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If the theme of last years ACORD Property and Casualty program was “the year when the rubber met the road,” then this year it should be “and now were putting the pedal to the metal.” It is one thing to define a standard, but it is much harder to implement that standard.

Implementation of standards-based systems has risen dramatically in the last 12 months, and the industry at large is now linking its standards implementation to key focus points as it responds to business drivers, market forces and capital restrictions.

For 2003, ACORD member companies (both insurers and vendors) reported 170 P&C/Surety implementations using XML standards. This figure compares to 42 implementations in 2002, an increase of 305 percent in overall implementations. And for agents, 2003 was a start to fulfilling promisespromises that the Web would make real-time communication between agencies and their various business partners a reality.

The term “real-time” is used in many different ways. Increasingly, it is being used within our industry to refer to the emerging interfaces that enable independent agents and brokers to receive an immediate electronic response when they request information, such as policy, billing or claims information.

Major progress was made last year in the area of agents communicating in real-time with their insurer partners, and much of this was enabled by the implementation of ACORD XML transaction standards for real-time claims, policy and billing inquiries. These standards were prioritized and developed in 2002 with the assistance of AUGIE (ACORD-User Groups Information Exchange). After a slow startat the beginning of 2003, implementing insurers were expressing frustration at the failure of most agents to take advantage of the real-time opportunities presentedthe uptake grew exponentially. Currently, the number of real-time inquiries and transactions is increasing by as much as 30 percent per month.

ACORD standards working groups have been quite active. In the last year, P&C/Surety working groups were formed to develop needed business message standards for commercial lines, including crime, boiler and machinery, electronic data processing system (EDP), and workers’ compensation. ACORD has been working closely with the National Council on Compensation Insurance (NCCI) and the Workers Compensation Insurance Organizations (WCIO). Both organizations are helping to build business messages for statistical reporting. WCIO is also collaborating with ACORD in the development and migration of their state reporting transactions from flat files into ACORD XML-formatted messages.

In addition, ACORD released three new guides to help members implement some important new standards. The guides that have been developed cover Exposure Reporting, Binding Authority and Coverage Matrix. Use of the new Exposure Reporting standards significantly improves reporting of location-based exposures. Development considered large commercial insurance risks, as well as personal and smaller commercial risks, including surplus lines risks that go to the London market from U.S. managing general agents via binding authority agreements. The new Binding Authority standards for binding these risks have been well received.

Another important activity was the P&C/Surety XML Claims Download Working Group work on the development of XML business messages for the transfer of claims data from insurer to agency. These permit real-time data requests and transfers, where supported by the insurer, that can populate and update agency management systems directly.

Standards development, to some degree, is an evolutionary process, especially for the youthful XML standards. Up to this point, all ACORD XML P&C/Surety standards have been built on the foundation of the ACORD version 1 specification. In November 2002, The P&C/Surety Steering Committee approved the formation of the Version 2 Working Group charged with first identifying the business and technical requirements associated with a Version 2 specification. The group has now moved into a more detailed analysis phase that continues to this day.

The advantages of building standards messages on a specification that incorporates all the advancements in XML technology over the last few years are numerous. One benefit will be improved and easier coding procedures for programmers based on a consistent message design. Another benefit involves a design that provides for tighter validation of the business data based on the transaction or line of business.

Concerns about backward compliance are one of the reasons ACORD exercises restraint in its schedule for major modifications of specs, always seeking to insure that the standards are kept stable for as long as it is feasibly possible. For example, when Version 1 was first released in July 2001, it carried with it an expected shelf life of 18 monthswhich has evolved into nearly three years of use. Though not yet officially determined, we speculate the anticipated life of the Version 2 spec will be at least three-to-five years, and perhaps longer.

Industry research points to a continued expansion of ACORD XML standards use in 2004 and beyond. ACORD anticipates that insurers and vendors will leverage industry standards and Web services to define common semantics across significant business processes.

is implementation consultant for Pearl River, N.Y.-based ACORD.


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.