Xactimate Software: Is It Really “Rigged” & “Owned by the Insurance Industry”?

Designed to be fast, accurate, and flexible, Xactimate solved a big problem in the insurance space: insurers were spending significant time and resources calculating repair costs.

Some, however, have criticized Xactimate’s software.

Merlin Law Group, for example, published a blog post arguing Xactimate is “controlled by the insurance industry,” for example. Others argue Xactimate is “rigged in favor of insurance companies.”

Are insurers really using Xactimate to undervalue claims and protect their bottom line? What’s the truth about the popular insurance industry software? Let’s find out.

Who Owns Xactimate?

Xactimate is owned by a publicly traded New Jersey-based company called Verisk Analytics, Inc. The company acquired Xactware, the makers of Xactimate, in 2006. Verisk has been publicly traded since 2009 (NASDAQ: VRSK).

Verisk Analytics traces its roots to the launch of the Insurance Services Office (ISO) in 1971. ISO was created through the consolidation of various property and casualty insurance rating bureaus. Verisk was established in 2008 to serve as the parent holding company of ISO.

Today, Verisk Analytics is the parent company of several major subsidiaries, including:

• Insurance Services Office (ISO): A provider of statistical, actuarial, and claims information to insurers
• Xactware: The makers of Xactimate
• AIR Worldwide: A Boston-based risk modeling and analytics company (acquired in 2022)
• Maplecroft: An England-based global risk and strategic consulting firm

What Does Xactimate Do?

Xactimate is designed to help insurers and contractors create more accurate estimates, leading to a smoother overall claim process.

Some of the specific tasks performed by Xactimate, according to the official website, include:

• “Create estimates quickly”: The software generates precise and detailed estimates for insurers and contractors based on real-world price data.
• “Access reliable pricing”: The software has more than 460 geographic regions, making it easier to get accurate region-specific pricing data. Those 460 regions are split into five broad geographic areas (West, Southwest, Southeast, Midwest, and Northeast).
• “Sketch complicated structures effortlessly”: Xactimate makes it easy to take measurements of a space without spending hours with a measuring tape. Contractors or adjusters simply take photos, tag certain walls and doors, and get accurate information about a space with Xactimate’s augmented reality feature, SketchAR.
• “Reduce cycle times and improve consistency”: Xactimate aims to help clients “react more effectively to changing circumstances” by providing more accurate estimates earlier in the claims process, simplifying claims overall.

Xactimate is available at two pricing tiers:

1. Pro: $2,690 Per Year
2. Standard: $2,100 Per Year

Do Insurers Own Xactimate?

The claim Xactimate is “owned by the insurance industry” is linked to the parent company, Verisk Analytics.

Verisk Analytics was formed all the way back in 1971 by a group of insurance companies. The company was known as ISO until 2008, when a parent company called Verisk was created before the company went public in 2009.

Here’s how the Verisk Analytics annual report explains the formation of ISO:

We trace our history to 1971, when Insurance Services Office, Inc. (“ISO”) started operations as a not-for-profit advisory and rating organization providing services to the U.S. P&C insurance industry. ISO was formed as an association of insurance companies to gather statistical data and other information from insurers and report to regulators, as required by law.

Verisk Analytics remains closely linked to US-based insurers today. The company derives the majority of its revenue from selling products and services to property and casualty insurers, according to its 2024 annual report:

Revenues derived from solutions we provide to U.S. P&C primary insurers account for a substantial portion of our total revenues. During the year ended December 31, 2021, approximately 52% of our revenue was derived from solutions provided to U.S. P&C primary insurers.

Of course, that’s not surprising: many insurers use Xactimate (along with other analytics and actuarial services from Verisk and its subsidiaries).

Critics, however, argue this dependence makes Xactimate beholden to insurers. If Xactimate’s software started favoring policyholders, wouldn’t insurers stop using it?

Who Owns Verisk Analytics?

Xactimate is owned by Verisk Analytics. So who owns Verisk Analytics?

As a publicly traded company, Verisk Analytics is owned by shareholders. According to Yahoo, the largest holders of Verisk Analytics include:

1. Vanguard: 11.96%
2. Blackrock: 8.78%
3. State Street Corporation: 4.45%
4. Alliancebernstein LP: 3.74%
5. FMR, LLC (Fidelity’s parent company): 3.41%
6. Massachusetts Financial Services Co: 3.16%
7. Geode Capital Management, LLC: 2.84%
8. Morgan Stanley: 2.39%
9. Invesco Ltd.: 1.61%
10. NORGES Bank: 1.37%

None of these names are surprising: they’re asset managers, institutional investors, hedge funds, and wealth management firms (NORGES Bank, meanwhile, is Norway’s sovereign wealth fund).

However, many of these institutional investors also invest heavily in large publicly traded insurance companies. Blackrock and Vanguard, for example, are major holders of some of the country’s largest publicly traded insurers (as the world’s largest asset managers, they’re also major holders of most of the country’s largest publicly traded companies).

Verisk also has relatively low insider holdings (0.25% of all shares are held by insiders, according to Yahoo, citing insider filings (Forms 3, 4, 5). That means no single large individual (like a CEO or major director) holds a controlling share.

Is Xactimate “Rigged”?

Some critics argue that Xactimate is rigged in favor of insurers. They say it leads to lower-than-market payouts and big savings for insurance companies.

Some of the arguments for Xactimate being rigged include:

• Payouts seem lower than current market rates
• The software doesn’t account for regional price spikes or material shortages
• It uses pre-set pricing that may lag behind real costs
• Insurers accused of manually capping or overriding cost estimates

These may seem like serious allegations. However, Xactimate has never been successfully sued or legally held responsible for underpaying claims.

Supporters argue it’s just a tool: it’s software that makes it easier to estimate repair costs, and it doesn’t have an ulterior motive. However, it is possible insurers could use that tool in a certain way – say, by choosing a specific pricing database or customizing labor efficiency settings – to potentially underpay claims.

Final Word: What’s the Truth About Xactimate?

Xactimate is not technically owned by insurers. It’s owned by a publicly traded company (Verisk Analytics), and that publicly traded company is owned mostly by a distributed group of hedge funds and asset managers (like Blackrock and Vanguard).

However, Xactimate’s holding company, Verisk Analytics, began life in 1971 as the Insurance Services Office (ISO), an organization created by insurers for insurers.

Plus, the majority of Verisk’s revenue comes from property and casualty insurers in the United States. Some claim this creates a real or perceived conflict of interest.

Some contractors and public adjusters criticize Xactimate for being rigged. They find it offers lowball evaluations, for example, and appears to favor insurers instead of policyholders. However, none of these allegations have been proven in court.

Overall, Xactimate plays a critical role in the insurance claim process, with adjusters using it daily to help process claims. The software is owned by a publicly traded company and, despite criticisms and perceived conflicts of interest, there’s no specific evidence Xactimate is rigged or owned by insurers.

Stephanie Corona

Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.