Driving data standardisation across the insurance industry

Vol 47: Issue 2 | July 2024

In short

• Global association ACORD is driving data standardisation across the insurance industry through its Global Advisory Council (GAC), created in February 2024.
• Already, 20 of the top 25 global reinsurers have joined the council, along with regional organisations such as the Singapore Reinsurers’ Association.
• The GAC aims to standardise data at all levels of the industry and across associations, driving efficiencies and enabling better compliance.
  

Data standardisation, then, might be described as creating a common language that aggregates data from diverse sources and makes it easier to interpret and use.

This has been a key driver for global standards body ACORD (Association for Cooperative Operations Research and Development) to launch an initiative to standardise data across reinsurance and insurance.

Announced in February this year, ACORD’s Global Advisory Council (GAC) data standardisation project includes members from 20 of the top 25 global reinsurers, along with regional industry bodies such as the Singapore Reinsurers’ Association.

Other regional bodies include the International Underwriting Association of London (IUA), the Association of Bermuda Insurers and Reinsurers and the Dubai International Financial Centre.

The GAC is chaired by Dave Matcham, chief executive of the IUA.

Logical next step

The initiative comes after several milestones in global insurance industry digitalisation, such as the full alignment of the Core Data Record and other key aspects of Lloyd’s Blueprint Two modernisation program with ACORD standards, as well as the Italian Market Data Exchange Platform project.

This leverages the ACORD Solutions Group’s ADEPT platform to connect the Italian (re)insurance community using ACORD Global Reinsurance and Large Commercial Standards.

Bill Pieroni, ACORD’s New York-based chief executive, says the data project is part of the organisation’s wider mission to “support interoperability” in the industry through standardisation.

“The goal is that any time a piece of data is exchanged across the insurance value chain and between stakeholders, it will be an ACORD standard and will be usable by our 36,000 members across 120 countries,” he says.

APAC guidance

While ACORD is a global body, Pieroni says the industry “tends to be very local” and because of this, much of the role of the GAC will be to consult with regional associations and understand their issues, such as local compliance and resource allocation, and how that might drive data standardisation.

“We are one of the few organisations where competitors can come together to collaborate and co-operate,” says Pieroni. “We can bring these people into the same room and the truth is that they will all benefit from pervasive data standards.

“The output I’m really looking for is to identify those shared opportunities and priorities, but to make progress we need to allocate and align resources to make it happen.”

Pieroni likens data standardisation to the industry using “the same power plug” around the world. Just as Apple and Samsung realised that using ecosystem-specific connectors for devices doesn’t guarantee customer loyalty, reinsurance — among many other industries — is finding that restricting the flow of customer data is no sure-fire way to retain business.

“The industry has realised over the last few years that it doesn’t help anyone in terms of their competitiveness,” he says. “It does nothing to help keep a customer, because you’ve locked them in with a moat from which they can’t escape.”

Single source of truth

Asked to describe his vision of how data standardisation could improve the efficiency of the reinsurance industry, Pieroni says it would impact the whole “operational value chain”.

“It is the ability to seamlessly apply, quote, find the cover and then share that data across underwriting, claims, finance, investment and the back and front office,” he says. “There are multiple stakeholders, such as the big brokers, the independent agents and the reinsurers, so it can deliver an ecosystem level of efficiency.

“Data standardisation is about using data at the moment of value, when the customer calls with a claim or when someone is quoting, or an agenda needs data.”

Reinsurers that are implementing artificial intelligence (AI) would also gain more value from the data standardisation project, because AI “really benefits from tagged data”.

“Tagging makes AI so much better in terms of its ability to derive insights,” says Pieroni. “In theory, AI could use unstructured data, but that creates issues around transparency. It creates a black box, which is difficult to understand. Being able to build a software solution with a consistent set of data standards to allow it to be leveraged across stakeholders globally creates huge levels of impact for the software community.”

The final, but equally compelling, benefit is in faster and easier compliance.

“Compliance is becoming more onerous, and standards can have a big impact on how data is collected, stored and reported,” says Pieroni. “Standardisation can take a lot of the pain and cost out of compliance, so I think it will have a big impact there too.”

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