- Where Insurance & Technology Meet

A Tale of Two Standards

Data exchange has been an important topic for insurers and brokers for the past 51 years.  By and large, the implementations have been complex due, in large part, to complex structures.

I recently attended a demo by the Insurance Brokers Association of Canada, which caught my attention. Instead of thinking big, the demo had but one data field as a start.

It occurred to me that instead of thinking big and complete, we might do well to think small and prepare to expand, based on the customers’ requirements.  I’d be really interested in your thoughts.

We have definitely seen big data projects *

In 1967, the summer of love was taking over San Francisco.  However, down in Silicon Valley, the Stanford Research Institute (SRI) was embarking on a project that was commissioned by the US based National Association of Insurance Agents (now the Independent Insurance Agents and Brokers of America or IIABA).  The purpose was to identify threats and to “assure a continuing future” for the independent agent force.

While computers were rare in agents’ offices, SRI recommended developing and implementing Standards to avoid fragmented implementation of emerging ‘electronic data processing.’

Insurer and agency leaders took the standards recommendation to heart.  In the early 1970s, industry leaders set up ACORD (Agency/Company Organization for Research and Development).  The purpose was to develop standardized paper forms, which could be used to develop electronic standards.

The forms work went on for 10 years, during which mid range computers  was hitting the floors of larger agents.  The result was to commission another study. The recommendations brought forward were to:

  • Create voluntary electronic data standards through the Insurance Institute for Research (IIR), which was put together with ACORD in the early 1980s;
  • Set up an insurance data communications facility, known as the Insurance Value Added Network (IVANS).

What did this mean for Standards?

Developing data standards for P&C insurance is not easy.  In order to manage the new or changing Standards, ACORD had specific voting requirements and new standards were approved (or declined) several times per year.

The methods of reviewing and approving changes to standards required a minimum of 3 months.  Some went a year or more.

As a result, there was a temptation by insurers and brokers to cut corners or develop a ‘new’ standard, without vetting the standard through the ACORD.

Meanwhile, back in the real world of today…

I had worked on and with insurance data standards for more than a decade, starting in 1986.  And I came to a conclusion:

Standards are important.  Business is more important.

And that is why I was really excited walking out of a presentation by two clever Toronto Insurance Council brokers  – Michael Loeters, Prolink and Brenda Rose, FCA Insurance Brokers –  who developed an approach to standards that are brought forward when the data formats are needed.

The starting point was to:

“deliver a set of technology principles created by the Insurance Brokers Association of Canada (ICAB) for how real-time technology integration between insurance brokers, insurance carriers, and other third party partners should occur.”

Rose worked through the data exchange workflow principles, and used these as the platform to the first implementation:  The First Notice of Loss (FNOL).

Why this?  Simply put, this aligns with the broker and insurer on notice to respond and (most importantly) tells the customer that people are on notice and will be working on it.

And the carriers, suppliers are ready

Prior to the session, Loeters and Rose solicited 5 insurers – AIG, RSA, Travelers, and SGI – to be the test group.  In addition, suppliers Custom Software, Keal and CSIO joined the insurers.

All together, there was an excellent open session on how this will work and, most significantly, why we need to provide this level of care for the customers.

Finally, the Standards

Rose set up the connection to one of the insurers and demonstrated that the insured’s call in to the carrier or the broker, will immediately put the first notice of loss into play.  The notice is also immediately sent to the insured so that there is a direct contact path throughout the course of completion.

There are other things that are required, but….

We need to have standards that are used internally and with business partners.  But we need to show our customers that we are there for their needs.  Perhaps this should be a standard.

* Documented in “Assessment of Agency Automation and Interface,” by Perot Systems (c) Independent Insurance Agents of America, 1990.