Learn how to classify applicants with Herald

Commercial insurance applicants are difficult to classify. These applicants differ across a number of factors:  legal status, employee base, processes, assets, contracts, products, customers, and more. People have attempted to organize the types of organizations that exist in the world (often referred as “classes”) by creating systems of “class codes.”

These systems usually have a list of business descriptions that are mapped to codes. Here’s an example of some codes defined by NAICS:

Unfortunately, there is no single standard for industry classification in commercial insurance.  There are a number of standards that exist for a number of reasons:

  • Multiple organizations —  government institutions, businesses, and non-profits — have created “competing” standards over time.
  • Some classification systems classify slightly different things. For instance, some codes focus on the type of organization as a whole (e.g., Baked goods retailers), where others focus on the type of employee that works within an organization (e.g., Bakers vs. cashiers).
  • Many insurance institutions have created their own classification systems (or variations on a standard system) to underwrite certain risks more effectively.

Classifications at Herald

We have created Herald Codes to normalize these variances into one classification taxonomy, such that every Herald code corresponds to a code for every insurance product we support.

In order to achieve this end, we used two following principles to decide on our classification system:

  • The system must be sufficiently granular so that every code can be mapped.
  • The system must be familiar for applicants and the brokers who represent them.

With these principles in mind, we chose to use NAICS Index Entries as our system of industry classification. As explained in our NAICS Index Entries doc, NAICS assigns 6-digit codes to each industry. Below each industry are even more granular descriptions, which is where Herald Codes are assigned.

In the example below, you can see that NAICS uses the code 541110 to identify the industry for Offices of Lawyers. Within the Offices of Lawyers industry, there are multiple descriptions (Index Entries) such as Attorneys’ offices, Counselors’ at law offices, and Law firms. These descriptions are where Herald Codes are assigned, with each description having a unique Herald Code.

To get quotes from most products via Herald, you submit NAICS Index Entries in the form of Herald Codes. Herald Codes, along with any other classification system, are submitted at the Application stage. For many products, the risk parameter for classification is [.h-code]rsk_b3jm_2017_naics_index[.h-code], which expects a Herald Code as the value.

The Herald Code is mapped to the corresponding carriers code when you submit the application.

You can get classifications using [.h-code]GET[.h-code] [.h-endpoint-link]/classifications[.h-endpoint-link]. Read more about getting classifications.