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Standard-bearer ACORD chief Bill Pieroni says stronger communication can help the insurance industry survive and thrive By John Deex
THE US-BASED ASSOCIATION for Co-operative Operations Research and Development – better known as ACORD – might not have the most catchy title. But the work it does is crucial, and increasingly so. Its website states it “facilitates fast, accurate data exchange and more efficient workflows through the development of electronic standards, standardised forms and tools to support their use”. In other words, it allows insurance industry players to communicate efficiently and effectively. The non-profit organisation has been doing this since its formation in the 1970s, but the work is far from finished. President and Chief Executive Bill Pieroni talked to Insurance News 150 days into his tenure, during a visit to Australia and New Zealand. He says it is vital for ACORD to continue evolving. “In the 1970s insurers were some of the earliest adopters of new technology,” he says. “They were really focused on automating repetitive tasks, so ACORD’s first foray was the development of paper standards, paper forms. Then as the industry matured ACORD went from paper forms to electronic data interchange. “That then evolved to XML (extensible markup language), as the internet began to take hold in the late 1990s early 2000s.” Mr Pieroni says the journey continues. He now wants ACORD to focus more on capabilities than transactions. “By that I mean the settling of a claim, the underwriting of a policy, the managing of a customer relationship. Our standards, our services, our assets 52
need to evolve along with the digitisation of insurance and the consumerisation of the product. “Millennials are not going to buy in ways their parents did. You are seeing some carriers embracing that, and some kicking and screaming as they are dragged into the future.” This is a future in which ACORD standards have a bigger role than before, Mr Pieroni says. Insurer margins are under huge pressure, which isn’t going to change any time soon. As a result, efficiency improvements are high on the list of priorities. “The ability to leverage new and emerging technology, thirdparty solutions, achieve greater degrees of strategic flexibility and operating adaptability – standards really play a role in helping to do that. I think it helps people to come together. “Historically, it was a source of competitive advantage in having bespoke, custom interfaces. “But increasingly, given the economics, many stakeholders are looking to ACORD to facilitate the use of new technology, the establishment of new channels, new products, new relationships.” Standards can reduce the cost, timeframe and risk of setting up new partnerships, Mr Pieroni says. The scarcest resource for insurers isn’t money, but time and expertise. “Do you really want to take the scarcest resource you have got and allocate it to building custom interfaces? You don’t. “You want new products, innovation, new pricing approaches, marketing, customer relationship management, not the interface, not the way you talk to all of your partners. insuranceNEWS
“That is why ACORD is important, and that is why I was so excited to come to the organisation. I think it has a real opportunity to make a difference for all of our stakeholder members and for consumers as well.” Mr Pieroni believes Big Data will have a huge impact on the industry. And once again, ACORD’s standards have a big role to play. After all, it doesn’t matter how much data is collected, it’s of no use if it isn’t consistently organised. “I believe in Big Data – but you need a standard. You can’t
see others that are still holding on to the past, and trying to do it from a bespoke standpoint. “It sounds self-serving, but I think they’re doing themselves a huge disadvantage. What you do with the data is the source of advantage, not how it is collected and how it is organised.” Using ACORD standards can also help manage cyber security, and they enable internal systems to be opened up to customers. This self-service trend gives ACORD standards a new urgency. “It is one thing to expect an
“Many stakeholders are looking to ACORD to facilitate the use of new technology, the establishment of new channels, new products, new relationships.” just throw it in a pile and expect you will be able to analyse it and develop insights and actions based on it. “Imagine just dumping all your tools and bolts and screws in a big pile and expecting that you are going to build something meaningful out of it. “Without those standards [data] becomes incredibly onerous. Even with the standards there is a lot of work to be done to make sense of it. “Some organisations are using the ACORD data dictionaries and data models to develop their systems and you October/November 2016
insurance agent, broker or underwriter to accommodate the foibles and issues and challenges of using an internal system, but if you enable a customer to receive a price or to make a change around their address, they are less forgiving. “We have standards that enable that seamless interaction internally. We need to help the carriers use what we have more effectively. Increasingly those internal technologies are going to be exposed externally. Consumers are just going to get frustrated and stop using it. “Members want to use the