Regarding "Through the Roof" insurance rates (Dec. 16), the answer may not be so elusive. The public relations representative at the Insurance Services Office (ISO) surely dissembled, simply because risk-assessment methods are a well-guarded trade secret.

Consider the fact that ISO is just one of many subsidiaries of a corporation by the name of Verisk Analytics (VA) that was established in the early 1970s. VA/ISO provides risk analysis data to the largest insurance companies all over the world. Verisk claims to hold some 12 billion records in its statistical database, a staggering number that is continually growing. These records allow Verisk to compute the risks (including those new ones associated with global warming catastrophes) in thousands of locations for all kinds of insurance -- health, auto, home, accident, you name it. Big companies like Allstate are more than willing to pay for the information that Verisk provides, because it allows them to minimize their losses by doing just what they have done in Westhaven.

Some might say all that is very scientific. But also consider that the larger the information database, the more complex it gets and the more prone to errors; that the data bits must be entered into special formulas devised by Verisk; and that an inadvertent entry by someone in New Jersey into one of the many formulas could easily result in the 10 rating assigned to the Westhaven fire district.

And about those formulas: It seems like there may be some sort of parallel here with those secret formulas recently devised to calculate the market value (and the risk) of all kinds of derivatives that are still in process of destroying our financial system.

I. Van Natter, Kneeland


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