Globalization and technology have affected every industry, including insurance. This has moved ACORD to participate in organizations and programs developing globalized standards, and to take a leadership role in uniting these separate efforts to improve electronic communications and data transfer.
ACORD has long recognized the need to be active in national and international standards initiatives. Since the early 1990s, ACORD representatives have participated in the American National Standards Institute (ANSI) and the United Nations Electronic Data Interchange for Administration, Commerce and Transport (EDIFACT). This has been helpful, although a comprehensive vision of global standards has yet to be created.
SOME HISTORY
Historically, Electronic Data Interchange (EDI) standards have been developed and implemented within national borders. Because insurance has been highly regulated and not traded internationally, standards sprang up in the United Kingdom, Germany, the United States, and other countries. With the development of the European Union, European countries saw the need for standards that all the member nations could share, leading to the development of EDIFACT standards for the property/casualty segment of the business.
While EDIFACT has addressed property/casualty standards, there is no life insurance participation. ACORD has begun filling the void in global life insurance standards through initiatives in South Africa and Australia, where we have formal working groups; Canada, which participates in our national working group; as well as vendors in the U.K. and Japan.
EDIFACT is a global cross-industry standards group under the auspices of the United Nations. In regions where insurance standards didn't previously exist, or where there was a practical need for a global standard, EDIFACT has seen wide support and implementation. ACORD participated in EDIFACT, but there weren't many opportunities for implementation in the United States, where strong standards were already in place. The EDIFACT Working Group (EWG), in an effort to support new technologies, is building the infrastructure to develop object models as the next generation of standards. The Insurance SubWorking group is a pilot for this effort.
For any business application to trade with another, they first have to be able to communicate with each other, irrespective of software product or technology platforms. The United Nations, in an alliance with the Organization for the Advancement of Structured Information Standards (OASIS), is also providing a forum for technology partners and business people to work for inter-operability of standards. The alliance is known as known as ebXML and will provide a structure that facilitates cross-industry communication.
THE CHALLENGE
The challenge to organizations like ACORD, e-Commerce Expert Group 7 (eEG7), and the Joint Venture for Reinsurance (JV) is to work together at a time when we are all trying to develop and migrate standards at internet speed. Our participants must realize that, as pioneers, they'll experience changes down the road as European and U.S. standards intersect and as life and property/casualty standards converge.
THE INVITATION
ACORD invites the global standards community to join us in examining how standards developers share information. ACORD is conducting an exciting project with eEG7 to unite our XML work, and a related effort to develop a global data model that encapsulates all of the industry's disparate models.
Nigel Wooden, eEG7 technical administrator, notes, 'Unless the standards from these trading communities are harmonized, then the full potential of e-business cannot be realized, and implementation will remain fragmented. As most insurers and brokers trade in many markets and across multiple lines of business, the cost to the industry in terms of monetary cost and lost opportunity is incalculable.' The industry needs a framework of standards that supports competition in the global marketplace and allows for seamless communications.'
In the global economy, small and medium-sized vendors support customers all around the world, just as large vendors do. Standards lower the entry barriers for the smaller vendors and also help larger vendors develop off-the-shelf software quickly and efficiently. With global standards, vendors can better support their customers, and carriers and intermediaries can more quickly take advantage of new distribution systems, such as the Internet.
GLOBAL EFFORTS
ACORD is involved in several global efforts:
- eEG7-ACORD XML Convergence. The Western European EDIFACT Group and ACORD are working on uniting their XML projects. We've laid out the project, including follow-up to the initial discussions, and begun the data harmonization process, while technical and business representatives worked on data harmonization, methodology, and tools.
- JV/XML. The Joint Venture is recasting its EDIFACT messages in XML and selected ACORD and IVANS to do its development work. The XML will be taken from a JV data dictionary. ACORD and IVANS will group the data into logical reusable aggregates and provide data tags and the document type definitions for each business, starting from the Joint Venture reinsurance messages.
- Object Model Convergence. Under the U.N. pilot project, eEG7 and ACORD are developing object models that will provide for reusable components for various industries. The ACORD Life participants will study possible benefits to their group. Gordon Serby, managing director of Marsh, said, 'In the longer term, business will be transacted using distributed objects which will allow the industry to react very quickly to changing and new sales. Marsh is very excited to participate in this project.'
- The ACORD Life program is continuing to expand internationally, building on its success in South Africa and Australia. Regional groups are basing region-specific needs, such as taxation, on the global standard. In South Africa, the Life Office Association is doing this work.
- In Australia, ACORD supports the working group. There are Canadian, U.K., and Japanese participants in the North American Working Groups.
This work requires an open mind, the ability to note market trends and needs and vision. The greatest challenge is to identify all the necessary parties and determine the most effective ways to work together. That's how each of these projects has developed. ACORD has worked on gap and overlap analyses to identify what's already being done to avoid reinventing the wheel.
The standard data and data relationships remain consistent once they're identified. Policy numbers, effective and expiration dates, covered objects, and covered parties are constants -t- hey just have different names in different places throughout the world. Documenting the commonalties allows us to identify and deal with the differences. Ultimately, the insurance industry is similar worldwide.
The market will others.
This work needs a formal infrastructure. Global standards are going to happen. It's just a matter of when.