American Association Of Insurance Services (AAIS) Definition
The American Association of Insurance Services refers to an organization that deals with the development of insurance policy forms and information to do with experience rating that casualty and property insurance companies use. The organization provides information to over 700 insurance companies. It helps these companies with actuarial analysis, policy development, regulatory paperwork, automation, and professional training.
The AAIS organization was established in 1930 first as the Chicago-based Transportation Insurance Rating Bureau, focusing mainly on inland marine insurance. In 1975, its name was changed, and its scope broadened in order to accommodate other insurance products.
A Little More on What is the American Association Of Insurance Services (AAIS)
It is important to note that AAIS is not an insurance firm. It is an organization whose advisory programs focus on Best in Class’ forms, loss costs, and rules. Using a collaborative approach, AAIS develops and delivers solutions that are customized for each of its members.
Through the programs they offer, AAIS empowers its members with flexibility and confidence. The organization’s forms and rates can, therefore, be geared towards target clients and become the base for excellent differentiation, underwriting, as well as a competitive advantage.
The AAIS has been for decades licensed as a statistical agent in fifty-one jurisdictions for all kinds of property as well as casualty lines. AAIS provides the following services to its members:
- It collects data that assist its members in carrying out responsibilities associated with regulatory statistical reporting
- It acts as an intermediary between insurance regulators and carriers
- It uses its transaction data to support rate-making activities and loss cost development
- AAIS services and products are complemented by value-added offerings to support improved product development, policy administration, underwriting, and speed-to-market. It does this through special partner relationships including and not limited to:
- Data and technology firms
- Claims and risk management companies
How American Association of Insurance Services Data is Used
AAIS data is used to achieve the following:
Provide information to commercial, personal, marine, and agricultural insurers. For instance, it provides insurance companies and homeowners with model forms describing the following:
- What homeowners policy covers
- What the policy excludes
- Whether the insurance provides actual cash value
- Replacement costs
- Modified replacement cost
- Functional replacement after a loss
As changes happen, AAIS usually updates its market model forms. Such changes may include exposure, lawsuits, and claims to assist insurers to keep on protecting themselves.
AAIS developed policy language that is modified to assist insurers in limiting their exposure to mold losses. This is more especially when there increment in mold claims when it comes to insurance policies related to homeowners.
It works to find out if there are any new sources of risk that may affect the insurance firms before extensive claims occur. This way, insurers can be in a position to choose whether or not to cover the risks or see if there is a need for them to charge more for the cover. When issuing policies to consumers, insurers can use the forms provided by the AAIS or may customize them to fit their format.
The AAIS does data collection from participating insurance firms. They do this to provide information on claims to insurance firms. The information shared by AAIS includes information on the claims insurers have paid in the previous years (history of losses). It helps insurers to make informed decisions on the amount they can charge their customers as premiums, including the types of risks they can or can’t cover.
In most cases, insurers will want to know that the premium they are charging their customers is enough to cover the risks they are covering. They want to be sure that their premium charges to customers can enable them to pay out customers’ claims.
Lastly, AAIS provides insurance firms with statistical data about general liability, property, and automobile insurance. Such information helps them to remain at the top of the competition in the insurance industry. The information also helps them to be aware of the available new insurance product they can offer their customers, including the suitable states they can offer the product.