Inside the Insurance Industry's Destruction Lab

You don't see your name up there, right? And, and shame definitely does work in a competitive environment. Peer pressure is a, a hell of a drug. It is. Julie says getting the facility built took a couple of years of intensive lobbying. At the same time, her counterpart at ibhs, the chief engineer, was busy figuring out things like how do you actually create a tiny artificial hurricane inside a building? Or how do you measure how many embers it takes to light a roof on fire? Finally, in the fall of 2010, the lab was ready for destruction. Julie and her colleagues invited a group of their investors, insurance company executives, to come see the inaugural set of test demonstrations. They set up a pair of two story houses in the test chamber. One of them was built to the standard code, and one was built with extra fortifications. They then programmed the giant wall of fans to reproduce the wind patterns of a hurricane. And when they turned it on, something unexpected happened to the unfortified house. You can actually still see this in a video they took at time. The whole house blew out the back door of the test chamber. It was literally in a pile, you know, like in a field in the pile. Julie and the IBHS scientists hadn't expected the house to completely blow away, but they still were able to learn how small differences in construction could lead to vastly different outcomes. The house that survived, it had been built with fortifications that cost less than 5% more than the house that ended up a pile of debris. The insurance executives were impressed. And over the next several years, Julian Co. Built out their program according to the specific research requests from the various insurance companies backing ibhs, the so called member companies. In exchange for dues, sometimes in the millions of dollars, member companies get exclusive access to the full range of IBHS research, though some portion is also released to the public. And when you think about all this from an insurance market perspective, there's something sort of odd going on here. Like usually all these companies are locked in a heated competition for customers. That's why we're all bombarded by ads with talking geckos or annoying jingles. Yet in the case of this IBHS destruction lab here, they all are congenially cooperating in order to fund research which could benefit them all. Which means these companies are also constantly walking a sort of legal tightrope. Because under U.S. antitrust law, which is meant to promote competition, competitors are strictly forbidden from coordinating on things like their pricing strategies or market segmentation because of the.