Standards: Will We Ever Get There?

In a sluggish economy, its only natural that carriers would seek to maintain any and every competitive advantage. One way some companies seek to do this is by maintaining proprietary systems, believing this will give them such an advantage. But analyst James Bisker of Needham, Mass.-based TowerGroup pointed out in last years NU Standards Supplement, its unlikely that any companys systems are head and shoulders above anothers.

Then theres the fact that a lack of standards results in inefficient communications with agents and with a carriers own customers. The irony here is that the perceived advantage of proprietary systems is antithetical to the growth of a carriers business–because its more difficult and more time consuming to communicate with that insurer.

Despite this cutting off of the nose to spite ones face approach, however, some insurers continue to believe they will lose something if we really get standards, because it will be easy for agents to “spreadsheet” quotes on a risk, allowing consumers to shop based on price alone. Those carriers who think this way will be dragged kicking and screaming into the standards eraif and when we ever reach that time. Meanwhile, such carriers will continue to pay lip service to the idea of standards by supporting redundant surveys and other half-distance steps that seem to indicate progress, but will never ultimately get us there.

Aiding this attitude of benign impediment is the well-known reluctance of our industry to adopt cutting-edge technologynot that most of the technology were seeing in insurance is actually on the cutting edge. Its just that even technology that is several years old is indeed “new” in this industry.

Most of the action on standards that were seeing from the vendor end is coming from big players like Microsoft and IBM. These and other companies have their own standards agendas that are generally meant to serve many industries. And while they are focusing on verticals like insurance, they are also running up against the phlegmatic pace of technological advance that has characterized insurance.

Yet, despite a climate that would inhibit their progress, standards are moving inexorably toward that wall, even if the steps arent as lengthy as many, including myself, would like.

How can we hasten the journey, and more importantly, make the goal attainable in our lifetime? One way to do so is to let go of the notion that isolated systems represent a competitive advantage. Once more companies see that the alleged advantage is, in fact, a disadvantage, a huge obstacle will have been removed.

It will also help to realize that as parts of the insurance industry, were all in this together. While we will always thrive on competition, we need to find areas of cooperation that will benefit all parties. Certainly, the establishment and implementation of transaction data standards is one such area.

Removing the barriers that have traditionally hamstrung this industrys progress on technology can help eradicate the half-distance-step mentality that has had such a fearsome grip on insurance.

Who knows? Some day, we just may be able to reach out and touch that wall.

Senior Editor Ara C. Trembly is NUs resident tech guru. He may be reached at [email protected].

Reproduced from National Underwriter Edition, May 19, 2003. Copyright 2003 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.