CSIO finalizes standard set of questions for underwriting this commercial line

The Centre for Study of Insurance Operations’ (CSIO) commercial lines working group has finalized a standard set of questions required for underwriting small contractor new business submissions.

“This is a significant step in implementing commercial lines data standards in the broker channel because it allows for frictionless data exchange between insurer and broker systems,” CSIO said in a press release last week. “This seamless interaction and structured data will enable CSIO members to automate aspects of commercial insurance underwriting while also advancing real-time quote functionalities.”

The working group identified 43 underwriting data risk attributes (such as brokerage name, address, applicant’s name and loss history) as part of the minimum set of questions required to quote commercial lines risks, CSIO’s president and CEO, Catherine Smola, told Canadian Underwriter Monday.

These finalized questions are critical for insurers to determine the appropriate industry group classification required to rate a risk and provide a quote. For the small contractor business, close to 100 industry codes were identified and, on average, a contractor industry code required six additional questions to evaluate and rate the risk.

What does this mean for commercial lines brokers?

“Once carriers and [broker management system (BMS)] vendors program the minimum data set and additional questions for contractors, commercial lines brokers can see immediate improvements in their daily operations,” Smola said. “Like their personal insurance counterparts, commercial brokers will be able to perform more tasks in their BMS and develop consistent workflows that apply to different carriers, reducing variations that can lead to human error.”

Once implemented by vendors, a broker can easily provide answers to a standardized set of questions captured in their BMS based on the applicant’s operation. As a result, brokers will be able to approach multiple markets for a quote with the same information.

One of the biggest pain points as a commercial broker is manual work and the amount of double entry required to complete a commercial lines quote, Smola added. “With more commercial lines’ automation in the BMS, the broker will be able to start and finish the quote in their BMS, reducing the time and cost of doing business. In turn, brokers will be able to service their customers more quickly and efficiently.”

Why did CSIO focus on small contractor business?

“Small commercial insurance has a higher volume of transactions and automating those transactions can help drive efficiencies,” Smola said. “This is why the working group decided to focus on small commercial insurance, starting with contractors.”

The finalized set of questions is a harmonized extension of the minimum data set. This data set, established in November 2018, provides a foundation for carriers to underwrite commercial risks, regardless of complexity and size.

The commercial lines working group (launched in July 2018) includes participation from insurer, broker and vendor stakeholders, with the goal of advancing the implementation of commercial lines data standards in the broker channel.

Building on the successful approach used for small contractor business, the commercial lines working group will turn their attention to establishing standardized underwriting questions to quote small retail and professional services. Other deliverables include carriers making the rating applications programming interfaces (APIs) available to BMS vendors, and BMS vendors programming the questions related to each contractor code, so that the appropriate questions are generated based on the industry code selected.