Why AAIS Rating Alone Is Not Enough to Run a Commercial Lines Program

AAIS rating guidance is a critical foundation for many commercial insurance programs. It defines how risks should be priced and how coverage structures are intended to work. However, many MGAs, wholesalers, and carriers discover that rating alone does not translate into a functioning insurance program.

This article explains why AAIS rating by itself is not enough, where programs typically break down, and what is required to operate AAIS based commercial lines at scale.

What AAIS Rating Actually Provides

American Association of Insurance Services publishes rating guidance that helps carriers and delegated authority programs price risk consistently.

AAIS rating guidance includes:

• Rating variables and factors
• Coverage structures and limitations
• Manual rules and references
• Loss cost and pricing frameworks

This guidance defines how rating should work. It does not perform rating in real time.

The Gap Between Rating Guidance and Real Programs

AAIS rating guidance exists on paper and in manuals. Insurance programs operate in production environments with live submissions, time constraints, and compliance requirements. The gap appears when organizations attempt to move from guidance to execution.

Common challenges include:

• Manual interpretation of rating rules
• Spreadsheet based calculations
• Inconsistent application of modifiers
• Difficulty maintaining version control

Without a production rating engine, AAIS rating guidance remains theoretical.

Why Rating Alone Does Not Support the Full Policy Lifecycle

Commercial insurance programs require more than pricing.

A functioning program must support:

• Quote generation
• Binding workflows
• Policy issuance
• Endorsements and mid term changes
• Renewals and servicing
• Reporting and oversight

AAIS rating guidance addresses only one part of this lifecycle.

Learn how the full lifecycle is supported: AAIS Rating Policy Issuance and Accounting

Policy Issuance Is Where Many Programs Stall

Even when rating is implemented, many AAIS programs struggle at issuance.

Common issues include:

• Manual document assembly
• Disconnected forms and schedules
• Inconsistent declarations
• Delays in delivering policies

AAIS provides forms and manuals. It does not generate policy documents or manage issuance workflows. Programs require systems that can take rated data and turn it into issued policies.

Endorsements and Mid Term Changes Are Unavoidable

Builders Risk and Inland Marine programs rarely remain static. Projects change. Cargo moves. Limits adjust. Coverage evolves.

Without integrated endorsement workflows, organizations often rely on:

• Email driven requests
• Manual recalculation of premium
• Reissued documents outside the system

This introduces risk, delays, and inconsistency. Rating guidance alone cannot manage these changes.

Reporting and Oversight Matter More as Programs Scale

As AAIS based programs grow, carriers and program administrators expect visibility.

This includes:

• Policy level activity
• Premium movement
• Endorsement history
• Program performance

AAIS rating guidance does not provide reporting systems or operational dashboards. These must be delivered by platforms operating the program.

Why Platforms Are Required to Operationalize AAIS Rating

To move beyond rating guidance, organizations need platforms that can:

• Implement AAIS rating logic in production
• Generate quotes and bind coverage
• Issue policies automatically
• Manage endorsements and renewals
• Provide accounting visibility and reporting
• Support delegated authority governance

Platforms turn AAIS rating guidance into repeatable, auditable workflows.

See how AAIS rating is operationalized:

Production Ready AAIS Commercial Lines Platform for MGAs Wholesalers and Carriers

AAIS Rating Compared to Other Standards

Insurance Services Office also publishes rating guidance used in commercial insurance. Like AAIS, ISO defines standards but does not operate insurance programs.

Regardless of which standards organization is used, operational platforms are required to execute rating, issuance, and servicing in real environments.

How MGAs and Carriers Avoid Rating Only Pitfalls

Organizations that succeed with AAIS based programs typically:

• Treat rating as one component of a larger system
• Implement rating, issuance, and servicing together
• Avoid manual processes early
• Choose platforms designed for delegated authority

This approach reduces operational risk and accelerates growth.

How Selectsys Supports Programs Beyond Rating

Selectsys provides the infrastructure required to operate AAIS based commercial lines programs beyond rating guidance.

This includes:

• Production ready rating implementation
• Policy issuance and endorsement workflows
• Reporting and operational visibility
• Support for delegated authority requirements

Learn how AAIS rating fits into a complete operating model: AAIS Rating Policy Issuance and Accounting

Frequently Asked Questions About AAIS Rating

Does AAIS provide rating software?
No. AAIS publishes rating guidance, which rating engines implement within production systems.

Can a program run with rating alone?
No. Insurance programs also require policy issuance, endorsements, and reporting systems to operate effectively.

Is this issue unique to AAIS?
No. ISO and other standards organizations also publish guidance rather than operating insurance systems.

Who is responsible for operating AAIS programs?
MGAs, wholesalers, carriers, and program administrators operate programs using platforms and internal processes.

Conclusion

AAIS rating guidance is essential, but it is only one piece of a functioning commercial insurance program. Without systems for issuance, endorsements, and reporting, rating alone cannot support real world operations.

Successful programs combine AAIS standards with platforms that operationalize the full policy lifecycle.