Legacy Thinking Plagues Industry As Much As Legacy System Problems

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

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

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

Yes, the ACORD process is more robust today (some say more complex), 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 forward in parallel ways, yet vary the pace for each constituency. The end result is an unprecedented number of people driving more deliverables today than ever before in our history.

Because of this parallel activity, it is very important that we head in the same direction, so we launched the “eMerge” initiative last year. It helps us to keep the business context in sync with the standards. The only thing worse than not having standards at all, is having standards that lack stability and dont travel well with time.

ACORDs transition does not come without a challenge, and thats to be sure we are in sync with the marketplace. While our process is driven by the majority, we do not disregard the minority because they include those on the leading edge that pave the way for the rest of us. So we are re-working our process to be ever more inclusive and hopefully more creative in how we serve the industry.

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

For all the new technology available today, proprietary solutions continue to plague the agency distribution channel. And this is largely driven by proprietary strategies, by people unfamiliar with the standards in place, or by the lack of participation in building standards where they are needed.

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

While XML is pervasive, having enormous potential, it remains quite 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 technology and the mechanics of data exchange. So we need to encourage open dialogue, but also restrain non-productive activities that impede industry progress.

It always amazes me when I see a vendor using new technology to carry forward old ideas, rather than building better ones. When I ask why, they tell me that they have interviewed prospective customers and are building solutions to meet their needs. Of course, the problem is that customers do not always lead developers to innovation. They are sometimes more focused on digging out of holes. Then theres the “not invented here” or “silo” syndromes that permeate most organizations.

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

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

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

Mr. Sculley noted that the next two-to-three years will be critical for ACORD as we build and backfill the foundation of industry standards that members will use to conduct business in a networked world. So I hope that you and your organization are actively engaged in the ACORD industry process. If youre not so engaged, please ask why. Is it legacy systems or is it legacy thinkingor both?

Gregory A. Maciag is president and chief executive officer of ACORD, the non-profit industry association based in Pearl River, N.Y., with offices in Belgium and the United Kingdom. ACORD develops and maintains standards for the insurance and related financial services industries, and promotes effective use of technology to facilitate E-commerce and reduce costs worldwide.

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

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Legacy Thinking Plagues Industry As Much As Legacy System Problems

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