UL is the premier product testing lab in the country. Building codes and other use and installation codes inevitably require that various products be certified by a "nationally recognized testing laboratory such as Underwriters Labs." In fact, there is no other organization quite like it. This has led to charges that UL is a monopoly—a charge that UL officials privately admit is true in many product areas. It is not true, however, in the case of woodstoves.
Founded in 1894, the year after the Palace of Electricity astonished visitors at the great Chicago Exposition, UL was established by an electrical investigator hired earlier by the Chicago Board of Fire Underwriters to assist exposition officials. Aware of the burgeoning market for electrical equipment and the lack of available safety standards, William Merrill started a business with the still-popular UL motto: Testing for Public Safety. The original idea was to provide information to insurance companies on the fire risks attendant to various electrical equipment. The organization (known then as Underwriters Electrical Bureau) soon became affiliated with the National Board of Fire Underwriters. Incorporated as Underwriters Laboratories in 1901, UL began offering its testing services directly to manufacturers. A manufacturer would submit its product to UL for testing, pay a testing fee, and receive permission to display the UL label (also for a fee) if the product was approved. This third-party certification service, as it is often called, was soon expanded
to include a "follow-up service," now a major part of UL's function. Currently, the "listing" of a product is contingent upon the use of UL's follow-up service, whereby representatives of UL make periodic inspections of the products at the factory and possibly from the open market to determine compliance with UL requirements. This comprehensive inspection system is a form of quality control, meant to assure that proper tolerances are kept in the manufacturing process. Subscribers to UL's listing service are visited approximately four times per year.
UL has always prided itself on its independence from manufacturers' interests. Although originally affiliated with the insurance industry, UL became legally independent in 1936, when it incorporated as a nonprofit corporation in Delaware. The Internal Revenue Service challenged the tax exemption, however, and a federal court eventually agreed that UL "may be good business, but it is not charity." The tax exemption was restored by Congress, and UL continues to be viewed as the most independent of the private standards-setters. UL's reputation is excellent. It has been remarkably free of scandals or horror stories. Staff members at the Federal Trade Commission, which proposed to regulate private standards and certification in 1977, concur that UL is usually above reproach.
UL has branched out considerably over the years from its best-known area, electrical devices. There are over three thousand employees (a third of whom are engineers) and six major departments—burglary protection, casualty and chemical, fire protection, heating and refrigeration, marine, and electrical—handling literally thousands of product categories. In 1984 over 2.5 billion labels bearing the UL mark were used at 35,381 manufacturing sites in sixty-four countries. Other testing labs compete with UL, but only in a limited sense. The competition often uses UL's standards. Some labs provide certification at a lower cost than UL, in part because they do not have to bear the expense of developing standards. They also do not have to assume the same risk of being held liable in a product liability suit, since they bear no responsibility for the content of the standards. These labs are not always considered "nationally recognized" for the purposes of regulation, however, and some insurance companies charge higher premiums for product liability insurance when the manufacturer uses a testing lab other than UL.