PEARL RIVER, NY – 24 March 2005 – ACORD (www.acord.org) and XBRL (www.xbrl.org) examine the need for data standards and their own roles in the overall communications flow in their newly released white paper — XML Standards and the Insurance Value Chain. The document focuses on the flow of data within the insurance value chain and the importance of data standards to transport the information along the path for financial reporting and regulatory compliance.
Data is recognized as being a highly valued necessity within the insurance industry and the movement of that data requires all industry participants to invest the time and money in order to create and communicate consistent quality data. It also requires, according to the authors, a commitment to improve data transparency as well as to enable data transfer across the Internet and between disparate automated systems. This need for data underscores the need for data standards and the significance of this effort.
“This is the beginning, an exploratory exercise, between the organizations and not a conclusion,” said Beth Grossman, assistant vice president, Industry Relations, ACORD, adding that “we are discussing and examining such things as common definitions, mappings between the two standards, and namespaces agreements but where it will lead in the future is what this work, and other discussions in progress are focused on. The objective is to illustrate the importance of standards and to find the result that best benefits the industry.”
XML Standards and the Insurance Value Chain establishes a foundation of knowledge based on the backgrounds and areas of expertise of the organizations. It breaks the data flow into four specific areas where their respective standards play a prominent role: Business Operations; Internal Enterprise Business Reporting; External Enterprise Business Reporting; and External Investment and Lending Analysis. After documenting their roles, the white paper explores future efforts and areas of potential cooperation. However, the paper strongly emphasizes that these examinations are only a first step.
“By examining potential harmonization or interoperability between ACORD and XBRL, we hope to ease the flow of financial and business reporting information and come closer to fulfilling our data obligations with the least amount of cost and effort. ACORD provides the content and XBRL provides the way to express that content.” said Paul L. Horgan, PwC Insurance Group Leader.
The document also points out that while the prospect for harmonization and cooperation does exist, it simultaneously raises other issues, such as security, proprietary data, and confidentiality, which must be addressed by the organizations, their memberships, and the insurance industry as a whole. The focus remains, for both organizations, on the important role standards play in today’s data communication.
“In light of increased reporting requirements, Sarbanes-Oxley, data transparency, and a host of other issues raised by recent events, there is an even greater demand for timely, consistent, quality data and this is where standards are essential,” said Denise Garth, vice president, Membership and Development, ACORD.
Recently, the Securities and Exchange Commission (SEC) announced the launch of the XBRL Voluntary Filing program. “We applaud the SEC’s recent announcement which we see as evidence of the movement towards using tagged data for business reporting and we expect to see increased usage of XBRL across any number of industries such as insurance,” said Paul Penler, chair, XBRL US Steering Committee.
To further explore the issues raised by the white paper, ACORD and XBRL are setting up a CFO Roundtable to start the examination and discussions of the issues among industry leaders. Details of the event will be announced in the near future.
ACORD has been the global operational data standards organization for the insurance industry for more than 30-years. They have worked with numerous standards organizations around the globe to harmonize standards and improve data flow throughout the industry.
XBRL serves the overall financial services community with a standard for business financial reporting. From the back office outwards, the XBRL standard constitutes the XML standard for enterprise business reporting to a variety of stakeholders including regulatory authorities, analysts, and investors.
The white paper began at the request of industry members who wanted to more fully understand the specific roles ACORD and XBRL play within the data flow. ACORD personnel worked with members of the XBRL community to create the document and more clearly define the specific roles in the data flow within the insurance community.
XML Standards and the Insurance Value Chain is available from ACORD.
About ACORD: Based in New York, ACORD (Association for Cooperative Operations Research and Development) is a global, nonprofit insurance association whose mission is to facilitate the development and use of standards for the insurance, reinsurance and related financial services industries. With offices in London as well, ACORD accomplishes its mission by remaining an objective, independent advocate for sharing information among diverse platforms. ACORD Standards and services improve efficiency and expand market reach. Affiliated with ACORD are hundreds of insurance and reinsurance companies, and thousands of agents and brokers, related financial services organizations, solution providers, and industry organizations worldwide.