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Stronger together: ISO and insurer collaboration still makes sense today

More than 2,300 years ago, the philosopher Aristotle paraphrased something many of us hold to be true: “The whole is greater than the sum of its parts.”1 When it comes to the cooperation between the insurance industry and ISO, Aristotle nailed it.

For decades, ISO has served as the go-to architect of insurance policy programs, providing a strong foundation for individual insurers to grow their business, expand into new markets, and serve their customers. As new issues and risks have emerged, ISO has worked closely with the industry to remain innovative.

Recently, I’ve witnessed some insurance leaders question the value of this cooperation. My question is, “In 2020, is Aristotle wrong?” I, for one, still believe in the power of the sum of the parts.

Sometimes we forget how important ISO’s forms, rules, and loss costs can be to the success of individual insurers and how industry collaboration continues to fuel our collective strength.

Power combined is power magnified: Data-driven differentiation

Some insurance leaders may be attempting to do more with less (data). Many of these carriers go through the same labor-intensive data processes simply to avoid sharing any perceived advantage. ISO has one of the largest, most comprehensive contributory databases of insurance risk in the world. This data is your real advantage.

In The Complement of Credibility,2 author Joseph A. Boor reminds us of the power and importance of external data sources to the industry: “[T]he availability of industry increased limits tables (in the United States) makes this the easiest specific excess complement to compute.” Compare these examples of some current practices with potentially stronger alternatives available when working with ISO:

  • Example 1: Some actuaries may attempt to go it alone in trend measurement. Understanding changes over time for various lines of business can be a challenge when working with the carrier’s data alone, because most insurers don’t have enough credible data to develop individual state trends. As a result, they may develop countrywide trends, despite knowing there may be critical geographic differences.

Stronger alternative: As an industry aggregator of data, ISO is uniquely positioned to develop industry trends at a more granular level, providing greater insight on data points.

  • Example 2: Most insurers are seeking to grow their book and diversify their footprint. When you specialize in a particular region, business segment, or age group, your data may be biased toward what you know. To grow and diversify effectively, you need data you simply may not have access to, and extrapolating your current data can be a significant risk.

Stronger alternative: ISO’s broad spectrum of classes, segments, and regional data allows for credible analysis that empowers companies to broaden their footprint and help meet their strategic goals.

By bringing together experience from a broad array of companies, we help decrease the variability in the data and provide a more accurate forecast of future performance. The lowered variability creates a powerful data element for carriers to leverage as a complement to credibility. When data is sparse and lacks statistical reliability, it’s a best practice to use a trusted and reliable statistic to complement your findings.

Lacking credibility often means you’re shooting in the dark. A few data points do not make a trend, but a significant number of points are a trend you can trust. Few sources can provide that credibility like ISO. With more than 35 to 40 percent of personal lines data aggregated and over 60 percent for commercial lines of business, ISO is a leader in providing a complement of credibility for the industry.

The power of words: Foundational forms and economies of scale

In addition to providing the benefits of aggregated, industrywide data, we also act as a centralized regulatory and forms resource for the industry. ISO has more than 30,000 forms in its library, covering 54 jurisdictions.

Instead of 400-plus companies developing and defending their own language, ISO forms include court-tested policy language that stands as the best in class and is available to the industry through our Core Line Services. Further, ISO reviews thousands of court cases annually, across all the jurisdictions we serve and applicable to 20-plus lines of business.

Having hundreds of companies reviewing the same case law can be a resource drain on the industry and muffles innovation. A stronger alternative is leveraging ISO as a resource for these foundational activities, freeing you to focus resources on your brand, unique features, and differentiating innovations.

The power of collaboration: Stronger with a set of helping hands

Working at an insurance carrier before my career at ISO, I benefited firsthand from ISO’s collective experience. My company was looking to expand into new geographic areas and desired an exposure mix and regulatory environment like our current book. We initially hired consultants to help us identify five states for expansion.

Only later did we turn to ISO to license our forms, rules, and loss costs in these states. ISO professionals asked us questions regarding our plan, goals, and other details we hadn’t even contemplated. ISO brought multiple regulatory changes to our attention and ran analyses on our book, comparing it to the aggregate and developing insights we could not have seen or learned elsewhere. As a result, we eventually changed two of the states where we had planned to expand.

It became clear to me at the time that we needed an extra set of hands. We needed the collective data insights we couldn’t get on our own. We needed a partner to help us achieve our goals.

To learn more about how ISO Core Line Services can provide a stronger foundation for your business please visit our website. And stay tuned for additional articles in this series exploring how ISO Core Line Services can make your business smarter and more efficient.

  1. Aristotle, Metaphysics, 350 B.C.E.,< >, accessed on January 2, 2020.
  2. Joseph A. Boor,The Complement of Credibility, Casualty Actuarial Society, p. 21, < >, accessed on February 20, 2020.

Douglas Wing

Douglas Wing is vice president of core lines pricing and data contribution strategy at Verisk. He can be reached at

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