Report Published by Celent
Use of ACORD XML could save industry over US$250 million annually.
Celent�s new report, ACORD XML Standards in US Insurance, finds that the US insurance industry is increasingly embracing ACORD XML.
“Carriers surveyed by Celent either expected to achieve or had already
achieved integration efficiencies on the order of 20%-30% by using ACORD
XML standards,” says Matthew Josefowicz, a senior analyst at Celent and author
of the report. “If embraced universally throughout the US insurance industry,
the use of standards could save the industry over US$250 million in
technology costs annually.”
72% of the top 50 US P/C carriers and 46% of the top 50 US L/H carriers are ACORD members, as are 52% of the top global reinsurance carriers. ACORD currently maintains three separate XML standards: one each for Life, P&C/ Surety, and Reinsurance. Each standard consists of a data definition or model, a tabular data structure, and a transaction wrapper.
Celent found that carriers are embracing standards for five main reasons: to speed integration with external business partners; to speed integration with external technology vendors; to enable internal integration; to save time and effort from developing internal standards; and to avoid internal political conflict.
Actual usage of standards in production-level technology projects, however, is still at a relatively early stage. Celent�s survey determined that the main reasons carriers delay adopting standards are: that their business partners are not yet using standards; that using standards adds unnecessary complexity; that they have already developed internal schemas; that standards are not comprehensive; and that standards are immature. Even considering these issues, Celent believes that given the potential savings to be had, carriers should aggressively face their fear of being first movers in order to start saving as soon as possible. Celent predicts that the majority of new insurance IT projects that involve XML will be based on ACORD XML standards within three or four years.
The report includes two case studies that illustrate some of the advantages gained and challenges faced by carriers implementing ACORD standards in technology projects. The first case study examines the experience of a carrier that is using the standards in internal systems development. The second looks at using the standards
to integrate with business partners.
A Table of Contents is available online.