ISO Says States OK Optional By-Peril Rating Rules for Homeowners

ISO says it has received approval of its Risk Analyzer Homeowners by-peril rating rules in 13 states and has filings pending approval in several other states.

ISO would not disclose which states have cleared its filings. However, as of Aug. 23, the following states had confirmed with Insurance Journal that they are among those where insurers may use the new ISO form: Arizona, Colorado, Idaho, Maryland, Montana, New York, Nevada, Oregon and Utah. Not all states require approval; in some states insurers can file and then use new forms without waiting for state approval.

The new optional rules provide insurers with by-peril rating relativities for key homeowners rating variables. When they use them in conjunction with the current ISO Risk Analyzer Homeowners environmental rating rules, insurers can obtain more in-depth by-peril analysis of the homeowners risks within their book of business, according to ISO.

Both the by-peril rating rules and the combined all-perils environmental rating rules use output of ISO Risk Analyzer Homeowners, a predictive model that develops expected losses at a much more refined geographic level than traditional territories.

With this latest enhancement, ISO said its Risk Analyzer Homeowners now makes available rating relativities by individual peril for several homeowners rating factors, including Coverage A amount of insurance, deductible, and age of construction. There are nine peril categories: fire, theft and vandalism, lightning, liability, wind, water (non-weather related), water (weather related), hail, and all other perils (excluding hurricane and earthquake).

“The new optional by-peril rating rules offer increased flexibility for insurers that want to look at the effects of perils individually and perform their own by-peril analysis,” said Kevin Thompson, president of ISO Insurance Programs and Analytic Services. “By predicting expected losses at the policy level by peril, ISO Risk Analyzer Homeowners helps insurers evaluate homeowners risks with greater precision and thus enhance accuracy.”

Insurers also have the option of using only the combined all-perils environmental rating rules, which have been available since June 2011