ISO's Buy May Signal Shift

Having completed the acquisition of policy administration and rating software vendor AscendantOne (Nashua, NH), Insurance Services Office's (ISO, Jersey City, NJ) leadership is stressing continuity with its traditional mission of providing data and analytical pricing and underwriting information, but the addition could signal a strategic departure from that role.

Since February 2000, ISO has finalized the acquisitions of fraud detection software provider NetMap Analytics (Columbus, OH); Insurance Information Exchange (iiX, College Station, TX), a provider of motor vehicle records; catastrophe modeling software firm AIR (Boston); and IntelliCorp, Ltd. (Solon, OH), a provider of criminal records, and other public documents. Also, ISO took on an equity share of AscendantOne in the spring of 2002.

Until the AscendantOne deal, most of the companies that ISO acquired offered solutions more focused on delivering information, thus directly relating to and supporting ISO's core business, according to Kimberly Harris, research director, Gartner (Stamford, CT). The same also rings true with the rating component of the AscendantOne acquisition. But when it comes to AscendantOne's policy administration solution, "if this is a sign of ISO's strategic vision, that's a different direction than we've seen from ISO in the past," Harris says.

The major driver in the acquisition of AscendantOne, according to Frank Coyne, chairman and CEO, ISO, was that "the P&C industry would constantly come to us and ask, 'Why doesn't ISO have a rating engine?' Because ISO is the direct source of data and analytic information for rating and policy administration systems feeding into the AscendantOne platform, its rating methodology and calculations really give a unique value proposition to carriers." Nevertheless, Coyne chooses to stress continuity over change of strategy. "We will continue to focus on data, analytics and decision support," he insists.

Competitive Threat?

The AscendantOne/ISO combination is a strong one, Gartner's Harris agrees. "If I were a traditional competitor in some of the product areas that have to do with policy admin and rating, I would be concerned," she says. Smaller vendors will find it hard to compete with the financial strength and reputation of ISO, she adds, and "having a newer technology that ISO can then package, bundle and market is going to give some of the older installed-base technology vendors, such as CSC, a good challenge."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio