Obstacles to Obstacles to Innovation at ISOInnovation at ISO

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What is Insurance Services What is Insurance Services Office (ISO)?Office (ISO)?

Premier provider of data, analyticalPremier provider of data, analyticaland decision support productsand decision support products

Serves customers in and outsideServes customers in and outsidethe insurance industrythe insurance industry

Trusted intermediary to the P/C Trusted intermediary to the P/C industryindustry

Leading source of information about Leading source of information about property and liability riskproperty and liability risk

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ISO History and ISO History and StructureStructure

In 1971, ISO, a nonprofit organization owned In 1971, ISO, a nonprofit organization owned by the larger companies in the industry, was by the larger companies in the industry, was formed replacing a number of state insurance formed replacing a number of state insurance bureaus. bureaus.

In 1996, ISO became for-profit which enabled In 1996, ISO became for-profit which enabled it to perform as an independent company it to perform as an independent company focused on providing value to the insurance focused on providing value to the insurance industry.industry.

StructureStructure 4 independent Strategic Business Units (SBUs)4 independent Strategic Business Units (SBUs) Large somewhat federated IS&T organizationLarge somewhat federated IS&T organization Shared Marketing/HR/etcShared Marketing/HR/etc Many recently acquired independent subsidiariesMany recently acquired independent subsidiaries

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Examples of Innovation Examples of Innovation at ISOat ISO

ISO Score Small BusinessISO Score Small Business ISO Score Small Business is an automated, ISO Score Small Business is an automated,

intelligent, and low-cost system for scoring small intelligent, and low-cost system for scoring small commercial risks (Like a credit score but for commercial risks (Like a credit score but for insurance)insurance)

Workers Comp FROI/SROI Transactional Workers Comp FROI/SROI Transactional (FST)(FST) Each state requires submission of Workers Comp Each state requires submission of Workers Comp

claim info in slightly different formatsclaim info in slightly different formats FST allows insurers to submit data to the ISO FST allows insurers to submit data to the ISO

transactional system and ISO satisfies each transactional system and ISO satisfies each states reporting requirements obviating the states reporting requirements obviating the insurer of this expensive taskinsurer of this expensive task

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Innovation at ISOInnovation at ISO The creation of value through the The creation of value through the

implementation of new ideasimplementation of new ideas Innovation is composed of:Innovation is composed of:

Conception and refinement of new value-adding Conception and refinement of new value-adding idea idea

Little understood Little understood No processes in place – Lightning bolt we hope occursNo processes in place – Lightning bolt we hope occurs Huge room for improvementHuge room for improvement

Implementation: Advancement of new idea from Implementation: Advancement of new idea from concept to utilizationconcept to utilization

Well understoodWell understood Many repeatable processes in place (ex. BCP to SMC)Many repeatable processes in place (ex. BCP to SMC) Incremental improvements are possibleIncremental improvements are possible

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General ObstaclesGeneral Obstacles

Strong past performanceStrong past performance High market shareHigh market share Results in complacencyResults in complacency

Non profit historyNon profit history Strongly decentralized org structureStrongly decentralized org structure

Different SBUDifferent SBU’’s are not inclined to work s are not inclined to work togethertogether

No dedicated resources for innovationNo dedicated resources for innovation Stricter controlsStricter controls

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Actionable ObstaclesActionable Obstacles ISO does not have enough individuals purpose-fully ISO does not have enough individuals purpose-fully

searching for and defining opportunitiessearching for and defining opportunities The idea-capturing process at ISO has fallen into The idea-capturing process at ISO has fallen into

disuse and needs renovationdisuse and needs renovation The full potential of the CRM Process as a valuable The full potential of the CRM Process as a valuable

resource in the search for and development of new resource in the search for and development of new opportunities is not being realizedopportunities is not being realized

Job rotation is not being purposefully used as a Job rotation is not being purposefully used as a means of fostering innovationmeans of fostering innovation

We do not do enough training in support of We do not do enough training in support of innovationinnovation

The rewards system at ISO could be used more The rewards system at ISO could be used more effectively to support innovationeffectively to support innovation

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Innovation Proposal – Innovation Proposal – July 05July 05

Authorization to refine and begin Authorization to refine and begin progressing the general recommendationsprogressing the general recommendations Dedicate Individuals to InnovationDedicate Individuals to Innovation Renovate and re-introduce process for idea Renovate and re-introduce process for idea

capturecapture Train in Innovative Methodologies Train in Innovative Methodologies Passively Screen New HiresPassively Screen New Hires Formally Rotate JobsFormally Rotate Jobs Enhance and Leverage CRMEnhance and Leverage CRM Create Incentive ProgramsCreate Incentive Programs

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Recommended Next Recommended Next StepsSteps

Better determine ISOBetter determine ISO’’s current Innovative s current Innovative statusstatus Conduct Stevens Innovation Audit Conduct Stevens Innovation Audit Research origins of recent new products Research origins of recent new products Determine barriers to implementing an innovative Determine barriers to implementing an innovative

ISOISO Refine recommendations based on findingsRefine recommendations based on findings Publicize initiative among employees (and Publicize initiative among employees (and

update status periodically) update status periodically) Align with other initiatives to create a stronger Align with other initiatives to create a stronger

case for change toward an innovative culturecase for change toward an innovative culture Implement recommendations Implement recommendations

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UpdateUpdate ISOISO’’s 2009 strategic objective is in pursuit of growth, large portion tied to s 2009 strategic objective is in pursuit of growth, large portion tied to

improving innovationimproving innovation ISO does not have enough individuals purpose-fully searching for and ISO does not have enough individuals purpose-fully searching for and

defining opportunitiesdefining opportunities Developing white space opportunity attack teamsDeveloping white space opportunity attack teams Developing common processes/deliverables managing innovation within SBUsDeveloping common processes/deliverables managing innovation within SBUs

The idea-capturing process at ISO has fallen into disuse and needs The idea-capturing process at ISO has fallen into disuse and needs renovationrenovation

Different SBUs are developing their own basic idea-capturing tools Different SBUs are developing their own basic idea-capturing tools The full potential of the CRM Process as a valuable resource in the search The full potential of the CRM Process as a valuable resource in the search

for and development of new opportunities is not being realizedfor and development of new opportunities is not being realized No changeNo change

Job rotation is not being purposefully used as a means of fostering Job rotation is not being purposefully used as a means of fostering innovationinnovation

No changeNo change We do not do enough training in support of innovationWe do not do enough training in support of innovation

Working on developing grassroots education in basics of InnovationWorking on developing grassroots education in basics of Innovation Followed by more focused training and attempt at culture changeFollowed by more focused training and attempt at culture change

The rewards system at ISO could be used more effectively to support The rewards system at ISO could be used more effectively to support innovationinnovation

No changeNo change

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