Straight-through processing (STP) for annuities has also undergone a great deal of expansion. Implementation of the standards has dramatically reduced “not in good order” business and enhanced the overall process. Recent estimates from those who have adopted the standards indicate that error rates have plummeted from 60-to-70 percent to nearly 0 percent and that turnaround times are now hours, instead of weeks. This can only lead to increased satisfaction, and business, for all parties. These messages also include commission information, which eliminates the need to send commissions back to the originator. Commissions can be calculated and netted.

One organization is using the standards to improve STP capabilities. At present, 20 carriers and 9 distributors are using their platform to enter application and subsequent premium payment annuity transactions. The company is using commission table feed from carriers to compute commissions and net the commission from the final transaction. The netting of commissions expedites the overall transaction time. The system is configured for individual products via data feeds from the carriers of ACORD standard XML product profile for annuity (PPfA) files. Another big win is that the distributors get a homogeneous order entry experience across carriers. Also, the “not in good order” rate is very low with the ACORD standards-based system.

There has also been a major change in the underwriting requirements with such members as labs, parameds, medical companies and those rendering services to the insurance industry. As they collectively moved ahead on standardizing messages for ordering, status and fulfillment requirements, they also used the ACORD forum to further clarify some of their own business processes. Until now, the definitions of such things as blood tests varied from company to company. By utilizing ACORD and our anti-trust exemption venue, they were able to help standardize more than just their data. The result will be increased efficiencies and more transparent data.

Licensing and appointments is an area that has seen a great deal of attention. For more than two years, ACORD has been working on improving the workflow and messaging involved with licensing and appointments. In any case where the data requirements are mandated by the states, ACORD and its membership looks to the regulatory bodies for guidance on the development of standards that meet the full requirements of laws and regulations.

An example is the validation of the Producer Inquiry (“Can Sell”) message, which has been developed in cooperation with the National Insurance Producer Registry (NIPR) and National Association of Insurance Commissioners (NAIC). The message enables any system (especially pre-sale systems like illustration, new business and contact management) to quickly and easily validate with carriers a producer's eligibility to sell a given product in a given state. This system not only provides the necessary compliance but also permits all parties to identify potential issues well before an application is actually submitted. The result is that a transaction that once took up to 120 days to get done can be completed in a matter of minutes or seconds of real-time processing.

One area where members have focused standards implementation is data quality and transparency. Data is the lifeblood of the industry; it connects and flows between trading partners to support business operations. Members have recognized that using standards to define that fundamental first piece of data collected in the first client transaction begins a process that ensures data quality and transparency for improved decision-making, underwriting, financial and regulatory reporting, and error reduction. For these reasons, the use of standards has become an enterprise-wide strategic consideration.

ACORD and its working groups have focused on their many projects in the past year. While the Life and Annuity standards have great breadth they contain more than 12,000 items and nearly 200 messages supporting the entire insurance value chain the focus now is to take them deeper into business processes. The goal is to enhance our “house” and build a bigger, better and more accommodating structure.

Rick Heil is program manager, Life Standards, for Pearl River, N.Y.-based ACORD. He can be reached at [email protected].

Reproduced from National Underwriter Edition, May 21, 2004. Copyright 2004 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.