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I read somewhere that it came about in the '80s because Yamaha was rating their outboards at the propshaft and other manufacturers were rating them at the crank, is that correct? I assume 10% was chosen because that's roughly the amount of parasitic loss? Is this around the same time the ISO 3046 became the standard for measurement?
Found this thread, looks like there was some truth to what I read elsewhere and the EPA plays a part therefore the hp and torque numbers posted in CARB reports these days should be pretty accurate with the government being so stringent on emissions.
https://www.screamandfly.com/archive...p/t-44449.html
The 10% was chosen for manufacturing tolerance not necessarily to cover parasitic loss from the crank to prop as shown below by 1983 international council of marine industry association though not sure there is any law it has to be followed therefore it's possible for some outboards to exceed 10% of their advertised hp rating.
http://continuouswave.com/whaler/ref...OMIA28-83.html