The Good, New Days
I couldn't help but think of my Uncle Jimmy when reading our correspondent's account of last week's ACORD standards Forum in the global capital of the insurance world–London.
Whenever someone would get nostalgic about "the good, old days" in almost any context–sports, politics or life in general–claiming times were simpler and somehow better than the world we faced that morning, my dear Uncle Jim would grouse, "What was so good about them?"
He would then offer a blistering critique of whatever past you loved to reminisce about, pointing out how in fact times were a lot more complicated back then and life far tougher than with the modern advantages and opportunities we take for granted today.
Uncle Jim would have had a field day with anyone waxing fondly of the days when London was paper-based and anything but a "standard" market in which to do business. There were all sorts of man-made hurdles adding time and cost to every transaction.
ACORD–a well-known brand name here in the colonies fighting the good fight to implement insurance standards–took the U.K. by storm a few years ago. Now, London is poised to make some major breakthroughs in the way brokers and carriers transact business compared to those "good, old days" of yore.
It helps a great deal that ACORD and London reform leaders have local regulators solidly on their side. Indeed, those who fail to get up to speed could face penalties if they don't comply with the London Market Code of Practice on Contract Certainty by the end of 2006. (For more details, see our news story on page 24.)
However, it appears clear from the Forum–attended by between 500 and 600 over the two-day event–that few need their arms twisted at this point. The London market–long derided as inefficient, costly and too paper-based–is preparing to reemerge as a much leaner, high-tech, standardized operation.
Lloyd's CEO Nick Prettejohn set the tone with his keynote address. He juxtaposed the carrot being offered to adopt standards (the economic and competitive benefits of reform) with the stick of legal mandates, characterizing the two as "a commercial pint with a regulatory chaser."
Mr. Prettejohn, who did such an outstanding job as the ramrod implementing governance reforms at Lloyd's the past few years, will unfortunately (for Lloyd's) be departing at year's end to become CEO of Prudential's U.K. operations. However, he was keen to point out that the job of bringing Lloyd's into the 21st century would be incomplete without the business processing reforms championed by ACORD.
"Data–and therefore data standards–are at the core of our market's future," he declared, warning that "there is a world outside, and we cannot assume the world will continue to channel its capital and its risk into London, and into Lloyd's," without such operational reforms.
Chiming in was Lloyd's director of operations, Steve Quiddington, who said: "We see standards as the key to market reform. They do drive change and they do provide early wins."
This is no doubt music to ACORD's ears, but they've earned their kudos in this case, racking up hundreds of thousands of frequent flyer miles in shuttle diplomacy to help make this London market modernization scheme a looming reality.
Perhaps we Yanks will learn from the example set by our older brothers in London and convince our own regulatory community of the benefits of standards. After all, that's what the National Association of Insurance Commissioners is all about.
Why not extend NAIC's mandate to include harmonization in transactions and communication? Imagine how much easier it would be to get such standards in place if U.S. regulators literally laid down the law so that everyone would be on the same page once and for all?
Sam Friedman is NU's Editor-In-Chief. He may be reached at sfriedman@nuco.com.
"Perhaps we Yanks will learn from the example set by our older brothers in London and convince our own regulatory community of the benefits of standards."
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