Striking ACORD with XML standards: ACORD's plan for data standards is one step closer to implementation. Attendees at the organization's annual meeting in Florida received an update

Risk & Insurance, July, 2002 by Lori Widmer

It's been more than a year since ACORD, the Association for Cooperative Operations Research and Development, announced its eMerge initiative, eMerge was intended to be the beginning of a common global insurance industry data standard. It is an XML standard for life insurance, property and casualty insurance, and reinsurance. Currently, ACORD has separate standards for each line, which is the starting point for this initiative. The single standard aims to be technology neutral and use a common data dictionary.

Where does the initiative stand today? At the ACORD Technology Conference on May 19 to May 21 in Orlando, Fla., attendees were given a series of updates. The group's program manager, Lloyd Chumbley, said the plan is much closer than before, and ACORD is making sure to remember the customer.

An external framework model has been adopted; and the license and appointment model is in place. The group developed the business message design, which allows technology implementers to identify how to convert business requirements into messages. Chumbley says the concepts will be tested, and there will be analyses made of the results. A long-term road map for implementation will then be developed.

ACORD's eMerge plan includes the search for common features, a layered approach to development, and logical features. Chumbley said that process modeling was something that the team was quite active in. "It's important that what we have at the end is useful across all business platforms," he said. "When you have consistent data, you don't have to restructure. That's more effective to you and to the business managers."

The group is using process modeling to bring UN/CEFACT Modeling Methodology (UMM) and Unified Modeling Language (UML) standards a unified language. According to Chumbley, the goal is to allow multiple requirements from different groups to be managed cleanly. "We don't want to tie it to a product. We want to tie it to an industry. Our target is the business message--what will the transaction do?"

Exhibitor News

From the vendors at the meeting came news of mergers, integration efforts, and new product rollouts. Simsbury, Conn.-based idNET and Illinois-based Afni Inc. announced their merger. The focus of the newly formed company will be on 24/7 agency focused on customer service, according to idNET's CEO Richard Roy.

One vendor at the show was The Innovation Group (TiG), whose American presence grew from a one-person office--W.J. Hickey, now the president of U.S. operations--to a strong U.S. contender among the insurance software solutions providers. The company announced at the meeting that Sentry Insurance will now use the company's claims management system for commercial lines claims solutions. TiG's claims management system is one that promises to replace antiquated workers' compensation claims systems with a streamlined platform of operations.

Microsoft Corp. delivered its core messages through a newly redesigned booth, complete with XBox for trade show floor attendees. The message at the ACORD show was clear; Microsoft has become an integral part of the insurance software space. Saying that the company is more than ready to compete in this area, Microsoft representatives are helping the push for XML standards. The company is also hoping to make .NET and XML synonymous with insurance.

Says Kevin Kelly, managing director of Microsoft's financial services division, "Microsoft's goal is to become the preferred enterprise solution provider to the insurance industry. Toward that end, we have worked diligently to deliver a platform that now meets and exceeds the expectations of the large, mainframe-bound enterprise."

Industry Clearinghouses

Two vendors had the opportunity to present a workshop on the benefits of industry clearinghouses. Marc Reiser, VP of insurance services at Depository Trust & Clearing Corp. (DTCC), and Katherine Huelster, president and CEO of inreon, showed how using clearinghouses could bring cost savings to companies. Reiser says that clearinghouses offer streamlined processes, access to timely data, capacity and scalability, increased sales, and expansion of one's market. "As the volume is increased through the clearinghouse and you become more efficient, the cost of transaction goes down. This could be insurance in five years," says Reiser. "The market will not reach its full potential without open standards. It doesn't mean just the creation. It means the mass adoption by the industry in all sectors."

Huelster showed an example of a working clearinghouse scenario. inreon offers insurers an online venue for trading platform for reinsurance. In the inreon example, Huelster says there were four predefined phases of strategy: submission, quoting, confirmation, and documentation.

"We looked at not only how we can standardize data, but also how to standardize processes and to simplify those. We looked at the way we typically buy reinsurance and it's a very tedious, time-consuming, manually intensive process. How can we make that easier?" Huelster said that the company worked with a panel of reinsurers and determined the minimum amount of data necessary to transact business. Huelster says the process can take as little as 24 hours to turn around a quote. "What makes this process even more attractive is the cost savings that we want to extract are certainly there on the front end, but it's equally important to look at the back-office processes and to try to capture and drive some efficiencies there."