Data is good for us

By Tony Kaye | Vol: 39 Issue: 4 | Dec 2016
data is good for us

On any given day, insurance companies are processing millions of policies, claims and other transactions as part of their usual business activities. 

Few give the big picture much thought, except for those intimately involved in developing technologies and processes to collate, analyse and manage the huge volumes of data being collected from customers and other parties. 

Ensuring the smooth and near instantaneous flow of information between companies and countries is a real-time challenge. It is a colossal task. Often insurers not only need to securely exchange complex and sensitive information with each other, but also with reinsurers, underwriters, brokers and even third parties such as superannuation funds. 

EFFICIENT EXCHANGE OF INFORMATION 

No wonder there is a lot of work being done behind the scenes. Insurers are investing heavily to better use the customer information they receive to improve the structure of their insurance policies, information security and risk management models. The end goal is to provide more innovative products and services. 

Along with implementing systems to better manage data near instantaneously, there’s also substantial work being done in the area of ‘blockchain’ technology, aimed at improving data quality and security. 

These topics are all very familiar to Steven Tuften, a central figure in the process to improve insurance data quality and information exchange. Steven is the Australia/New Zealand Representative and Program Manager for the Asia–Pacific GI and Life programs at ACORD. 

ACORD is a global non-profit organisation founded in 1970, with the aim of implementing global data standards for the insurance industry. It facilitates fast, accurate data exchange and more efficient workflows through the development of electronic standards, standardised forms and tools to support their use.

STRENGTH IN STANDARDS 

“We have been running programs with a number of the big insurers to provide standardised formats that promote greater efficiency,” Steven says. “In our role we try and get insurers to work more closely together to better exchange information.” 

He adds that implementing standards has been shown to not only improve data quality and flow, but also increase efficiency and realise billion-dollar savings to the global industry. 

Steven says some insurers see standards as a threat that will reduce competition. They instead develop bespoke systems. This creates information exchange issues, he says, including overlaps between systems. 

“The advantage of having a standard is that once the interface has been built, it only needs to be tweaked. The incremental savings are profound,” Steven says. 

ACORD has done a great deal of work with Steadfast, the largest broker network in Australia, which runs a data platform from which brokers can seek multiple quotes from various insurers. 

A good example of standards being developed is the work done by Miramar. The underwriter has worked with Lloyd’s of London and Steadfast to develop an industry standard for all coverholders around the world to communicate with the London market. 

In general insurance, Australia has a mature standard that is now being rolled out into the broader Asia–Pacific region. Its users include AIG, Chubb, Aon, Allianz, Berkshire Hathaway, Suncorp, Calibre and Lumley. 

Within life insurance, ACORD has been working with insurers and superannuation providers. 

“On the life side, the standard is newer but rapidly evolving, with a number of insurers working with us to build new capabilities to support not only Group and Retail Life policies, but also annuities, managed funds and related superannuation data,” Steven says. 

TAL Life’s Head of Architecture, Atul Sood, has been working closely with ACORD to embed its data standards into the insurer’s business models. 

“At TAL, our goal is to provide the best possible service to our customers to help them when they need us most. This has necessitated the consolidation of critical information from multiple systems in order to provide seamless experience for customers across all distribution channels,” Atul says.

“ACORD has helped us to accelerate that. For example, we have been able to utilise ACORD’s messaging and information models to create a standard structure. It has cut down a lot of time for us. However, we are not stopping there because ACORD can help us to create models for our unstructured data as well.” 

TAL’s prudent adoption and adaption of standards has been able to highlight that standards can be leveraged to gain competitive advantage.

“We believe that wider adoption of standards would provide further tangible benefits to insurers as well as present customers with greater choices and options,” Atul says. 

The process of improving data flows across the insurance industry is ongoing, but the will to achieve better outcomes is certainly there. 

“We’re a fairly unique organisation,” Steven says. “We’re one of the few that can get competitors into the same room to collaborate on how to drive greater industry efficiency. We can then take those ideas and help our member organisations realise those efficiencies and savings for both themselves and their business partners.”

HOW ACORD PLANS TO IMPROVE THE INSURANCE INDUSTRY

Standards are enormously valuable in every industry. If every construction company operated with different procedures and processes, it would take a lot longer to complete a build, as every new process would need to be signed off by building safety inspectors. 

New work on older buildings would become extremely difficult as engineers have to come to grips with the building processes employed by the original builders. A lack of standards is a lack of a common language. 

That is exactly the issue that the increasingly globalised insurance industry is facing – a multitude of languages. But in this case we’re talking about data. 

As each individual insurance company in each territory has come up with their own data collection systems, businesses are all speaking different data languages. This removes a major opportunity for the industry to accelerate into the future, fuelled by a mass of data analytics brought together in an environment of standards and common architecture. Insurance, after all, has always been about strong data. 

If the global industry gets its standards right, ACORD argues, then we will see a massive improvement in the efficiency and effectiveness of execution of business across the entire insurance value chain.

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