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The Advantages of Rating By Peril

Learn the benefits of rating by peril and how its supported by P&C Insurance Software | WaterStreet Company

Better data is shaping today’s insurance industry. With more information at a carrier’s disposal, better decisions can be made for all parties involved.

Insight into the costs of coverage on a per-peril basis can drastically influence competitive decisions to improve loss ratios, reach internal efficiencies and improve customer satisfaction.

WaterStreet Company offers P&C Policy Administration Solutions to give carriers & MGAs all the necessary tools to keep up with industry changes.

What is Rating by Peril?

Rating by peril means offering the policyholder a fixed rate based on the perils covered by the policy.
Coverage is priced based on the cause of the loss. This allows carriers and other insurers to more accurately associate the costs of damage by perils with fairly priced coverage, rather than an all-inclusive or less-inclusive coverage plan.

All carriers desire a lower loss ratio. Rating by peril shows policyholders the true costs to selectively cover their property from certain perils over others. Geographic location or property features can increase or decrease the rating as well, working in favor of the policyholder in many cases. If the policyholder can show their property has extra protection from select perils, such as smart locks on the door to protect against theft, their coverage could cost less depending on how the carrier rates by peril and the questions asked to take into consideration when providing coverage.

Self inspections are one feature carriers can enable through third-party integrations with WaterStreet Company. This allows the policyholder to directly share information about their property with pictures and video, allowing them to receive discounts on their policy for showing how their home protects against perils.

Common Ways to Rate by Peril

There are nine common perils insurers rate by. These perils are dictated by the most manageable and predictable causes for claims compared to the costs to cover them.

  1. Weather-related water
  2. Non weather-related
  3. Wind
  4. Hail
  5. Lightning
  6. Fire
  7. Liability
  8. Theft or vandalism
  9. All other perils

One trend for rating by peril is whether or not to cover against named storms. Some carriers charge a deductible in the case of hurricane damage. Rating by peril can include wind, hail, lightning and weather-related water separately, however some carriers exclude hurricanes from coverage due to their far-reaching effects.

In total, there are 16 named perils that are often covered. There are additional named perils that are either impossible or very difficult to cover.

  • War
  • Nuclear hazard
  • Earthquakes and landslides
  • Flooding due to storms
  • Intentional loss
  • Damage due to neglect or lack of maintenance, such as rust or mold

Home warranties are an example of unique coverage for protecting home appliances and systems from mechanical damage, which is excluded under most home insurance plans. Pet liability is another example of niche coverage often excluded but can be offered as an add on or through a separate insurer.

All risks and perils coverage may be offered by insurers seeking to offer the best coverage against unexpected events.

P&C Insurance Software with Rating by Peril

WaterStreet Company’s solutions are built with a robust API, allowing us to connect any number of third-party tools to your system, including solutions to rate by peril.

This allows your team to gather all the needed data for shaping policies and rates. Gain access to geographic data and historical property data to view data on weather patterns. Carriers might also find an individual policyholder’s background or a home’s past features to be useful.

Our solution is built with Document Management at its core. A history of all documents, images, video and agreements with each policyholder is organized in the system, keeping all of your employees within one unified solution to easily access the data your company relies on.

Reach out to WaterStreet Company today to request a consultation and demo of our solutions.

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