Few would argue the claim that the insurance industry is far different today than it was 30-to-40 years ago. What we do is the same–take on risk for individuals and groups. But how we do it… there’s the rub.

Processes have changed in obvious ways–less paper, e-mail, real-time exchange of information over the Internet.

However, less conspicuous but fundamental change is occurring behind the scenes–a transformation in the way the industry builds and connects the systems (large and small) that power the voluminous exchange of data that underwriting risk requires.

Industry leaders are embracing change because they need systems and processes that are not only quicker, more cost-efficient and transparent, but also more adaptable and agile to remain competitive in this global market. They are proactive–implementing now but also planning ahead and plotting the build-out of a more complete transformation at their core. This approach holds true for ACORD as well.

ACORD standards are a vital part of communication within the industry. They enable internal and external integration and provide the foundation for data flow across the insurance value chain. But as times change, so must we.

ACORD saw a need to expand standards to better serve today’s needs and plan for future developments. This is the ACORD Standards Strategy, released in March 2006. It provides a blueprint for our future and for the growth of ACORD standards.

The strategy brings together activities from all of our domains–property and casualty/surety, life and annuity, and reinsurance and large commercial–and combines them with the contribution from IBM of data process models and services to form the ACORD Standards Framework.

So, we have a foundation of achievements in form and message standards, and now we are moving toward standardization of insurance business models. The new standards strategy is a blueprint for growth to support industry transformation. The following are some of the recent key ACORD developments contributing to the transformation:

o Property & Casualty/Surety Standard, Version 2:

The ongoing transformation to Version 2 of the ACORD Property and Casualty/Surety Standard continues with the efforts of ACORD and our volunteer members. This evolution is both tactically and strategically important for the industry.

Tactically, it will support more rapid and consistent implementations across the value chain. Strategically, it will be a core component of the ACORD Standards Framework, enabling adaptability in this changing industry landscape of Web services, service-oriented architecture, enterprise architecture and enterprise management of data.

o Standardized Life & Annuity Forms:

In 2005, ACORD released the first standardized life and annuity forms available via the Internet. This was a major step forward for the industry and a program that continues to grow.

Several prominent life and annuity companies led the way by authorizing ACORD to file on their behalf and then adopting and implementing them. This illustrates the spread of standards across the industry into new realms.

o International Harmonized Data Dictionary:

In October, ACORD, eEG7 (the Western European EDIFACT Insurance Group) and CSIO (the Centre for the Study of Insurance Operations, based in Canada) released a harmonized data dictionary for the insurance industry that marked the completion of efforts by this international coalition of standards bodies to harmonize their existing data dictionaries as part of a United Nations initiative.

This new data dictionary provides the technology-neutral, reusable building blocks that serve as the basis for the development of messages for all lines of insurance business.

o The ACORD Standards Framework:

These recent activities and achievements help form the foundation for the overall ACORD Standards Framework.

Our goal is to ensure that ACORD members keep pace and improve integration and communication through the implementation of standards.

The ACORD Standards Framework incorporates our existing standards for forms and messages while adding new dimensions such as business process models, business process service definitions, a single business dictionary and a single data model across all our domains.

Our blueprint–the ACORD Standards Strategy–sets a course for growth and expansion. It takes into account the numerous forces transforming the industry, including changing technology, globalization, regulatory requirements and increased competition. It outlines the interconnected evolution of the six specific components that create the ACORD Standards Framework:

o Business Capability Model

o Business Process Models and Process Services

o Single Business/Data Information Dictionary

o Single Business Data Model

o Messages

o Cross Domain Technical Messages

They work in harmony to create an overall business architecture foundation and enable companies to build their own specific business logic for competitive advantage. However, the elements remain firmly anchored in the structural foundation the Framework provides to integrate each of the components.

Business process models are essential in today’s environment and are an integral structure within the Framework. BPMs are truly the building blocks of technology today. When you take these standardized building blocks and assemble them to meet your company’s specific needs, you get something uniquely yours. But because they are standardized pieces, change and adaptation are easier and more efficient.

BPMs will help all members of the insurance value chain more easily define business and meet their own individual needs. They reduce integration points and total cost of ownership while simplifying integration of loosely-coupled silos.

For many, implementing standardized BPMs would also enable modernization of legacy systems by developing core components that integrate to multiple systems. By creating this flexibility and adaptability, insurers gain a further benefit: that can level competition between vendors.

With the release of the ACORD Standards Strategy and the growth of the ACORD Standards Framework, we have laid the foundation (of forms and messages). The blueprint is created, setting forth the goals and directions.

Now we are constructing a bigger, broader, more dynamic structure. It is one that will help members be agile, adaptable and competitive in today’s world.

In the end, transformation of insurance technology will be invisible to most in the industry. And that is how it should be. They don’t have to understand how it was built to use it. But they will appreciate how they can use it to perform the everyday tasks they depend on it for.