Modotech’s Internet Solutions for Insurance (ISi) supports insurance risk management software by enforcing underwriting rules, capturing risk data, and integrating with external sources. ISi is a user-friendly policy administration, billing, and claims system, with a few risk management features. ISi provides support for insurance risk management processes in its core functions.
Most small insurance companies, specialty insurers and MGAs do not need an ERM. However, they do need an all-in-one insurance software solution to help them compete in the insurance market. ISi may be the right all-in-one platform for many smaller insurers. Here’s more.
What Is Insurance Risk Management?
Insurance risk management involves identifying, assessing and controlling potential risks at the individual policy level and across their entire book of business. Risk management in insurance is broader than underwriting or claims management. It is a vital process to ensure the insurance company stays solvent while scaling and growing.
The primary goal of effective risk management is to ensure the covered risks are profitable and sustainable. This involves three main processes:
- Risk Assessment: Using data, statistics, and actuarial analysis to quantify the likelihood and potential financial impact of an event (e.g., a car accident, a house fire). Actuaries collect data, including historical claims data, demographic information, geographic data (e.g., location, flood zones), and even real-time data from sources like telematics for car insurance.
- Pricing: Using risk data to set fair and profitable premiums.
- Risk Transfer: The insurer transfers some of their most catastrophic risks to other insurers through reinsurance to avoid large-scale losses.
Most insurers that use Modotech, export ISi data into actuarial or risk platforms for deeper analysis.
7 Types of Risk That Insurers Manage
Insurers manage a variety of risks that go far beyond just the policies they write. These interconnected risks all play a crucial role in an insurer's financial health. Here's more on the types of risks they must manage.
- Underwriting Risk: The risk of losses from writing policies (mispriced, adverse selection, inadequate exclusions).
- Pricing & Reserving Risk: The risk that premiums don’t cover claims or reserves are inadequate.
- Claims Risk: Risk of fraud, large unexpected losses and catastrophes.
- Operational Risk: Risk of system failures, process errors and cyber attacks.
- Credit Risk: Risk of reinsurers or policyholders defaulting on obligations.
- Market & Investment Risk: Risk losses from interest rates, markets or mismatched assets vs. liabilities.
- Catastrophe & Concentration Risk: Risk of too much exposure in one geography, line or peril.
ISi provides support for insurance risk management processes in its core functions.
Risk Management System Software Tools and Practices
Underwriting Guidelines
Underwriting guidelines are the foundational rules an insurer uses to identify risk. They act as a filter, helping underwriters determine which applicants to accept, decline, or accept at a modified price. These guidelines are a core component of the underwriting process.
- ISi supports underwriting guidelines by making them table-driven, configurable, and enforceable in a rate-to-bind workflow. ISi ensures consistent rule application while allowing manual underwriting for exceptions.
Reinsurance
Reinsurance is the practice of an insurer (the "ceding" company) transferring a portion of its risk to another insurer (the "reinsurer"). This protects the primary insurer from large-scale losses that could otherwise threaten financial strength.
- ISi itself does not handle reinsurance administration, but it provides the policy, premium, and claims data that reinsurance systems need. Insurers use ISi alongside a reinsurance management platform (or custom reporting) to handle ceded premium, treaties and recoveries.
Diversification
Diversification is a risk mitigation strategy by spreading exposure across different categories.
- Insurers use portfolio management software and geospatial analytics to identify and manage concentration risk by diversifying across geographies, lines of business and customer segments.
Pricing Models
Pricing models are the tools used to calculate the cost of a policy. These models are the heart of an insurer's profitability.
- ISi controls pricing at the policy level through its rating engine, SQL-driven factor tables, and integrations with third-party rating sources. Insurers define the rates; ISi enforces and applies them consistently. Rates must be adequate to cover expected claims and expenses, while also remaining competitive in the market.
Claims Controls
Claims controls are the practices and systems an insurer uses to manage the claims process efficiently and fairly, while also mitigating the risk of fraud and overpayment.
- ISi can flag suspicious claims and handle simple claims quickly and accurately with automation. ISi also ensures that claims payments align with policy terms.
Reserving & Capital Adequacy
Reserving is the practice of setting aside funds to pay for future claims. Capital adequacy is the measure of an insurer’s financial strength and its ability to absorb unexpected losses.
- Insurers use actuarial reserving software to forecast future claims payments and ensure they hold adequate funds. They must hold a certain amount of capital as a buffer against unforeseen losses.
- ISi and Reserving: ISi can output actuarial triangles in various formats and provide underlying details for the actuarial to understand any development that seems out of the ordinary.
Regulatory Compliance
Regulatory compliance with governmental regulations is a risk that impacts every aspect of the business.
- ISi supports regulatory compliance by ensuring accuracy in policy underwriting, billing, reporting and captured claims data. ISi ensures that workflows follow statutory rules by giving insurers the management tools and data they need to stay compliant.
ISi plays a central role in this effort by ensuring underwriting discipline, maintaining accurate exposure data, and creating the audit trails regulators expect.
Enterprise Risk Management (ERM)
ERM is a holistic framework that manages all risks across the entire company, not just the risks related to insurance.
- Software Tools: Insurers use specialized ERM platforms that provide a unified view of all risks. ISi feeds ERM processes by capturing, structuring, and exporting the data that ERM teams need. Common frameworks include:
- COSO (Committee of Sponsoring Organizations)
- ISO 31000 (International Risk Management Standard)
- NAIC’s Own Risk and Solvency Assessment (ORSA).
Role of Technology (like ISi)
- Data Collection – captures exposures, claims history, and customer info for analysis.
- Automation – enforces underwriting and billing rules to reduce human error.
- Integration – connects to external data (ISO, credit, catastrophe models) to improve risk assessment.
- Reporting – provides portfolio-level views to monitor concentration and performance.
Is Internet Solutions for Insurance (ISi) an Insurance Risk Management Platform?
Insurance risk management keeps the balance between taking on risk and protecting solvency. It combines underwriting discipline, diversification, reinsurance, capital management, and analytics, supported by systems like ISi that provide the data and automation to enforce those practices.
ISi is a comprehensive policy administration system that supports risk management processes.
What ISi Provides To Support Risk Management and Compliance Functions
Insurance carriers face regulatory pressure and must balance profitability with sound risk practices. A policy administration system (PAS) like ISi plays a central role in this effort by ensuring underwriting discipline, maintaining accurate exposure data, and creating the audit trails regulators expect.
ISi’s table-driven design and built-in integrations give carriers the tools to manage risk consistently, while its linkage between policy, billing, and claims data supports compliance and informed decision-making. Here’s more.
Underwriting Controls
Table-driven questions enforce eligibility and underwriting rules at the policy level.
Exposure & Rating Data
Policy headers and transactions store detailed information about coverage, limits, geography and insured risk characteristics.
Claims Linkage
Claims link to policies, so insurers can track loss ratios and historical experience, which affect underwriting and pricing.
Third-Party Integrations
Jobs connect ISi to ISO, DMV, credit and replacement cost tools to assess risk during underwriting.