ISO Ratings
ISO history: how a small non-profit turned into a $35B company
The Insurance Services Office (ISO), the organization behind fire department ISO scores, began in 1971 as a non-profit association of insurers gathering statistics for regulators. It traces its roots to the 1866 National Board of Fire Underwriters, went for-profit in 1997, and went public in 2009 as Verisk Analytics, a company worth roughly $35 billion.
Key takeaways
- The ISO was founded in 1971 as a non-profit association of insurance companies formed to gather statistics and report to regulators.
- Its roots go back to 1866, when the National Board of Fire Underwriters was created after large citywide fires bankrupted several US insurers.
- ISO became a for-profit entity in 1997 and effectively went public in 2009 as Verisk Analytics: with major insurers, including Berkshire Hathaway, among its top owners at the IPO.
- The Fire Suppression Rating Schedule (FSRS) that produces fire department ISO scores is now a very small part of Verisk, a roughly $35 billion market cap company.
Established in 1971, the Insurance Services Office (ISO) evolved from a non-profit formed to standardize insurance rates into part of the $35 billion Verisk Analytics. Originating from the initiatives of the 1866 National Board of Fire Underwriters, ISO's journey reflects its enduring impact on insurance pricing, and its unusual relationships with major industry players, including Berkshire Hathaway.
How did the ISO start?
The Insurance Services Office started operations as a non-profit in 1971. It was formed as an association of insurance companies to gather statistics and report to regulators.
ISO's founding was over 100 years in the making. In 1866, the National Board of Fire Underwriters was created after large, citywide fires led to several insurer bankruptcies in the US. The National Board sought to standardize insurance rates and regulate insurers to avoid more bankruptcies and bailouts.
By the 1920s, however, rate restrictions meant US-based insurers couldn't compete with offshore insurers like Lloyd's of London. By the 1950s, states were starting to allow insurers to price outside federal rate restrictions.
Which brings us back to 1971: the ISO was formed so insurers could make their own rate decisions, but they were expected to use good data. ISO provided that data.
How did a non-profit become a market giant?
In 1997, ISO transitioned to a for-profit entity. It effectively went public in 2009 as Verisk Analytics. At the time of the IPO, top owners included several large insurance companies, among them Warren Buffett's Berkshire Hathaway. That's a rarity: you seldom see key customers as large owners of a publicly traded company.
As of this writing, Verisk Analytics carries a market cap of roughly $35 billion. The ISO Fire Suppression Rating Schedule (FSRS), the system that produces fire department ISO scores, is now a very small part of Verisk. But the roots of this massive company trace back to one simple question: how should fire protection insurance be priced?
Curious how the FSRS grades your department today? Start with ISO Scores 101, then explore ISO scores by state, ISO training requirements, and how ISO scores influence efficiency and funding.
Common questions
When was the Insurance Services Office (ISO) founded?
The ISO began operations in 1971 as a non-profit association of insurance companies formed to gather statistics and report to regulators, giving insurers good data to make their own rate decisions.
Why was the ISO created?
Its origins trace to 1866, when large citywide fires bankrupted several US insurers and the National Board of Fire Underwriters was formed to standardize insurance rates and regulate insurers. By the 1950s, states began allowing insurers to price outside federal rate restrictions, and in 1971 the ISO was formed to supply the data those rate decisions required.
Who owns the ISO today?
The ISO transitioned to a for-profit entity in 1997 and effectively went public in 2009 as Verisk Analytics. At the IPO, top owners included several large insurance companies, among them Warren Buffett's Berkshire Hathaway.
Does the ISO still rate fire departments?
Yes. The ISO's Fire Suppression Rating Schedule (FSRS) still produces the Public Protection Classification (ISO score) for fire departments, though the FSRS is now a very small part of Verisk Analytics' overall business.
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