The new index is in response to the growing volatility and scale of loss patterns, offering a timely indicator of underwriting experience. Credit: Treecha/Shutterstock.

Data analytics and technology provider Verisk has unveiled the ISO Experience Index, a new tool designed to modernise risk pattern analysis for actuaries in the insurance sector.  

The index is a response to the growing volatility and scale of loss patterns, offering a contemporary and timely indicator of underwriting experience.  

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This tool aims to provide frequent insights, enhancing the speed and confidence of pricing decisions and market condition evaluations. 

The ISO Experience Index will provide quarterly updates and streamlined data adjustments, delivering more frequent insights than traditional loss cost reviews.  

It is linked to specific time points and employs a consistent methodology across different states, ensuring uniform measurement.  

This new tool is intended to provide carriers with up-to-date information and contextual insights beyond the annual review cycles. 

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It is accessible on existing product delivery platforms for eligible Verisk Core Lines Services subscribers.  

The launch introduces loss level metrics by state for homeowners insurance, with plans for expansion to other key business lines in the future.  

The recent trends in the homeowners segment, as indicated by the ISO Experience Index, highlight the fluctuations in loss levels across different markets. 

Verisk reports that the countrywide Experience Index for Homeowners increased 2.5% in the fourth quarter (Q4) of 2023 from the previous quarter, marking a reversal from the decline seen in Q3.  

The index is currently 3.4% higher than at the end of 2022 and 24.4% above the level as reported at the end of 2021. 

The ISO Experience Index also sheds light on longer-term patterns by using a rolling five-year data basis.  

It highlights a 17.2% increase in pure premiums for Q4 2023 compared with the same period over the past five years.  

This numerical context is crucial for understanding issues like severe convective storms, which have impacted property insurers and altered the operating environment. 

Verisk underwriting solutions co-president Saurabh Khemka said: “This index provides insurers with timely indicators to prioritise in-depth analysis, resource allocation and pricing activities. It also offers a comprehensive view of changing conditions in various geographic markets, enabling carriers to make informed decisions.”