As ACORD is careful to point out, it is a membership-based organization, focusing first, last, and always on standards for the insurance industry. From its beginnings almost four decades ago, ACORD was set up to address operational issues by setting standards for the paper- and electronic-based transfer of information.

Today, the ACORD forms library contains hundreds of forms for agents, brokers, and insurers to use in P&C, life, and annuity transactions. Its electronic data standards include detailed specifications for transactions in P&C, life and health, and reinsurance. ACORD's 50-member staff coordinates dozens of working groups and steering committees to maintain these standards.

In short, ACORD is a well-oiled standards-setting machine.

However, standards setting and standards implementation are two very different activities. While there has been widespread adoption of the ACORD Standard Forms within the U.S. agency/company community, in our opinion electronic transaction standards have not had the same uptake. By the mid-1980s, ACORD had published electronic data interchange (EDI) standards for most of the transactions required for personal and commercial lines, including new business, policy change, renewals, claims, and accounting. However, in our view the same organizations that invested their employees' time in developing standards were reluctant to invest in implementing them, as there was no critical mass of vendors or trading partners to work with.

In the late 1980s agent organizations began marketing ACORD. Technology-savvy agents created campaigns to push their carriers and technology suppliers to implement standards for downloading copies of policies to update the agents' databases–a simplified implementation of a subset of ACORD standards.

We believe the simplified approach had an important implication for smaller insurers: Standards leveled the playing field. Many of the larger carriers had invested in proprietary agency interface systems, which offered marketing advantages. The Download initiative offered smaller carriers the opportunity to respond to the agents' demands and to solidify relationships with their agency force. Eventually, many of the ACORD members–large and small–came to accept the Download method for synchronizing data with their agents.

From our perspective, the success of the Download initiative marked a transition for ACORD from pure standards setting to standards evangelizing. ACORD members came to realize the value of the standards increased for the members as the implementations grew–both within the community and beyond.

As a result, ACORD has actively sought relationships with associations and user groups to promote standards implementations. One current example is AUGIE (ACORD-User Group Information Exchange), a federation of user groups for major agency systems vendors that conducts studies and promotes initiatives of value to independent agency carriers. ACORD provides secretariat services and hosts meetings, frequently in tandem with ACORD events.

In summary, we find there were three pertinent lessons resulting from the Download experience:

o Standards, without implementations, were of little use.

o ACORD could, and should, play a role in the implementation process.

o Regional insurers could benefit by opportunistic involvement.

So, if ACORD is beneficial for smaller and regional insurers, why did the executive quoted in the beginning feel so unwelcome? We think that the executive at the ACORD conference likely was overwhelmed by the apparent size and magnitude of the facets of ACORD, many of which seemed irrelevant to his/her environment.

Because of its success in developing standards, ACORD has broadened its reach beyond P&C into reinsurance, life, health, and annuity businesses. Also, ACORD has expanded geographically, now with an office in England, and formal initiatives under way in Europe and China as well as in the London market. When coupled with its developing role in implementation support, ACORD is much broader and deeper than what it was in the past.

At the conference, our executive friend would have heard presentations on international initiatives, catastrophe modeling, SOA, and other esoteric topics. Supplier exhibitors at the conference number in the hundreds and include major players selling large solutions geared for the very large players.

With all of that going on, some of the items of interest to the smaller insurers easily might have been lost. One of the key areas insurers large and small are coping with is the integration of technologies, encompassing questions such as:

o How do I get data from my legacy system into our new executive information tools?

o How can I provide claims data to my underwriting workbench from the old claims system?

The increased acceptance of ACORD standards by vendors for interorganizational data transfer has positive implications for intraorganizational integration projects. Kimberly Harris-Ferrante, of the Gartner Group, refers to a phenomenon of "standards by default." In a recent article, Harris-Ferrante said: "There are insurers that never made the decision consciously to use standards but have purchased new applications that support standards."

To the extent that such standardization is coming with packaged products, smaller insurers (that tend to buy more than they build) could realize significant benefits. The key is gathering the information and making the business case.

Because the opportunity areas with ACORD span many parts of an organization, the CIO is uniquely suited to help business managers understand the strengths and weaknesses of ACORD in approaching specific problems. Therefore, we suggest the CIO lead an inventory of opportunities with business managers.

We also strongly suggest this not be quickly delegated within the IT department. In our experience, IT personnel can be as much a hindrance as a help in guiding business managers in understanding ACORD opportunities. Many IT professionals–including developers, business analysts, and operations personnel–never have experienced working with data standards, especially those extending beyond the organization–and see applications as silos. This is especially true in smaller organizations where operational exigencies do not allow for broad analysis of solutions.

Therefore, it falls on the CIO to understand all of the implications of standards and help both the IT staff as well as the business managers to evaluate opportunities both within and outside the boundaries of the company.

If it appears there are some opportunities for a company, we suggest the CIO rely on skills learned from leading other complex initiatives. For example, as with any new technology or process, it is frequently wisest to find a small, non-mission-critical application with which to begin.

This could be internally or externally focused. But the CIO must weigh some complex risks and rewards. For example, beginning with an externally focused application has appeal from a marketing perspective. However, external projects have an inherent weakness in that the CIO's organization does not have complete control over the resources, and the project will move at the pace of the slowest participant.

In evaluating opportunities it is important to know what applications have been used by other organizations and with what success, including ACORD papers and articles. However, the best way to judge success is by direct contact with other implementers. The CIO should use his/her network to seek these out. In addition, ACORD and AUGIE host periodic events at which implementers interact.

Once there has been a decision to proceed on a project, training is a critical function. The volume of standards documentation is overwhelming. Fortunately, ACORD staff can point to help facilities they have created and do conduct training for members.

If a project is initiated, we think the CIO should focus on scoping down the project early and often. The CIO quickly will see the standards themselves are very large, and it is easy for a developer to assume everything must be coded perfectly and exclusively to the standards. As demonstrated by the Download initiative, however, frequently a subset of the standards work to meet the 80-20 rule.

Expectation management also is key, especially with projects involving external trading partners. It is wise for the CIO to ensure there is a consistent, realistic message about the expectations and scope of the project that is given to all involved, both within and outside the company.

ACORD standards do not address every, or even most, issues a regional carrier CIO faces, but they can work in surprising ways. By following common sense, we believe a number of CIOs will be pleasantly surprised at the contribution they can make to their organizations with intelligent implementations. Then their executives can go to conferences and feel very welcome. TD

Patrick Vice is director of IT for Frank Cowan Company Limited, a managing underwriter, specializing in public entity insurance in Canada (www.frankcowan.com). He serves on various ACORD standards committees and working groups. Vice can be reached at [email protected]; 519-458-2007.

Marek Jakubik, a former CIO of Zurich Financial and Pitney Bowes, is a co-founder and managing director of the Insurance Technology Group (www.insurancetg.com). He can be reached at 416-214-3445 or [email protected].

"CIO Chronicles" focuses on issues of concern to midmarket insurers. Its content is the responsibility of the authors. Views and opinions are those of the authors and do not necessarily represent those of Tech Decisions.