So you’ve filed an insurance claim. What happens next? Here’s the insider’s guide on how insurance companies evaluate and pay out claims.
ISO is an overused acronym with a lot of different meanings depending on the context. In the insurance world, ISO doesn’t stand for “isolation,” “in search of,” or even “independent sales organization.” It refers to Insurance Services Office, Inc., a huge, overarching information services company that provides risk management and policy language—among many, many other services—to insurers.
So that you can better understand what ISO means in the insurance industry beyond this basic definition, we’ve compiled all there is to know on the topic. Here is your guide to understanding all the ins and outs of ISO in insurance.
What Does ISO Stand for in Insurance?
In the insurance world, ISO stands for Insurance Services Office, Inc., a business that is the leading global provider of insurance tools and analytics. ISO helps insurers determine risk using “unique data assets and deep domain expertise” so that they can accurately price policies. ISO also provides their services to reinsurers, third-party insurance administrators, agents, brokers, regulators, and risk managers.
Basically, ISO extracts information from a massive database to develop language and evaluations that help insurers and other insurance businesses write policies. As a result, you might see their copyright on your Certificate of Insurance. This copyright can often throw people off and lead them to assume that they’re insured by ISO. Be sure to note though, ISO is not an insurance company; it is simply a service for many insurance companies.
Insurance Services Office, Inc.: Some Background
Insurance Services Office, Inc. was founded in 1971 as solely a property/casualty insurance marketplace. It formed as a result of a merger of the databases of several companies. With this combined data, ISO began to offer analytics services. Most pertinent for insurance companies, these services encompassed underwriting analytics, actuarial information, and policy language.
Over the years, ISO has expanded its services far beyond its initial marketplace. It now offers risk analytics and mitigation in diverse markets far beyond the ones it started with. Plus, in 2009, ISO became a wholly owned subsidiary of Verisk Analytics.
As a result of this steady expansion and evolution, Insurance Service Office gradually refreshed its brand and began referring to itself primarily as ISO in external communications.
What Does ISO Do, Exactly?
So, you’re familiar with the nature of ISO, but what it actually does might still be a bit hazy. Essentially, ISO is a massive database that uses data to provide insight on best practices for businesses that handle risk.
With the massive pool of data it has access to, ISO provides services for a wide variety of personal and commercial insurance companies. The following services comprise ISO’s main offerings:
- Statistical information: With a massive database at its fingertips, ISO is able to offer wide-ranging statistics on risk and insurance.
- Actuarial information: Actuarial information simply means data that can be used to mathematically determine, prepare for, and react to financial risk.
- Underwriting information: Underwriting information is information used to evaluate and undertake the risk of lending to or investing in a given borrowing entity.
- Claims information: Most insurers will consider claims information—whether it’s specifically your claims history or more general claims history—when they underwrite your policy.
- Insurance policy language: Many insurance policies are worded based off of language produced by ISO. That’s why many policies will carry an ISO copyright on them, despite the fact that the policy is provided through a completely separate insurer.
- Information about specific locations: If you want to insure real estate, most insurers will do research on the location of the property. Say you want to insure a storefront, for instance. An insurer will get information from ISO to determine the nature of the property and use that information to determine your policy.
- Fraud identification tools: Finally, ISO also offers fraud identification tools for financial and insurance entities hoping to mitigate the risk of fraud for their businesses.
Considered generally, ISO services are information services. Any language or tools they provide are developed directly from the vast pool of information which is the backbone of their business.
How ISO Influences Thimble Coverage
So, how does ISO relate to the small business insurance that Thimble offers?
Put simply, the Commercial General Liability insurance policy that Thimble offers is based on the ISO CG 00 01 04 13 coverage form. This means that the policy language was developed by ISO for General Liability insurance. Of course, you’ll be able to add proprietary endorsements and exclusions onto your Thimble policy, but this example gives you an idea of how ISO works.
ISO in Insurance: The Takeaway
Now that you’ve made it through our comprehensive guide to understanding what ISO stands for in insurance, you’re familiar with much more than what’s in the name Insurance Services Office, Inc. You’ve learned the details on the background, offerings, and practical results of ISO.
You’re now familiar with what ISO stands for in insurance—and then some. What are your main takeaways? Moving forward, be sure to keep an eye out for this acronym on insurance policies.
If you don’t spot the ISO trademark on a policy, then you should ask your potential insurer where the policy language came from before you sign off. The ISO trademark on a policy means the language has been pored over and assessed, so any other version of a given insurance policy could be less thorough and less regulated.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.
Knowing what to look for when you’re comparing general liability insurance quotes will help you choose the best policy for your business. Start by asking yourself these six questions.