Release: Immediate

Contacts:
Susan Boyle / Jessica Riccardi
MWW Group (for ISO)
201-507-9500
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it / This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

ISO's 5-YEAR CHALLENGE: OFFER NEW SERVICES TO
RAISE SALES 40%, WHILE KEEPING KEY FEES AT CURRENT OR LOWER LEVELS

NEW YORK, Jan. 14, 1997 — The chief executive officer of Insurance Services Office,Inc. (ISO) today established a challenge for ISO to provide useful services thatwould enable the company to raise revenues by 40 percent by 2001.

The second part of the double-barreled challenge is to holdinsurers' participation fees for ISO's core services at— 8/100ths of a cent per premium dollar or lower for the next five years.ISO's core services include prospective loss costs (estimates of futureclaims payments), policy forms, and rating and policywriting rules.

Fred R. Marcon, ISO's chairman, president and executive officer, announcedhis targets for ISO at a meeting today of ISO participating insurers. Themeeting came shortly after ISO's conversion to a for-profit stock corporationbecame effective Jan. 1.

"Over the next five years, we're going to make it our business to introducenew services that you will find useful to buy because they improve yourbottom line," Marcon told insurer executives, many of whose companiesare both customers and shareholders of ISO. Added Marcon: "Revenuegrowth from new products and new markets will be the basis of improvingISO's profitability and value for our shareholders."

ISO's targeted revenue growth would raise ISO's revenues by $100 million to$349 million in 2001 from an estimated $249 million last year.

ISO's growth, Marcon said, would come from "increasing our real value to customers."

ISO's customers include about 1,500 insurers, as well as agents, regulatorsand others.

The for-profit conversion, said Marcon, "provides us with flexibility andincentives to fund, develop and deliver additional services that add valueto your own operations, and new profit incentives to intensify our demonstratedcost control."

ISO's for-profit structure will enable the insurance information-servicescompany to more readily develop new products and services by drawing capitalfrom sources that are readily available to for-profit corporations, Marconsaid.

Marcon noted ISO's new financial structure enables ISO to sell or issuemore stock, "if capital needs increase in the future, or if a strategicopportunity becomes clear."

Under its new financial structure, ISO will "provide information beyond pricing and underwriting data," said Marcon. "We'll be a one-stop source for information across lines of insurance — for claims and other operational information that you need to service niche business, specialty programs and other markets," he said.

Policy forms, for instance, will no longer be "just plain vanilla,"but will go beyond coverage programs by line of business to provide standardizedprograms for individual classes of risk and individual industries, he said.

"You can count on us to focus first and foremost on meeting your needs," Marcon said. "Our first priority will be to deliver services that will lower your costs, increase your revenues, help you manage your risk, and improve your bottom line," he said.

Marcon said ISO planned to extend its product line in a number of areas,including risk-specific information, multiline surveys of risks and premiumauditing.

"You can also look to us to leverage our core competencies with thesimilar — or dissimilar — expertise of other firms," said Marcon. As examples, he cited ISO's strategic alliances with Equifax InsuranceServices and Policy Management Systems Corporation for the delivery of ISOinformation through their electronic delivery or policy-processing systems.

Marcon said development of ISO's new capital structure is in keeping withchanging customer needs in a worldwide insurance marketplace that is swiftlytransforming because of six developments.

Consolidation that "has a long way to run" before acquisitiveinsurers are satisfied they've increased their market shares sufficiently,reduced their work forces, eliminated overhead redundancies, and attainedthe financial strength and capacity they seek.

Specialization and focus on niche markets. "Insurers of all sizes and in just about all markets are moving from an 'all things to all customers' focus to a focus on selected market segments," Marcon noted.

Competitive pressure to cut expenses, including pressure from alternativemarkets that have taken a third of the commercial-lines business. Suchcompetition has helped suppress average annual premium growth to a levelnearly 2 points below the rate of economic growth since 1988.

Catastrophes, which since 1989 have run an average annual tab of $10.6 billionfor the industry — more than four times the average of $2.4 billion a yearfor the seven preceding years.

Increasing globalization, which Marcon viewed not only as a source of competition,but as a growth opportunity, as well.

Rapidly advancing information technology "and the profusion — somewould say confusion — of alternative technology solutions" that offerthe promise of being a " Key strategic and competitive advantage inmany business areas," including marketing.