What is an advisory organization in the insurance industry?

An advisory organization in the insurance industry serves as an independent body that provides various services to insurers. This can include statistical data collection, rate-making assistance, and developing standardized policy forms. By providing these resources, advisory organizations help insurance companies improve their operations and assess risk more effectively, ensuring that they can better meet consumer needs while maintaining competitive pricing.

Such organizations do not have regulatory authority like governmental agencies, nor do they function as underwriting firms or local brokerages. Their primary role is to facilitate cooperation and information sharing among insurers, promoting more uniform practices and pricing structures within the industry. This collaborative aspect is essential in a field that relies heavily on accurate data and consistent standards to function effectively.