Standards: Making IT Happen.

By Doug Grant CIP, Principal,
(as published in Alberta Broker, August/September 2003 issue)

At’s seminar in late May, the premise that insurance organisations can derive “Strategic Value from Standards in Insurance Underwriting” was explored, mostly from an insurer’s perspective:

  • Chris Hoar of Camilion Solutions considered tools to help companies standardise and more effectively manage insurance products from concept to feasibility through implementation to eventual sunset;
  • Barb Addie of Baron Insurance Service Inc. presented some key issues of the insurance business today and then demystified the concept of credit scoring as a valuable underwriting tool;
  • Michael Turney, and Jim Godfrey of SAS explored with case studies the use of predictive modeling with data mining and analytical tools for rate-making;
  • Michael Hornick from Insurance Systems Inc. illustrated how the newer technology standards like XML are making the exchange of transactional and static data between organisations much easier; and
  • Ronald Dudley, Vice President, Standards, ACORD unveiled some of the challenges of setting data standards in the insurance industry on a global basis.

This list certainly does not exhaust the domain of standards. Depending on our own job responsibility, most of us relate to only one of the above areas of the use of standards, and yet such issues touch all of us in different ways every day, in both our personal and business lives.

Base technology

Ten and fifteen years ago we awaited the next faster Intel chip, the increments of memory we could use and the size of hard disk drives as technology components. At the computer level, there were a variety of technology platforms and operating systems. Today hardware announcements are less newsworthy as hardware is much more commodity in nature, and most operating systems work away, perhaps quietly. Microsoft, the small business defacto standard, vs Linux, might become an issue to catch our interest in this space today.

Attention is more focused on deriving value. At a basic level we are more concerned with reliability, security, ease of management, cost of ownership – and the hardware and software vendors have all responded with programs to address such issues. Conceptually the question of computing evolving from a locally managed resource to a utility is a fascinating trend which is dependent in the extreme on many hardware, software and communications standards being robust and well implemented.

More Communications

Whether within our four walls in a home or standalone business office, among multiple geographic offices of a single organisation, or among industry, like insurance, participants and even to our collective customers, communications married to computing has become ubiquitous, driven by the less-than-ten-year explosion of the commercial Internet. In the latter part of the nineties, most accepted the Internet for a tool rather than a toy. Employee acceptable-use policies, access to Intranet, Extranet and the open Internet for information access and a general deployment of email, and a web site were probably the most common activities.

As the new century dawned, the excitement around the gee-whiz nature of the Internet, faster modems, routers, hubs, switches, bandwidth all faded from the radar screen. The next level of applications began to unfold. The business issues – as with base technologies – moved to centre stage: security, reliability, business value, integration with existing processes which had used other communications channels etc.

From a broker’s perspective there are four primary communities of interest when considering Internet communications tools and the business: serving customers better, improving employee capabilities, interacting better with markets and employing services more effectively and efficiently.

In a recent discussion with people from Markel, they indicated satisfactory progress since their new web site went live last November. As a leading trucking insurer, Markel accepts applications from brokers with whom they transact business on an ongoing basis, as well as other brokers who have an occasional requirement. A major issue with applications traditionally received via fax, courier, email etc. has been incomplete, invalid and missing data. An electronic application was designed to help reduce the back and forth nature of finishing an application, with the attendant time delays and work effort involved. The bonus comes from an underwriting performance promise of one business hour turnaround through underwriting after submission.
And the results after six months, in May this year, showed a surprising number of applications completed outside normal business hours, and a full forty percent of their applications received this new way.

It would appear that the benefits to both parties of reduced administrative overheads, in conjunction with the underwriting turnaround objective, has brought many brokers to this function, which also implies that the brokers have the underlying technical capability to use the service.

There are a myriad of similar uses of the Internet technologies between brokers and markets, from payment inquiry to application submissions and claims status and many more. The Internet and computing technologies are irrevocably married, and we are getting used to them.


The underlying technology standards in the above examples – browsers, ISP’s, telecommunications connections, web-based applications integrating to company back-ends etc. – are an essential part of the successes we are experiencing. The data standards from CSIO, ACORD and others are essential to getting to the next plateau. XML allows the exchange of data between computer applications in the same firm, or between firms, with much less development and implementation effort than was ever the case before.

Example: If Markel in the scenario above has used XML to connect the interactive form on their Extranet web site to their underwriting support system, then it is conceptually easy to connect another computer system – say a broker management system – to that same underwriting backend. However, if the data is represented differently in the BMS than in the company system, then the easy connection provides no value as the data still cannot be exchanged. Thus, if both insurer and BMS had developed their respective computerized systems using data standards as defined by CSIO/ACORD, then both the system connection and the data transfer would be relatively easy. As many have pointed out before, extensions are much easier when the underlying platform are standards-based. In this scenario, a particular broker and particular company still need to talk to resolve security issues etc. before the two firms can “transact business” this way.

In Web Services Explained, by Anthony Kumnick, OARBIC Software Inc. at the ability of now-emerging web services to remove even the need for company to company discussion and setting of parameters in their respective systems is noted. Once again though, to no avail if the basic Internet standards tools of XML, data standards have not been used in the first place.

The world improves

It is wonderful to see the technology vendors now focused on reducing the issues with our current technology and addressing the tools needed to make further progress easily possible. Whether taking an insurance product through its life cycle, requesting and processing risk assessment information, pulling data from various sources to model for ratemaking, or executing simple transactions, technology and data standards will be increasingly important to our IT and business future. It is now up to us insurance types as either vendors or practitioners to make sure we position our people, processes and tools in a way which allows us to exploit these coming changes to our advantage.

(note: Canada’s leading Insurance Internet Resource Centre provides current information for you at and can help you reach your target audience)