[VRSK] Verisk Analytics
One job of an insurance commissioner is to ensure that carriers under their jurisdiction have sufficient reserves to pay claims. In the early 1900s, the data required to make this determination was collected across insurers and standardized into formal reports by a number of rating agencies. A second job of a commissioner is to ensure that carriers aren’t exploiting their customers, and one way to do that is by promoting competition. But competition was hard to come by because the business of insurance is the business of pricing risk, and pricing risk requires lots of data, data that a new entrant data that a new entrant hasn’t had the time to gather. So in the spirit of promoting competition, regulators gave birth to a new monopoly. The McCarran-Ferguson Act of 1945 allowed insurance rating agencies to merge their datasets and those datasets gave carriers the ability to underwrite business in new geographies and lines of risk. In 1971, five of those agencies merged to form Insurance Services Office (ISO), which over the next few decades grew to become the dominant entity for formalizing policy language and setting underwriting standards. To alleviate understandable collusion concerns, in 1997 ISO converted from a non-profit data coop to a for-profit corporation while its founding insurance carriers were forced to relinquish control. Today, ISO stands as the central pillar of Verisk (”Veritas” + “Risk”)1.