After the May 2007 ACORD/LOMA forum, Greg Maciag, president ofACORD, reported on his blog an executive from a regional insureroffered this comment about the event: "Thanks for making the smallfirm feel unwelcome." While Maciag went on to comment on theimportant role regional insurers play at ACORD, we think thecomment begs two questions we will explore here:

o Is ACORD relevant to the regional insurer community?

o And, if so, what role can and should the CIO play in realizingbenefits from ACORD?

To begin, we think it is important to understand what ACORD is,what it is not, and how it has evolved within the insurancecommunity.

As ACORD is careful to point out, it is a membership-basedorganization, focusing first, last, and always on standards for theinsurance industry. From its beginnings almost four decades ago,ACORD was set up to address operational issues by setting standardsfor the paper- and electronic-based transfer of information.

Today, the ACORD forms library contains hundreds of forms foragents, brokers, and insurers to use in P&C, life, and annuitytransactions. Its electronic data standards include detailedspecifications for transactions in P&C, life and health, andreinsurance. ACORD's 50-member staff coordinates dozens of workinggroups and steering committees to maintain these standards.

In short, ACORD is a well-oiled standards-setting machine.

However, standards setting and standards implementation are twovery different activities. While there has been widespread adoptionof the ACORD Standard Forms within the U.S. agency/companycommunity, in our opinion electronic transaction standards have nothad the same uptake. By the mid-1980s, ACORD had publishedelectronic data interchange (EDI) standards for most of thetransactions required for personal and commercial lines, includingnew business, policy change, renewals, claims, and accounting.However, in our view the same organizations that invested theiremployees' time in developing standards were reluctant to invest inimplementing them, as there was no critical mass of vendors ortrading partners to work with.

In the late 1980s agent organizations began marketing ACORD.Technology-savvy agents created campaigns to push their carriersand technology suppliers to implement standards for downloadingcopies of policies to update the agents' databases–a simplifiedimplementation of a subset of ACORD standards.

We believe the simplified approach had an important implicationfor smaller insurers: Standards leveled the playing field. Many ofthe larger carriers had invested in proprietary agency interfacesystems, which offered marketing advantages. The Downloadinitiative offered smaller carriers the opportunity to respond tothe agents' demands and to solidify relationships with their agencyforce. Eventually, many of the ACORD members–large and small–cameto accept the Download method for synchronizing data with theiragents.

From our perspective, the success of the Download initiativemarked a transition for ACORD from pure standards setting tostandards evangelizing. ACORD members came to realize the value ofthe standards increased for the members as the implementationsgrew–both within the community and beyond.

As a result, ACORD has actively sought relationships withassociations and user groups to promote standards implementations.One current example is AUGIE (ACORD-User Group InformationExchange), a federation of user groups for major agency systemsvendors that conducts studies and promotes initiatives of value toindependent agency carriers. ACORD provides secretariat servicesand hosts meetings, frequently in tandem with ACORD events.

In summary, we find there were three pertinent lessons resultingfrom the Download experience:

o Standards, without implementations, were of little use.

o ACORD could, and should, play a role in the implementationprocess.

o Regional insurers could benefit by opportunisticinvolvement.

So, if ACORD is beneficial for smaller and regional insurers,why did the executive quoted in the beginning feel so unwelcome? Wethink that the executive at the ACORD conference likely wasoverwhelmed by the apparent size and magnitude of the facets ofACORD, many of which seemed irrelevant to his/her environment.

Because of its success in developing standards, ACORD hasbroadened its reach beyond P&C into reinsurance, life, health,and annuity businesses. Also, ACORD has expanded geographically,now with an office in England, and formal initiatives under way inEurope and China as well as in the London market. When coupled withits developing role in implementation support, ACORD is muchbroader and deeper than what it was in the past.

At the conference, our executive friend would have heardpresentations on international initiatives, catastrophe modeling,SOA, and other esoteric topics. Supplier exhibitors at theconference number in the hundreds and include major players sellinglarge solutions geared for the very large players.

With all of that going on, some of the items of interest to thesmaller insurers easily might have been lost. One of the key areasinsurers large and small are coping with is the integration oftechnologies, encompassing questions such as:

o How do I get data from my legacy system into our new executiveinformation tools?

o How can I provide claims data to my underwriting workbenchfrom the old claims system?

The increased acceptance of ACORD standards by vendors forinterorganizational data transfer has positive implications forintraorganizational integration projects. Kimberly Harris-Ferrante,of the Gartner Group, refers to a phenomenon of "standards bydefault." In a recent article, Harris-Ferrante said: "There areinsurers that never made the decision consciously to use standardsbut have purchased new applications that support standards."

To the extent that such standardization is coming with packagedproducts, smaller insurers (that tend to buy more than they build)could realize significant benefits. The key is gathering theinformation and making the business case.

Because the opportunity areas with ACORD span many parts of anorganization, the CIO is uniquely suited to help business managersunderstand the strengths and weaknesses of ACORD in approachingspecific problems. Therefore, we suggest the CIO lead an inventoryof opportunities with business managers.

We also strongly suggest this not be quickly delegated withinthe IT department. In our experience, IT personnel can be as much ahindrance as a help in guiding business managers in understandingACORD opportunities. Many IT professionals–including developers,business analysts, and operations personnel–never have experiencedworking with data standards, especially those extending beyond theorganization–and see applications as silos. This is especially truein smaller organizations where operational exigencies do not allowfor broad analysis of solutions.

Therefore, it falls on the CIO to understand all of theimplications of standards and help both the IT staff as well as thebusiness managers to evaluate opportunities both within and outsidethe boundaries of the company.

If it appears there are some opportunities for a company, wesuggest the CIO rely on skills learned from leading other complexinitiatives. For example, as with any new technology or process, itis frequently wisest to find a small, non-mission-criticalapplication with which to begin.

This could be internally or externally focused. But the CIO mustweigh some complex risks and rewards. For example, beginning withan externally focused application has appeal from a marketingperspective. However, external projects have an inherent weaknessin that the CIO's organization does not have complete control overthe resources, and the project will move at the pace of the slowestparticipant.

In evaluating opportunities it is important to know whatapplications have been used by other organizations and with whatsuccess, including ACORD papers and articles. However, the best wayto judge success is by direct contact with other implementers. TheCIO should use his/her network to seek these out. In addition,ACORD and AUGIE host periodic events at which implementersinteract.

Once there has been a decision to proceed on a project, trainingis a critical function. The volume of standards documentation isoverwhelming. Fortunately, ACORD staff can point to help facilitiesthey have created and do conduct training for members.

If a project is initiated, we think the CIO should focus onscoping down the project early and often. The CIO quickly will seethe standards themselves are very large, and it is easy for adeveloper to assume everything must be coded perfectly andexclusively to the standards. As demonstrated by the Downloadinitiative, however, frequently a subset of the standards work tomeet the 80-20 rule.

Expectation management also is key, especially with projectsinvolving external trading partners. It is wise for the CIO toensure there is a consistent, realistic message about theexpectations and scope of the project that is given to allinvolved, both within and outside the company.

ACORD standards do not address every, or even most, issues aregional carrier CIO faces, but they can work in surprising ways.By following common sense, we believe a number of CIOs will bepleasantly surprised at the contribution they can make to theirorganizations with intelligent implementations. Then theirexecutives can go to conferences and feel very welcome. TD

Patrick Vice is director of IT for Frank Cowan Company Limited,a managing underwriter, specializing in public entity insurance inCanada (www.frankcowan.com). He serves on various ACORD standardscommittees and working groups. Vice can be reached [email protected]; 519-458-2007.

Marek Jakubik, a former CIO of Zurich Financial and PitneyBowes, is a co-founder and managing director of the InsuranceTechnology Group (www.insurancetg.com). He can be reached at416-214-3445 or [email protected].

"CIO Chronicles" focuses on issues of concern to midmarketinsurers. Its content is the responsibility of the authors. Viewsand opinions are those of the authors and do not necessarilyrepresent those of Tech Decisions.