ISO Enhances Wind Rating Program for Underwriting, Pricing Wind Exposure

ISO has launched its Enhanced Wind Rating Program, a commercial property rating program designed specifically to address the wind peril. ISO is a member of the Verisk Insurance Solutions group at Verisk Analytics.

The Enhanced Wind Rating Program provides a detailed review of building characteristics and geographic and environmental factors that may improve – or worsen – a building’s wind resistance or damageability.

“The engineering-based, actuarially sound program fills a void in the insurance industry by quantifying a building’s resistance and exposure to wind damage,” said Beth Fitzgerald, senior vice president of ISO’s Insurance Programs and Analytic Services division. “Using wind-related building and exposure characteristics, insurers can more precisely identify, measure, and price exposures specific to the wind peril.”

ISO filed the program with state regulatory authorities earlier this year. The program becomes effective in 26 states during the first quarter of 2013. A total of 36 states are eligible for the program.

“Eligibility for this program is based on the geographic risk from wind. The initial program targets buildings in high wind-risk areas and will reflect the specific wind exposure of eligible commercial buildings in those areas,” said Fitzgerald. “The key exposed areas are along the coast, where the hurricane exposure is significant, and the central part of the country, where tornadoes are the key threat.”

Enhanced wind loss costs for eligible commercial properties are available in Verisk’s ProMetrix database in anticipation of the upcoming effective dates, according to Kevin Kuntz, assistant vice president of Verisk’s Commercial Property division. The program leverages information from the hurricane and severe thunderstorm models of Verisk’s AIR Worldwide subsidiary, ISO’s extensive premium and loss statistical database, and building inspections to develop the enhanced loss costs.

“Insurers have indicated a need for a program that will allow them to match the premium they charge more directly to wind loss exposures, assist in comparing disparate risks, and provide them with building data to feed into underwriting systems and catastrophe models,” said Kuntz. “More detailed wind rating can improve the process of identifying and pricing building-specific wind exposure.”

ISO field representatives began collecting enhanced wind rating data in April 2011. The data collected provides information on approximately 40 characteristics related to the wind exposure for each eligible building – encompassing such areas as location and surrounding environment, roof and wall envelope integrity, framework, and building codes.

“The collection process involves the deployment of resources to identify and capture building characteristics that affect loss potential from wind. We are aggressively adding wind-related data to the eligible risks in our ProMetrix database. We also leverage our data sets such as the Building Code Effectiveness Grading Schedule (BCEGS), which provides insight into the adoption and enforcement of building codes for specific risks,” added Kuntz. “While the initial phase of the rating program will focus on a select number of variables, the full complement of characteristics will be available to allow insurers to price and underwrite the wind exposure more effectively, whether directly online or through our underwriting reports.”

ProMetrix is Verisk’s database of specific commercial property information containing vital details covering more than 3.3 million commercial buildings in the United States and more than 6 million individual businesses occupying those buildings.

ISO is a source of information about property/casualty insurance risk. The company provides statistical, actuarial, underwriting, and claims information; policy language; information about specific locations; fraud identification tools; and technical services. ISO serves insurers, reinsurers, agents and brokers, insurance regulators, risk managers, and other participants in the property/casualty insurance marketplace.