Insurance is one of the most heavily paper document–dominated industries around. The need to document the entire insurance process, from customer acquisition to claims ful-fillment (and everything in between), practically eclipses every other industry with the exception of perhaps health care. As such, the need to simplify the storage and exchange of this information has motivated groups to create industry standards, using XML as a possible base for these efforts. In this section, we focus on one of the major insurance industry XML efforts.
Association for Cooperative Operations Research and Development (ACORD)
The insurance business is driven by data, and the Property & Casualty (P&C) business is no exception. In the drive to utilize the Internet as a means for real-time exchange of insurance information between producers, carriers, rating bureaus, and service providers, the Association for Cooperative Operations Research and Development (ACORD) cre-ated an XML format for defining message-oriented P&C transactions. Leveraging the existing Interactive Financial Exchange (IFX) specification as a “base protocol,” ACORD is defining an insurance industry format that contains transactions for Personal and Commercial Lines, Surety, Claims, and Accounting transactions. As a result, most of the business message structure, data types, and documentation conventions were borrowed from the IFX specification.
The organization was actually formed in 1970 for the development and promotion of standards for the insurance industry. ACORD’s first XML standard to pass approval was its ACORD Property and Casualty and Surety (P&C and Surety) specification, developed in late 1998 and approved in 2000. ACORD’s follow-up to this was the development of the ACORD Life insurance standard known as XMLife. A key aspect of the ACORD standards is its dependence on the IFX standard and its support of the e-business stan-dardization effort ebXML. It also extends Automation Level 3, an EDI standard adopted in the insurance industry.
ACORD specifies all the aspects of the insurance lifecycle, from customer acquisition to claims fulfillment. These are divided along the lines of Property and Casualty, Life, and Surety insurance. ACORD specifies a very large and thick Document Type Definition (DTD) around the vocabulary and exchange mechanisms designed to meet these needs.
Due to its longevity and reputation,ACORD has the support of over 1,000 insurance car-riers and groups, 25,000 agencies, the majority of software services and vendors, many nonprofit organizations, and the CPCU society. This, combined with its excellent work in the form of its XMLife and Property and Casualty standardization efforts, contribute to its excellent chances of success in surviving any battles with conflicting insurance industry standardization efforts.
For security, ACORD relies on channel-level encryption, such as SSL or SMIME, for privacy and data integrity. ACORD contains built-in mechanisms for authentication of user parties and transactions but does not provide any mechanism to protect privacy and guarantee data integrity between endpoints. As a result, the implementation relies on channel-level facilities for this functionality. Because ACORD follows the same architec-ture structure of IFX, it supports batch and interactive styles of communication and is application protocol independent, supporting HTTP, FTP, SMTP, or emerging protocols for transport.
The ACORD Global Standards Strategy Committee has also announced a project called “eMerge” that aims to integrate existing ACORD standards into a single common stan-dard. The goal is to facilitate more effective and efficient movement of data between insurance trading partners. This project is an evolution of the XML standards that ACORD has supported since 1998. This new and evolving format will develop a single view of financial services by partnering with other standards bodies globally in an effort to facilitate straight-through processing (STP). Increasingly, the lines between insurance and the other financial services sectors are becoming blurred by virtue of increasingly shared data and implementations. Adoption of a common data-exchange structure will simplify and streamline data transfer both internal and external to an enterprise.
Major ACORD members involved in crafting the standards include such insurance and software industry vendors as Channelpoint, IBM, Manulife Financial, Marsh Inc., MetLife, Microsoft, Oracle, Principal Financial Group, SAFECO, Silverlake Software, The Hartford, Travelers, TowerStreet, and ZeBU.