Legacy Thinking Plagues Industry As Much As LegacySystem Problems

For those of you who did not attend ACORD's annual conferencelast month, I want you to know that the industry is working hard tobuild and implement standards. The number of awards we presented toinsurers and solutions providers was unprecedented.

Whenever Wall Street talks about expansion, you think aboutgrowth. When you hear about transition, you expect bad news. Lastyear was an expansion year for ACORD, and this is our transitionyear, but unlike Wall Street, the news couldnt be better.

We now have all segments of our fragmented industry workingtogether. We operate globally and our standards touch the consumer,intermediaries, insurers, reinsurers, and the trading partners andsolution providers in between. We also work with cross-industrystandards bodies around the world and partner with manyorganizations in financial services.

Yes, the ACORD process is more robust today (some say morecomplex), but its intended to expand the standards-setting channel.Broadband if you will.

Our global standards committee has oversight responsibility,with three steering committees that focus on property and casualty,life and annuity, and reinsurance. This allows us to move forwardin parallel ways, yet vary the pace for each constituency. The endresult is an unprecedented number of people driving moredeliverables today than ever before in our history.

Because of this parallel activity, it is very important that wehead in the same direction, so we launched the “eMerge” initiativelast year. It helps us to keep the business context in sync withthe standards. The only thing worse than not having standards atall, is having standards that lack stability and dont travel wellwith time.

ACORDs transition does not come without a challenge, and thatsto be sure we are in sync with the marketplace. While our processis driven by the majority, we do not disregard the minority becausethey include those on the leading edge that pave the way for therest of us. So we are re-working our process to be ever moreinclusive and hopefully more creative in how we serve theindustry.

Insurance agencies and financial advisors can do much more todaythan they did in the past, but they have not realized the seamlessintegration that has been so illusive. Well, some say that the onlylesson we learn from history is that we dont learn any lessons fromhistory. That may not be true about technology itself, but it istrue about people and their decisions.

For all the new technology available today, proprietarysolutions continue to plague the agency distribution channel. Andthis is largely driven by proprietary strategies, by peopleunfamiliar with the standards in place, or by the lack ofparticipation in building standards where they are needed.

Many challenges we face are driven by the decisions being madeby vendors and insurers. It seems that we have as much a problemwith legacy thinking as we do with legacy systems.

While XML is pervasive, having enormous potential, it remainsquite fragmented. A common industry data dictionary is available,and everyone needs to be using it with no excuses.

Developers often get sidetracked in “holy wars” on technologyand the mechanics of data exchange. So we need to encourage opendialogue, but also restrain non-productive activities that impedeindustry progress.

It always amazes me when I see a vendor using new technology tocarry forward old ideas, rather than building better ones. When Iask why, they tell me that they have interviewed prospectivecustomers and are building solutions to meet their needs. Ofcourse, the problem is that customers do not always lead developersto innovation. They are sometimes more focused on digging out ofholes. Then theres the “not invented here” or “silo” syndromes thatpermeate most organizations.

John Sculley, former president of Apple (who spoke at ourconference), said that we may (worst case) need to wait for the“next” generation of business executive before seeing significantchange to business models and, as a result, systems thinking.

Our role is to hasten that change by working closely with thoseon the leading edge. So we are doing all we can to close the“digital divide” I spoke about in my last NationalUnderwriter column, in the May 20 “Battle For Standards”supplement.

Agents are also working with ACORD through AUGIE (the ACORD-UserGroups Information Exchange) and ACT (Agents Council forTechnology) to help everyone get beyond legacy thinking.

Mr. Sculley noted that the next two-to-three years will becritical for ACORD as we build and backfill the foundation ofindustry standards that members will use to conduct business in anetworked world. So I hope that you and your organization areactively engaged in the ACORD industry process. If youre not soengaged, please ask why. Is it legacy systems or is it legacythinkingor both?

Gregory A. Maciag is president and chief executive officerof ACORD, the non-profit industry association based in Pearl River,N.Y., with offices in Belgium and the United Kingdom. ACORDdevelops and maintains standards for the insurance and relatedfinancial services industries, and promotes effective use oftechnology to facilitate E-commerce and reduce costsworldwide.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, June 17, 2002.Copyright 2002 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.