Tech World Will Be Tower Of Babel If Global Standards Are Not Developed
I just returned from the Council of Insurance Agents and Brokers' annual meeting at the Greenbrier. It is probably the largest gathering of senior insurance executives in the United States, since the brokers represented by the CIAB produce a huge chunk of the commercial business in the market.
While domestic primary insurers and reinsurers are represented, our friends from around the world are as well, including Lloyd's and the London market. We are always reminded that the business of insurance is highly domestic in some ways, but global in others.
The small talk was about the economy and the insurance business that portends the immense flow of information around the world. But will all the national standards in place today become major obstacles to that flow of data?
I appreciate the value of independent, country-specific insurance standards developed by various national insurance associations. They are sturdy and well-traveled standards. But even as these national insurance standards continue to be effective today, there is a looming issue: The insurance industry must more quickly send data across company, industry, and country boundaries.
However, the fact that we have these standards in place may be viewed as a major opportunity rather than a major obstacle for us.
The European Union, the new euro currency, and a more intertwined global insurance marketplace are pressing brokers, carriers and reinsurers to confront the challenges of cross-border insurance commerce.
Consumers are demanding more efficient claims processing and policy issuance, regardless of where they are domiciled. Mergers and acquisitions are requiring intra-company data exchange in far-flung insurance groups with dozens of subsidiaries in various countries.
To manage these challenges and capitalize on opportunities, many players in the European insurance community are striving to fasten the existing, reliable network of roads into a common hub of global insurance standards. The goal is to provide greater ease of data movement without sacrificing local perspective and benefits.
Each European country developed and implemented insurance standards, answering the countrys individual needs.
ASSURNET (today "Portima") was formed in 1986 to allow Belgium motor and non-life carriers to exchange data with brokers.
French mutual insurers specializing in motor insurance and needing to share data with loss inspectors built the "Darvanet" system. Today that organization provides a range of data exchange services in auto, other non-life, and healthcare lines.
In Switzerland, regulators and carriers use an electronic system to issue and service motor insurance coverage for a population of 7.2 million.
In the United Kingdom, in the mid-1990s a new motor insurance competitor grabbed a 50 percent market share in two years with a direct-to-consumer distribution channel. Facing the challenge, carriers, brokers and software vendors developed "Polaris," an electronic data interchange initiative that enabled carriers and brokers to exchange data electronically. The result? Insurers and brokers were able to deliver policies quickly.
Strong national standards and business-process improvements dovetail nicely with the current opportunity to broaden existing standards to make them work across borders.
ACORD is working with e-business Expert Group 7 for Insurance (eEG7), the European standards body for the insurance industry, on the next steps toward this objective.
ACORD and eEG7 have worked together for years, and we have a formal commitment to develop a unified global insurance business specification. In addition, we want to develop this global foundation in a way that "maps" it to European country-specific standards, enabling valuable national standards to remain in use.
ACORDs foundation in the European insurance market is based on our commitment to global standards for reinsurance and large commercial lines.
For insurers, brokers and reinsurers throughout Europe (and in the United States, for that matter), success will mean faster commerce, more efficient data exchange, and more satisfied insurance consumers.
Sounds like we have plenty in common with our friends from Europe, and that means more opportunities for U.S.-based agents and brokers to play in this space as well.
Gregory A. Maciag is president and chief executive officer of ACORD, the non-profit insurance standards association based in Pearl River, N.Y., with offices in Belgium and the United Kingdom.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, October 28, 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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