Xactimate, who owns it and who are you actually dealing with when the insurance company relies on an Xactimate estimate?

Xactimate is a program created by Xactware and it used by insurance companies to estimate property damage claims that many believe are biased against the insureds in favor of the insurance company. Today 22 of the top 25 property insurance companies in the U.S. use Xactware property insurance claims tools. Xactware is a subsidiary of Verisk Analytics which was formed to be the parent company of Insurance Services Office or “ISO”.  Verisk is essentially owned by the insurance industry even though it is technically “publicly” owned.

ISO was created in 1971 when several rating bureaus consolidated and formed a non-profit association of insurers. By 1993, ISO had been reorganized as a for-profit independent corporation. Xactware was acquired by ISO in 2006 and in 2008, ISO created a new company called Verisk. ISO went public the following year and became a wholly-owned subsidiary of Verisk, therefore Verisk is currently the parent company and controls ISO. Verisk also currently owns AIR Worldwide, Geomni, iiX, ISO, ISO Claims Partners, NER, Sequel, and Xactware Solutions which are all relevant companies in the insurance industry. Verisk shareholders consist of numerous insurance companies, including but not limited to, Liberty Mutual, Travelers Insurance, and the ACE Group. The Verisk “Leadership” page details the executive officers for Verisk, ISO, and Xactware which have shared executives over the years. Kenneth Thompson is currently the Executive Vice President of Verisk and was previously the Senior Vice President and General Counsel for ISO in 2006. Mark Anquillare is an Executive Vice President of Verisk and was also a previous Exec Vice President and Chief Operating Officer of ISO. David Grover currently sits as Controller for Verisk and has also previously held the position of assistant controller for ISO.

ISO and Verisk’s connection to Xactware is important because its software, Xactimate, is used by a majority of the insurance companies in handling insured’s claims. It is problematic that a company like Xactware, who has substantial ties to the insurance industry, is being used to provide an “unbiased” estimate of insureds property damage. In fact, Xactware was at the center of a dispute in Schafer v. State Farm & Fire Casualty Co., Docket No. 06-8262, 2008 U.S. Dist. (E.D. La. June 11, 2008),  where the insureds alleged that State Farm insurance company colluded with Xactware to manipulate prices on construction material in order to keep replacement cost low. The court ultimately dismissed the price-fixing claim but allowed the insureds to move forward with an intentional misrepresentation claim against both State Farm and Xactware. The case was eventually settled in 2010 before the intentional misrepresentation claim was ruled on. As an insured is important to know who is actually behind the estimation of their claims. An insured should always double-check the prices used in the insurance companies estimate. If those prices appear to be inaccurate the insured should consider consulting with a public adjuster or attorney who specializes in insurance coverage matters.

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