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ISO and AscendantOne product managers discuss the unique benefits of this relationship to the property & casualty insurance market: Question: What is the primary objective of the ISO-AscendantOne relationship? Bob Cate (Vice President): The combination of ISO's industry-leading content and AscendantOne's insurance software solutions is a key impetus behind our relationship. Together, we can increase the ease and speed of revising insurers' programs with current ISO information. AscendantOne -- Powered By ISO -- delivers a cohesive rating/quoting/underwriting application for all lines, which can be integrated with a full-function AscendantOne policy management system, or connected via XML to a carrier's existing policy administration system. The flexibility of our rating and policy systems, combined with essential ISO information, enables insurers to roll out new products and introduce existing products into new markets more rapidly. Dom Yezzi, Jr. (Vice President, Specialty Commercial Lines, ISO): The ISO-AscendantOne alliance delivers a fast, accurate, flexible and well-documented rating process, resulting in a superior ISO-based rating product for carriers. What's more, insurers will be able to expedite regulatory filings and implement rate changes more quickly than ever before -- benefits that go directly to a carrier's bottom line. To accomplish this, ISO and AscendantOne configure and maintain Web-based "ratebooks" that calculate quotes and policy premiums for particular state and line of business combinations via a unique methodology developed by AscdendantOne for data structures and hierarchies, page/field attributes, navigation, edits and underwriting guidelines. ISO's rating rules, loss costs and policy forms are the content standards that drive the ratebooks. Question: How are the two companies working together to create value for insurers? Yezzi: We have created joint product development teams comprising ISO's actuarial and insurance specialists and AscendantOne's insurance and technology experts. This convergence of our two companies' domain expertise - ISO's in developing state-of-the-art insurance programs, and AscendantOne's in developing state-of-the-art rating and policy administration software solutions for those programs - seamlessly brings together 2 critical P&C insurance functions that traditionally have not been well coordinated. Starting with the ISO BOP 2002 program, and expanding to other lines of insurance, ISO and AscendantOne staff have been working side-by-side to analyze and define the most precise electronic representation of ISO's eligibility, coverage and rating rules within the AscendantOne software applications. Cate: As the analysis and definitions are completed, AscendantOne's business analysts -- using our product configuration tool - create the software code that reflects the defined program rules and rating logic. Throughout the process, numerous quality assurance tests are performed by both organizations to ensure that the resulting output from the rating process is consistent with the ISO-defined rating methodology. Once ISO is comfortable that the output is consistent and reliable, they sign-off on the completed ratebooks. Yezzi: This documented process we have established to initially develop the ISO-based ratebooks is not a one-time exercise. This same collaborative process will also be used on a going-forward basis to update and maintain the ratebooks as ISO updates its insurance programs. Using the same tool deployed by by ISO and AscendantOne to build and maintain the ratebooks, carriers can adopt ISO updates as released, while easily layering in their own underwriting guidelines, loss cost multipliers, rate modifications, independent forms, and more. That is, carriers can efficiently remain current with industry pricing and regulatory standards, while focusing their resources on maintaining competitive advantage in the P&C marketplace. Question: What are some of the results you have seen so far from the BOP 2002 effort? Yezzi: During the analysis process, we addressed many complex rating rules and calculations in the ISO manuals that are typically not well managed, or are handled disparately, by most rating engines. Here are examples of some of the more complex rating rules that are often difficult for many rating software programs to automate properly, but which we have accurately addressed: Order of Application - The order in which calculations are performed and results are rounded is key to determining the appropriate BOP premium. The ISO/AscendantOne solution ensures that the order of application for coverage calculations and rounding are properly completed. Deductibles - The extent to which deductibles apply to certain optional coverages, and how that affects the calculation of the premiums for those coverages, can be complicated. For each optional coverage, we've made the determination of when and how the deductibles should apply, and built that business logic into the AscendantOne offering. Hierarchy of Forms - The level at which a policy form or endorsement is rated (for example, at the classification, policy, location or structure level), can make a significant difference in the final premium. Within the ISO-AscendantOne BOP 2002 product, all premium-bearing forms and endorsements are automatically slotted to their proper level. Predominant Occupancy - The AscendantOne rating engine has automated the process of determining the predominant building occupancy when rating multiple occupancy buildings. Thus, underwriting workflow is streamlined and premium calculations made more accurate. Cate: The result of the ISO and AscendantOne collaboration is a base platform for insurers to quote and issue policies based on the ISO BOP 2002 program. Our rating and underwriting rules engine, uses the ISO-validated validated algorithms to perform the appropriate premium calculations. Standardizing the business logic of underwriting improves the quality, consistency and accuracy of quoting, new business and renewal processes. Question: What are other benefits of the ISO-AscendantOne collaboration on BOP 2002? Yezzi: Another example of the value from our combined content and technology expertise is demonstrated in the recently introduced Utility Services Direct Damage and Time Element Coverages. We found that the AscendantOne rating engine efficiently handles the intricate rating rules for these new coverages. Other instances of achieving a more precise rating process include: Functional Business Personal Property - To properly rate policies when both Functional Business Personal Property and Replacement Cost coverage apply, the AscendantOne engine automatically calculates an average base rate for Business Personal Property based on a weighted average of the two. With this level of attention to detail, the AscendantOne rating solution can achieve a higher degree of rating precision. Ordinance or Law Coverage - The interaction of Ordinance or Law Coverage with the various time-element coverages and earthquake coverage creates many possible rating permutations. The AscendantOne rating engine accurately handles all possible coverage combinations. Earthquake - The AscendantOne engine incorporates all of the various state-specific nuances for rating earthquake and earthquake sprinkler leakage (EQSL) coverage. Hired and Non-Owned Autos - The AscendantOne rating tool incorporates the proper rating methodology for hired and non-owned autos, based on policy limits. Professional Liability - The AscendantOne rating engine incorporates the proper rating methodology for pharmacists and veterinarians professional liability, again based upon policy limits. Liquor Liability - The application of liquor liability limits by state and with respect to policy aggregates is accurately detailed in the AscendantOne offering. Cate: The result of this collaboration is that manual rules are properly interpreted, optional coverage forms are attached at the correct level (policy, risk, coverage), and full testing and validation is conducted by both ISO and AscendantOne experts. Working together, ISO and AscendantOne are ensuring that the quoting, rating and underwriting processes and workflows within the new BOP are accurate and well-documented. For our customers, the competitive advantage is one of achieving highly accurate BOP premium calculations more easily than ever before. This quality and time-to-market standard will apply not only for the BOP 2002 program, but for all ISO lines of insurance developed as part of the ISO-AscendantOne alliance. Question: What is the long-term value of the ISO-AscendantOne relationship for insurers? Cate: This unique industry relationship brings numerous advantages to companies. The ISO-interpreted content along with our inheritance-driven technology accelerates a company's entry into a new line of business and/or new state for an existing line. More importantly, the ease and lower cost of staying current with ISO-promulgated loss costs and other changes can translate into bottom line profitability. Another less obvious benefit is that company product specialists no longer need to define for their IT analysts the ISO manual content, but are free to focus their efforts on defining and implementing improved underwriting rules and pricing initiatives to further enhance risk selection priorities that ultimately affect profitability. Yezzi: From the build-out of the BOP 2002 program with AscendantOne's advanced product development tools, we now know that the technology and our product development process capture the true intent of loss cost calculations incorporated into the AscendantOne rating/underwriting system. With ISO's validation at every step of the way for each line of insurance build-out, ISO-AscendantOne products can be rolled out into the market reliably and cost-effectively without the need for time-consuming additional corroboration and testing by customers. This methodology applies to each ISO-reviewed line of business jointly developed by ISO and AscendantOne. It is the underlying foundation for our alliance -- AscendantOne technology