Qorus Innovation in Insurance Awards 2020

Insurance Standard for Industrial Classification (ISIC)

Submitted by
04/05/2020 Insurance Innovation

About

A universal, detailed, relevant, current and easy-to-update list of all economic activities to enable industry-wide data consistency that enables straight through processing and accurate underwriting and reinsurance which ultimately benefits customers.

Innovation presentation

Old Mutual Insure recently launched the Insurance Standard for Industrial Classification (ISIC).

The ‘business description’ field is used by binders to capture the economic activity of the customer. It is one of the most critical data in the underwriting, as it allows an insurer to accurately classify the underwriting risk for all the vastly different businesses on its books. Examples include: Growing of avocados, Manufacture of motor vehicles, Retail sale of textiles, Pizzeria, Book publishing, etc.

However, there was a lack of uniform data standard for this field in the insurance industry and binders had to use a “free-text” or generic description (i.e. “Retailer”, “Manufacturer”, “Property owner”, etc.) to describe these economic activities. This negatively impacts the insurer’s ability to analyse portfolios and create straight through processes for profitable and sustainable underwriting.

ISIC codes are harmonised with the Statistics SA SIC Codes which means that ISIC allows for data integration with external sources. ISIC a giant leap forward for our industry – for the first time, there will be a standardised list of economic activities that the entire industry can use. Old Mutual Insure has made these data codes available to the industry free of charge.

ISIC code implementation is supported by Bryte, Santam and Hollard. Almost all third party system providers cater for standard list of Business Categories so ISIC can be easily implemented without any development work. Tial Technologies is going live with ISIC in June 2020.

Old Mutual Insure is currently developing POC for straight through underwriting processing of low risk using ISIC codes.

Uniqueness of the project

Old Mutual Insure has internally developed the ISIC over the past 12 months. ISIC contains more than 4,000 unique business descriptions which allows for SIC different levels of aggregation.

ISIC enables market trend analysis by economic sector, GDP activity, COVID-19 trends and identification of customers that are impacting and assisting them in times of crisis or need. Use of ISIC helps to quickly evaluate market or industry impact on our customers and to estimate the risk potential and create appropriate and timely responses to customers.

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