RECIPES FOR PRODUCTS such as Coca-Cola and KFC chicken arefamously locked away in vaults to protect their respectivecompanies' most vital assets. Many insurers feel equally protectiveabout their plans to deal with the influx of huge amounts of datafrom telematics systems that some believe will change how personalauto policies are and will be underwritten.

ACORD began the process of studying data standards fortelematics in the spring of 2011 in response to a number ofinsurance carriers—members of ACORD—who were interested in thetopic and wanted it brought to the table, according to JamesBielak, program manager for the property & casualty program atACORD.

"It was my job to formalize the community into a working group,"he says. "At that point we were under the ACORD governance policy.I got my steering committee to approve the working group and weramped up in June (of 2011). The first meetings were focused onbrainstorming business requirements and understanding what ourmembers were hoping to get out of such a working group."

Over time, the working group has had a half-dozen ACORD membersand some non-members. Because the process of defining the scope andbusiness requirements took so long, Bielak explains some of thecarriers have slowed their participation.

"I'm seeking more participation at this point because we are ata critical juncture as we define XML messages," says Bielak. "Somefolks may think spending an hour talking about businessrequirements is not the best use of their time, but now we needpeople to get back to the table. What we define is going to be thestandard and if it is not implementable than shame on us. We wantas much participation as possible to make sure what we define canbe implemented and will be used across the industry."

Because of the relative newness of telematics, getting carriersto share information is a challenge. Some major carriers haveagreed to participate and are eager to hear what the working groupis doing, according to Bielak. Getting those same carriers to chimein with information on their own efforts has proven to be moredifficult.

"There's a problem with telematics and being vocal about it,"says Bielak. "This is something we've been wrestling with from thebeginning."

If you are a third-party service provider or a carrier and youtake a position or ask a question about a certain point, Bielakexplains you are revealing your particular interest in the subjectmatter. By doing that, carriers are afraid they will spill whatBielak calls their "secret sauce" recipe.

"Because telematics is new and emerging, insurance carriersparticularly don't want anybody to have any notion on why they wantthe data, what data they want, and how they analyze the data," hesays. "It's black box to the world. The service providers arefollowing the lead of the carriers and aren't volunteering muchinformation at this stage."

Convincing Others

Bill Jenkins, a consultant with Agile Insurance Analytics,believes top insurance carriers will be reluctant to take part inestablishing telematics data standards as they are convinced theirproprietary information constitutes a competitive advantage in thisemerging underwriting tool.

"ACORD standards within Tier 1 carriers are not all thatpervasive," he says. "The big companies basically have proprietarystandards. The whole value of collecting third-party data is tocollect data that will be an advantage to that particular carrierbased on customer segments they have."

Jenkins points out that Progressive Insurance has seven patentsthat have been approved by the U.S. Patent Office concerningtelematics and have taken considerable steps to defend thosepatents.

"Some of that evolves around data so it is pretty muchproprietary at this junctiure" says Jenkins. "My guess is that thedata you have around your particular customer base is going to beproprietary for that organization. That's their differentiator.They might get into a circumstance where they share things down theroad, but it is too early to tell."

There are many carriers in the UK that have been focusing ontelematics and Jenkins believes those insurers are more advancedcompared to what is happening here in the United States.

"There are a lot of data management issues around this—what theycan use, where they can store it, a lack of skill sets to analyzethe data," says Jenkins.

Standards aren't just an issue for insurance carriers, pointsout Jenkins, many automobile manufacturers are installing differenttypes of devices into their cars.

"There is no doubt there is a need to have a standard in place,but how do you get the auto manufacturers in line?" asks Jenkins."In two years 90 percent of all cars will have built-incapabilities to do these types of measurement."

Some of the approaches ACORD has taken to attract cooperationinclude attempts to convince members of the working group to sendBielak examples—even brainstorming examples—so he can work the datato preserve anonymity when the information is presented to theworking group as an example.

"I finally got three contributors who shared with me thestructure of the data they are currently receiving or sending," hesays. "That gave us some framework of reality within which to work.That is what we are using to initiate this XML design. At the sametime, we are still struggling to get more participation."

The chair of the working group, Mark Woods from Allstate,suggested to Bielak on a recent call that if participants havequestions or want to guide the discussion but are unwilling tospeak on the call they should email Bielak their issues and he willtry to lead an anonymous discussion so nobody is accused ofspilling their company's secrets.

"One member actually had their general counsel talking to ourgeneral counsel about what we are up to because there were concernsabout their people participating on the standard," he says. "I wasnever privy to those discussions, but that's how serious insurancecompanies see this. It is top secret right now."

Top Secret Challenge

John Foster, vice president, personal lines underwriting forPenn National Insurance believes the scores that companies plan touse to provide discounts—the meat and potatoes of telematics—willlikely be kept confidential.

"I think carriers or third parties will tell you the mostsignificant drivers are mileage, acceleration, maximum speed, milesdriven, and hard braking," he says. "Companies will share withconsumers the most important characteristics and how the drivercompares to an average driver."

Companies are participating with ACORD and Foster believes thereason is to share data among various companies, but he also feelsit is going to be a challenge.

"Everybody that will be playing in the UBI space is looking tocreate a competitive advantage," he says. "They are going to lookfor pieces of data—something different—outside the ACORD standardthat they can use. I am suspect to see how that works out."

Penn National is an ACORD member company and Foster maintainsACORD has done great work for the industry in providingstandardization.

"We support their efforts, but how that plays out in the longterm with telematics is unclear to me," he says. "A company of[Penn National's] size is probably not going to be managing thedata. We will select a company to do that for us, do the analytics,and create a score for us. How the data is standardized andcollected is really not that important to us. It will probably bemore important to the big carriers."

Foster has heard horror stories from companies that have triedto collect telematics data themselves, analyze the data, and createtheir own score.

"When you are transmitting data every couple of seconds fromthese devices, it takes a lot of expertise to determine how you aregoing to collect it, organize it, compress the data, and ultimatelyhow you are going to use it," he says. "If ACORD is able tostandardize things, I see some value if they can take a leadershiprole and create standards. It would be easier for medium-sizedcompanies to collect the data and analyze it themselves, but Idon't see that happening in the next couple of years."

There are many different ways of representing the data andBielak believes the examples that were contributed certainly revealthat. Bielak comes from a scientific background—oil and mining—andhas dealt with big data in those industries and seen standard waysof representing big data files.

"Seismic surveys have a specific format and it allows the datato be portable from one system to another," he says. "I don't seewhy telematics data should be any different. I think that pastexperience gives me an eye to focus on just the data. I do think weare on to some good approaches that de-couple the whole issue ofproprietary information from the data itself. By being smart andcoming up with a good definition for the data, it ought to provideflexibility to allow different providers to send different types ofdata to consumers. I think we have the bases fairly well coveredright now for a prototype."

Commercial vs. Personal Lines

Bielak explains the original plan was to separate commercialfrom personal lines—with personal lines coming first—as a way offollowing what Polaris, the European standards organization, did inGreat Britain.

"I thought that was a good idea, but the members on the callwere not worried about the differences between personal andcommercial lines," says Bielak. "Eighty percent of the data we wantto deal with is pretty much the same—GPS, accelerator data, ODB 2,speed. When you get into the commercial lines there will bewrinkles you don't have in personal lines. We need to focus on the80 percent that is common and then we can focus on any whistles andbells we might need for commercial lines."

The working group's scope is to define a mechanism tocommunicate from the data provider to the data consumer. The dataprovider could be a technical service bulletin or some other thirdparty that dumps the data to the data consumer—in this case theinsurer, explains Bielak.

"Telematics goes all over the place, but all we are dealing withis data provider to data consumer, so that helps limit the scope,"he says. "It's an insurance standard so we are serving the purposeof the insurance industry."

According to Bielak, three things the working group has definedand are beginning to explore in more detail are"

• Recognition that vehicles generate events. Events are onecategory of data that the working group agrees needs to be in thestandard.
• Streaming data is the bread-crumb trail of GPS, according toBielak, and speed at different points in time that the vehicle ismoving across the landscape. The group envisions this potentiallyto be a large data set depending on how many columns of datacarriers are going to report. This is streaming data with anobservation every second, 10 seconds or in the case of an accident,down to milliseconds of data.
• Report or summary data. You can generate report or summary datafrom the streaming data, but some insurers have explained that theyare not interested in second-by-second observations. Instead, theywant a summary on how many minutes the vehicle was being drivenduring certain hours of the day to build a histogram of the numberof minutes. There also is the number of seconds the car wasaccelerating between 0Gs or 5Gs or decelerating; and the number ofminutes the car was being driven between 60 and 70 MPH. These areabstractions from the big data to generate a summary on thebehavior of the vehicle.

"We are almost done talking about events, but we have to come upwith lists of codes and how much granularity we are going to have,"says Bielak. "My business architect and I are investigating theright way to do the streaming data. In fact, the data mightactually be outside the XML message itself and a referral to a filemight be needed."

Bielak believes that from a pure data perspective, ACORD isdoing things the right way.

"We are not taking any old baggage with us," he says. "[Ourwork] could easily be used in Australian standards, South Africa,or London. We are just focused on the data itself and wrap it in anXML message that is domestic United States basically, but you coulduse the same mechanism for data reporting in all our other globalstandards. Hopefully this will gain traction globally because thereare only so many ways you can slice it. It's data, for heaven'ssake."

Bielak would like to have the base of the telematics—vehicletelematics notifying message—defined and submitted by this spring,or at the very least, have events and streaming data in thismessage.

"We can expand the message with summary reports, but I believewe need to fish or cut bait," he says. "Let's get the thing outthere. I'm shooting that by June or July we will have thespecification to communicate telematics data from a provider to aconsumer. If we miss anything then that will get non-participantsto join the group. We recognize other needs, but that's theproblem: to get them to come to the table to reveal what they wantwithout revealing what they really need."

Bielak has been a member of ACORD since 2003, but he's been anemployee for just two and a half years, so it is difficult for himto compare the job he faces today with earlier battles overstandards that ACORD has survived.

"When I look at the standards, a policy is a policy is apolicy," says Bielak. "There's not a whole lot that is proprietaryabout it. I do know there are plenty of different approaches thatinsurance carriers have to the way they structure their data andhow those carriers use the standards. The people who consume thedata have to be flexible enough to manage all the differentvariations."