Insurance Rating Systems

Insurance Rating Systems Employ the Old and the New

First there was paper–lots and lots of paper–on which everything had to be recorded. Then we moved into the computer age, which initially meant clunky machines and five and a quarter-inch (remember those?) floppy disks, which were introduced to the market in 1976 and held just over a megabyte of data, an amount considered miniscule in today’s terms. How times have changed! When it comes to harnessing the power of technology and automation, whether you are an enterprising program administrator, managing general agent (MGA), or an insurance carrier, your business and the clients you strive to retain rely on insurance rating systems that are based on a high level of agile yet predictable processes to instantly rate commercial auto insurance coverage.

These processes are continually evolving, always being refined and streamlined in order to deliver the most cutting-edge capabilities and interact with new technology and platforms. Yet it’s interesting to consider how some of the technological advances of past times continue to combine with the latest advances, with old and new working together to deliver systems and services that members of the insurance industry rely on every day. One of those items: the ZIP code system.

Juxtaposition of the old and the new

Zone Improvement Plan, or better known as “ZIP” codes, were introduced formally by the United States Postal Service (USPS) in 1963 (after years of experimentation in various large cities) as a way to sort, process, and deliver mail more efficiently and much more quickly than ever before. The system was extended to ZIP +4, a code of an additional four numbers in 1983, designed to enable determining an ever more specific location within a given ZIP code.

The numbers are are a system of postal codes used by the United States Postal Service (USPS) since 1963. The term ZIP, an acronym for Zone Improvement Plan,[1] was chosen to suggest that the mail travels more efficiently, and therefore more quickly (zipping along), when senders use the code in the postal address. The basic format consists of five decimal numerical digits. An extended ZIP+4 code, introduced in 1983, includes the five digits of the ZIP code, a hyphen, and four additional digits that determine a more specific location within a given ZIP code.

Although the system is more than 50 years old, the ZIP codes are used today to work with modules that, for example, are used to support multi-state policies for all types of motor vehicles. The modules frequently review ISO territory on the basis of ZIP code, as well as city and county, as part of the policy issuing process, including renewals, cancellations, and all manner of related tasks.

Consult with a proven qualified provider of insurance rating systems to obtain modern tools that will enable your organization to stay abreast of the latest developments in technology.