Reinsurance Is Embracing
e-Business Standards With Vigor
The reinsurance sector has never been viewed as the most technology-forward arena of insurance activity. For the longest period, dating up to the recent past, it was characterized as an industry where business was conducted in a gentlemanly good faith by word, paper and handshakes. But that is changing. Reinsurance is embracing e-business with a vigor that can only found in late bloomers.
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With this comes an equally strong embrace of data standards for real-time electronic business. ACORD has responded to that interest, and in the past year its activity has been far reaching and high profile.
A compelling confluence of factors have contributed to the heightened interest and commitment to standards-based technology in the cross-border reinsurance and large commercial community. One is the pressing need, in a post 9/11 world, to better understand risk. Good data, particularly exposure information, is critical for risk managers, brokers and the industry to make better-informed decisions and risk assessments.
Another is the maturation of ongoing efforts by the London market to reform its outdated, paper-intensive business practices and lift service performance levels. Also, markets have tightened, and to remain competitive, companies are looking for ways to make their systems more streamlined and cost effective.
During 2003, ACORD worked with its global membership to create new standards for reporting location-based exposures. This activity considered large commercial insurance risks, as well as personal and smaller commercial surplus lines risks. The standards addressed a critical need. The problem was that insurers and reinsurers were asking clients/brokers to provide different types of location data in different formats, resulting in difficulties in sharing data across the markets and incompatibility with standard risk modeling software. The result was extra work for all parties, such as manually reviewing electronic information received, checking quality of data, and re-keying information into formats that could be loaded into their own, or third-party supplier, catastrophe exposure modeling systems.
The data standards group of the Lloyd’s Market Associations (LMA) helped kicked off the effort by defining data elements and guidelines for the commercial property, household, onshore energy and fine art business. ACORD, in turn, worked with its international membership to incorporate these into a common standard. It validated the standards requirements with U.S. brokers and carriers and with the National Association of Professional Surplus Lines Offices (NAPSLO), the American Association of Managing General Agents (AAMGA), and others to make sure they meet the requirements of all parties involved in risk submission.