Standards For RMs Await Implementation

Mr. Vice said that by using standards, "instead of risk managers having to rely on one carrier system to view workers' comp loss results and another carrier system for general liability losses, for example, the information can be consolidated."

Standards also would allow risk managers to get "a more complete picture of their risk exposures and the results of their insurance programs," he noted.

Risk managers and their business partners stand to save time and money from implementing standards, he continued, explaining that a risk manager currently must keep "an asset list within his or her own company.

"When it comes time for a renewal, they have to generate a report out of their system and send it to [their broker and managing general agent]. We key that same information and any updated information into our underwriting system for our purposes," he said.

After that, he added, the information "is summarized into a schedule of properties used for our own underwriting purposes, and that we send to our insurers for their records."

He said that several organizations have begun limited projects using standards, "including the one I work for."

The Frank Cowan Company–a full-service MGA that does underwriting and claims–is working with a risk manager and an insurance company partner, "starting with property schedule exposures," he noted.

Elizabeth Morrell, immediate past chair of the Risk and Insurance Management Society Technology Advisory Council and senior risk analyst for Southern Company in Atlanta, said the goal in working with ACORD is "to support the implementation of standards and to promote more accurate and efficient exchange of information between risk managers and their partners." (ACORD is the industry's standards facilitator, based in Pearl River, N.Y.)

She agreed that raising awareness of standards with risk managers is critical.

"Risk managers who have participated see the potential for standardizing claims data and facilitating the exchange of exposure data," she said.

However, she added, "there are still a large number of risk managers out there who aren't aware that RIMS has been partnering with ACORD for five years to develop a loss-run standard, and that there are exposure standards available."

Ms. Morrell added that "getting our industry partners–brokers, carriers, third-party administrators and [risk management information system] vendors–to support the standards has to be customer-driven." Risk managers, she said, need to know the standards are available "and ask their vendors to support them."

She pointed out that standards exist to help with different parts of the risk management "puzzle."

For example, a risk manager working to renew an auto liability policy, who needs to provide their carrier with information about the number of vehicles and detailed information about those vehicles, can be helped with standards.

"The risk manager could simplify that exchange by using an ACORD standards spreadsheet to send vehicle data to the broker–the broker could turn the spreadsheet into an XML stream and the carrier could set up their systems to receive that XML stream," she said.

Many risk managers are comfortable organizing data into spreadsheets, but when each one sets up a unique format, it becomes more time consuming for underwriters to interpret and compile, she noted.

Claims data coming to the risk manager–either from the carrier or third-party administrator–would be provided initially in an ACORD XML format.

According to ACORD, standards developed at this point include claims notification, claims status inquiry and loss runs; property, auto and general liability standards; and policy images.

"The next step is to get risk managers asking their carriers and TPAs about standards," said Ms. Morrell, noting that the information currently is pulled together by RMIS vendors, who pool disparate claims data from different proprietary formats and feed the loss data into a reporting system that risk managers can use.

She explained that although the process may appear seamless to risk managers, they ultimately pay for inefficiencies through data conversion costs, delays and reduced accuracy.

With standards, instead of having to set up a different translation for every single provider, business partners could capture information internally, "but when they get ready to export it they can share data using ACORD XML and simplify the entire translation process," she said.

Mr. Vice explained that the ACORD standards are vendor-neutral. "They are just data standards–they say the name goes in this place, the address goes in this place, and the geographic location goes in this place," which standardizes how the information is transmitted.

How the information is captured is up to the individual and the respective systems used, he noted. But once the information is generated into an ACORD standard format it can be transmitted to any other system.

"Because it is pure data, Internet-based, there are standards for the exchange of the information," he said. "In the same way, if I'm using my Macintosh computer at home, I can access IBM or Microsoft databases because they have all adopted standards."

"There are still a large number of risk managers out there who aren't aware that RIMS has been partnering with ACORD for five years to develop a loss-run standard."

Elizabeth Morrell, Southern Company

Infographic for page 37:

Flag: Case For Standards

Head: Why Should Risk Managers Care?

Text:

While standards might appear to be an esoteric topic for corporate insurance buyers, there are a number of reasons why standards are critical to risk managers. They include:

o Bottom line, the use of standards saves time and money in transactions with insurers.

o Instead of having to rely on different carrier systems for each line of business written with multiple insurers, standards can consolidate loss information.

o Standards allow risk managers to get a more complete picture of their risk exposures and the status of their insurance programs.

o In renewal season, standards allow buyers to generate reports out of their system and more easily shop their account via their broker.

o Standards are vendor-neutral, which allows risk managers to do business with all participating third-party vendors without the time and expense of translating or re-keying data.