Verisk Analytics, long known as the data and analytics backbone of the insurance industry, delivered a solid first quarter in 2024. But buried within the otherwise positive earnings call transcript lies a seemingly innocuous detail that could hint at a significant strategic shift: the discontinuation of Verisk's existing telematics offering.

On the surface, the decision appears trivial. Elizabeth Mann, Verisk's CFO, noted the impact was "immaterial," affecting less than $1 million in revenue for 2024. However, this seemingly minor detail might signal a broader recalibration of Verisk's approach to the auto insurance market, one that prioritizes robust, proprietary data over third-party sources.

Verisk's telematics offering relied on data sourced from external partners. The decision to discontinue the program came as these partners, facing increasing scrutiny and privacy concerns surrounding connected car data, opted to cease data collection. Verisk's CEO, Lee Shavel, acknowledged this, stating the move stemmed from "entities that were providing that data to us [deciding] to discontinue collecting that data."

This presents a fascinating dilemma. Verisk, a company built on the aggregation and analysis of vast data sets, is seemingly stepping back from a potentially valuable data source. Why? The answer may lie in Verisk's commitment to building a more integrated and proprietary data ecosystem, one less reliant on external partnerships and more focused on data directly generated through its core insurance solutions.

Verisk's Hypothesis: Doubling Down on Core Auto Insurance Solutions

Here's the hypothesis: Verisk is strategically doubling down on its already dominant position in the auto insurance market, not by chasing the latest tech trends, but by leveraging the immense data generated through its existing suite of auto solutions. These solutions, including LightSpeed auto, Coverage Verifier and damage assessment tools, provide a constant stream of rich, real-world data on driver behavior, claims and risk assessment.

This proprietary data, directly tied to Verisk's core offerings and collected with full transparency and client consent, holds significant advantages over third-party telematics data. It is inherently more reliable, directly tied to specific insurance products and free from the privacy concerns that have plagued connected car data.

Verisk's Financial Performance: Strong Subscription Revenue Growth

Looking at the numbers, Verisk's commitment to this integrated approach is evident. While transactional revenue, which includes auto-related activities like shopping and non-rate actions, faced tough comparisons to 2023, subscription revenue, the bedrock of Verisk's business, grew an impressive 7.8% on an organic constant currency basis.

Verisk's Focus on Generative AI: Enhancing Existing Data Sets

Verisk is also actively investing in the modernization of its core solutions. The Core Lines Reimagine program, aimed at digitizing and enhancing essential industry standard solutions, is already driving better price realization in contract renewals. This suggests that Verisk is finding success in demonstrating the value of its integrated approach to clients, even as they face a potentially softening insurance market.

Furthermore, Verisk's focus on generative AI, showcased in their recent "Generative AI Day," is geared towards enhancing the value of existing data sets. As Shavel noted, one promising application is "the use of generative AI to gather and predigest massive amounts of information to organize and distill it for the insurance professional, improving and focusing their expertise, not replacing it."

This focus on augmenting, rather than replacing, human expertise aligns perfectly with Verisk's integrated approach. Rather than relying on external data sources like telematics, Verisk is focusing on empowering its clients to make better decisions by leveraging the rich data already generated within their existing workflows.

Verisk's Key Financial Highlights

Conclusion: A Quiet Revolution with Long-Term Implications

This quiet revolution within Verisk, a shift from third-party data aggregation towards an integrated, proprietary data ecosystem, may go unnoticed by many. However, the discontinuation of their telematics offering, coupled with their continued investment in core solutions and generative AI, suggests a company strategically positioning itself for long-term success in the auto insurance market, even as the landscape evolves.

As Verisk moves forward, it will be fascinating to see how this integrated approach plays out. Will it lead to the development of new, proprietary auto insurance solutions that further cement Verisk's dominance in the market? Will it attract new clients seeking a data partner committed to transparency and ethical data practices? Only time will tell. But one thing is clear: Verisk is not content to simply ride the wave of technological innovation. They are actively shaping the future of auto insurance, one data point at a time.

"Fun Fact: Verisk's Extreme Events division unveiled its Next Generation Models (NGM) during the Verisk Insurance Conference in April 2024. These models are the first in the industry to provide a full suite of over 100 models for all perils and geographies, accessible via Verisk's Touchstone platform. This cutting-edge technology allows insurers to better assess and manage their catastrophe risk, potentially impacting the availability and affordability of insurance in high-risk areas."