuing to rely heavily on manual processes for ISO adoption. This can create an operational burden across actuarial, product, IT, governance and regulatory teams, diverting specialist resources from work that could improve pricing performance and responsiveness.

Stubbs describes this as the “ISO capacity trap”. Insurers handling around 1,200 to 1,500 ISO circulars a year can face hundreds of hours of cross-functional work when updates require manual interpretation and implementation. Each update effectively creates a choice about where specialist resources are deployed, with compliance work competing against product launches, rate actions, deviation strategies, filing analysis and pricing optimisation.

The challenge extends beyond processing an ISO circular. Changes can require interpretation, impact assessment, updates to rating logic, system testing, governance reviews, filing support and deployment coordination. According to the analysis, manual processing can require more than 560 hours on average for a single circular, with complex updates potentially demanding considerably more.

The impact can be felt across three areas. The first is strategic capacity, as time spent maintaining existing pricing environments reduces the resources available for predictive modelling, product development and underwriting improvements.


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