Insurance Networking News

counterparts, notes Ki Nam Kim, VP of Boston-based Massachusetts Mutual Life Insurance Co.

“Because of the nature of the P&C business, they have to focus on efficiency,” Kim says.

Yet, with the investment income life insurers long enjoyed eviscerated by the financial crisis, efficiency and the standards that beget them are receiving renewed attention. Other, more formal efforts to increase the adoption of standards by life and health insurers also are afoot. For example, the Plug and Play Consortium is made up of insurers interested in making ACORD standards “plug and play” ready. Member companies include: Mass Mutual, New York-based New York Life, Newport Beach, Calif.-based Pacific Life Insurance Co., Boston-based John Hancock Financial, New York-based AXA Equitable Life Insurance Co, and Omaha, Neb.-based Mutual of Omaha Insurance Co.

The goal of the consortium is to accelerate the adoption of standards by excising some of the ambiguity in the standards. Many standards will provide, say, 90% of the information ultimately contained within it, with the rest made up with extensions.

“While ACORD has made great progress toward best practices, there’s a lot of interpretation in the ACORD standards as they stand today,” adds David Williams, AVP center of excellence, lead for data analysis at New York-based AXA Equitable.

The devil is indeed in the details, Kim says. “Am-
biguity leads to inconsistent implementation. We
want to remove ambiguities and tighten the stan-
dards. Also, more importantly, we want to make it
easier to adopt the standards.”
To be sure, a great gulf lies between adopting
and implementing standards. There are some com-
panies that adopted standards, but are not doing
large volumes of business with them because of
implementation issues. The consortium was created
to help address the problems insurers have had im-
plementing ACORD standards in the past, Williams
says. “We spend disproportionate effort integrating
a new application into our environment.”
To help surmount such issues and aid insurers,
the consortium wants to make implementation arti-
facts available online. “To really understand what a
standard says, somebody has to invest a lot of time
and read through hundreds of pages of documenta-
tion to implement it,” Kim says. “Instead of reading
through a document, people can actually download
a ready-made artifact for testing into their system.”
Williams says the consortium is taking pains to
make sure the plug-and-play certifications work in

Plans for 2010

concert with the still-developing ACORD framework. “As the framework becomes more available, we’ll be able to accelerate how we create specific implementations of plug-and play services,” he says.

Kim says the consortium is still open to receiving
new members. “We are very fortunate that many of
the companies in our industry recognize the same
need,” he says. “Once they realize what they can get
out of these standards, and also have access to the
implementation artifacts, I’m sure they will be join-
ing us left and right. What we really need now is for
the industry to get together, remove the ambiguities,
and make it easier to adopt standards so we can im-
prove the efficiency of the industry at large. Ulti-
mately, that benefits consumers.”
Williams says that by lowering one of the pri-
mary barriers of entry—implementation costs—the
plug-and-play approach will yield benefits for ven-
dors as well. “They won’t have to justify an expen-
sive integration effort,” he says. “They can just fo-
cus on the core offering and features.”
Chumbley predicts consortium members can be
effective advocates within the industry with the
view that adoption of standards ultimately will save
insurers both time and money. However, he cau-
tions that there are limits to advocacy. “Standards
are bought, not sold,” he says.

Much as widespread adoption by producers induced reluctant carriers to adopt standards, a critical mass of carriers can convince more vendors to include standards in their products.

“Carriers getting together and forcing the issue
will make a difference,” Conlon says. “But the ven-
dors need to step it up. You don’t see as much adop-
tion as you’d like to see from core system vendors.
Very few provide ACORD XML support out of the
box, so carriers purchase core systems then write
translation routines to and from ACORD XML.”
While it may be in a vendor’s best interest to push
a proprietary technology, carriers need to fear lock-in.
“If you opt for a proprietary technology, you’ve built
yourself another silo,” says Neal Keene VP of industry
solutions for Irvine, Calif.-based Thunderhead. “Open
standards future-proof you to an extent.”
To be sure, the push for standardization in insur-
ance is significantly buoyed by the technological tide.
With best-of-breed solutions and componentization
also gaining sway, XML-based standards are seen as the
best way to ensure true interoperability. “The macro
trend with SOA, and the advancement of technology,
means a lot more life insurers are adopting standards,”
Kim says. “The momentum is building.”
Williams agrees that tighter standards are a re-
quirement for the ultimate realization of SOA. “At
a certain point in our development at AXA Equita-
ble, we realized we were going to hit some barriers
with services that have external touch points unless
we tightened up how some standards were inter-
preted,” he says. “To take the benefit of what a ser-
vice-oriented architecture gives you and extend it
out to business partners, you have to be much
clearer in what you want from the standards.”
What’s more, insurers both in IT and in the busi-
ness side are becoming increasingly conversant in
the underpinnings of Web services, and the tenants
of service-oriented architectures.