North American Rating Engines: 2016 Property & Casualty ABCD Vendor View

This report presents a review and ranking of the rating engines actively being used by property & casualty insurers in North America. Celent’s ABCD Vendor View is used to evaluate and rank vendors in four dimensions: Advanced technology, Breadth of Functionality, Customer base, and Depth of client services. An XCelent winner is chosen for each of the dimensions.

Stand-alone rating engines are used for a variety of reasons, but primarily to externalize the rates, rules, and logic associated with rating from the policy administration system to create speed to market. This report provides an overview of the stand-alone rating engines available in North America for property & casualty insurance carriers. The information was collected from the vendors and supplemented with demos and customer reference checks.

The report profiles 12 stand-alone rating engines, providing an overview of the functionality, the customer base, lines of business supported, the technology, implementation, pricing, and support. Some solutions qualified for profiles that include customer references and a Celent opinion of the solution. These solutions are also ranked in the ABCD Vendor View. Some solutions did not qualify to be ranked in the ABCD Vendor View, and those profiles do not include a customer reference or a Celent opinion.

The following vendors and solutions are included in this report: CGI: Ratabase; Clarion Door: Insured Rating; CSC: Product Accelerator; Decision Research Corporation (DRC): GameChanger Rating; Duck Creek Technologies: Duck Creek Rating; Instec: Instec Rating; Insurity: Policy Decisions Rating; Majesco: Majesco Rating; NetRate Systems, Inc.: NetRate Commercial Lines Rating; Oracle: Oracle Insurance Insbridge Enterprise Rating; SAP: SAP Product Lifecycle Management for Insurance; and ValueMomentum, Inc.: iFoundry Rating.

Significant innovation is occurring in product management. Carriers are looking to grow, differentiate, navigate the regulatory environment, and do all of this efficiently. The most innovative carriers are focusing their product management efforts on unique offerings such as behavior-based products or products with services embedded. Multivariate rating algorithms are being used, and product managers are using predictive analytics as a tool in providing pricing guidance for books of business.

Smaller carriers are focusing on how to manage their rates more efficiently, looking for speed to market with easy and fast updates of rates and algorithms. All carriers are expanding channels and increasingly providing online rating capabilities to both agents and policyholders. And many organizations are seeking acquisitions. Each of these trends creates a potential reason to utilize an external rating engine.

External rating engines allow a carrier to build the rating algorithms once and distribute to any application — web quoting, comparative rater, or policy admin system — which can improve productivity, create speed to market, and provide carriers with greater flexibility. Intuitive configuration environments often found in modern rating engines allow business analysts to perform many of the updates. Product architectures that include inheritance allow rapid extension of products across jurisdictions. Modeling and testing tools included allow for faster, better analysis of proposed rate changes.

“Choice has increased for insurers in the marketplace for a stand-alone rating engine,” says Karlyn Carnahan, Research Director with Celent’s Insurance practice and author of the report. “While suite administration products have improved their capabilities, there are strong business drivers for some carriers to use stand-alone rating engines. Stand-alone rating engines are most desired by carriers with multiple policy admin systems, with complex products, or those moving towards omnichannel quoting.”