istock-628418294_porcorex / porcorex
29 August 2017Analysis

The value of standards

Insurance is an industry that centres around a promise—specifically a promise that the consumer’s risk is understood, indemnified, and in the event of a claim, paid. This promise is grounded in data, expertise and insight, which accumulates throughout interactions.

At first glance, data standards can seem abstract. However, standards serve the same overarching purpose as all specifications, including those created for electrical devices, buildings and automobiles. Standards reduce risk, increase satisfaction and enhance customer experience. For example, electrical standards and certification allow an appliance power cord, regardless of who manufactured it, to plug into a compatible outlet.

ACORD works with insurance industry stakeholders to establish standards for data elements, definitions, formatting, and process flows. These standards enable industry stakeholders to transform data into information, implications, actions and outcomes.

Data standards are particularly important to the insurance industry due to three complicating factors:

  •         Wide variation: Stakeholders include carriers, reinsurers, agents, brokers and third-party software vendors. Each one of these stakeholders has varying functional and technical demands as well as goals and objectives.
  •         Exponential data growth: The speed and magnitude of relevant data has been steadily increasing at a collective rate for the past decade. Transforming this data into information is contingent upon standards-based gathering, aggregation and synthesis.
  •         Industry change: Insurance faces many of the macroeconomic, technical and demographic changes facing other industries with the addition of several others. These include increasing consumer demands, a rapidly aging workforce, and technology obsolescence.

Through the development and deployment of data standards, standardised messages and transactions facilitate communication and integration among stakeholders across the entire insurance value chain.Data is the common element integrating the insurance value chain. Standards enable the sharing and leveraging of data across the enterprise value chain and with external partners. Through the development and deployment of data standards, standardised messages and transactions facilitate communication and integration among stakeholders across the entire insurance value chain.

Benefits of insurance data standards

Organisations are working to address historical and emerging challenges, and at the core of those efforts is data and accompanying standards. These challenges are driving organisations to embrace standardisation in order to deliver superior value propositions, optimise expenses and mitigate risk.

ACORD views the value of standards through three lenses: efficiency, effectiveness, and flexibility. Once organisations adopt and implement data standards to address the challenges they are facing, they realise capability improvements across process, organisation, and technology dimensions.


Many insurance stakeholders are asked to do more with less. Below are examples of how standards help organisations increase efficiency in their processes, organisation, and technology.

  •         Process: Data standards streamline operations, help reduce the amount of capacity needed for transactions, and better equip organisations to achieve straight-through processing (STP).

o   They provide a common understanding of data, allowing the organisation to collect data once and reuse it in different business areas across the enterprise.

o   Then the organisation can work towards a fully automated system where information from the first interaction is automatically transferred and shared without manual input or intervention.

  •         Technology: Data standards give organisations the benefit of faster implementation and less costly integration.

o   By adopting standards, organisations are able to leverage off-the-shelf third party solutions to meet their business needs. They avoid creating internal proprietary solutions, which cost more to maintain.

o   As data standards become more pervasive in the industry, vendors will be incentivised to build to those standards. These vendors will be encouraged to compete on delivering value and improving features.


The current global business environment is full of uncertainty. The ability for organisations to plan in order to react when the unexpected happens is a crucial survival skill. Standards give organisations the foundation to adapt successfully to an ever-changing business landscape.

  •         Process: Data standards shorten the time between diagnosing changes in the environment to adapting new processes.

o   When organisations adopt data standards, they can compare themselves to other organisations, allowing them to find and implement best-in-class practices.

o   Standards allow the organisation to build upon that foundation and focus on tailoring their processes to fit their specific needs to create a competitive advantage.

  •         Organisation: Data standards create a common language for organisations to communicate with partners. It allows each party to understand exactly what that data means and create seamless integration.

o   When there is a common understanding, organisations can share new information and access new data sources, increasing flexibility and better positioning the organisation to thrive in the evolving business landscape.

  •         Technology: Standards help organisations avoid the risk of being in agreements with partners that may be charging too much or not meeting business needs.

o   When an organisation creates custom or proprietary solutions, there is a chance the organisation could be forced into continuing to use it because there is no cost-effective way to extract their data. However, with standards, an organisation can migrate their data to new solutions and change partners as their business needs and objectives evolve.


Effectiveness can occur only if an organisation is meeting its objectives. Not only are standards useful in helping organisations reach their existing goals, but they can take the organisation to the next level, thus increasing their effectiveness.

  •         Process: Data standards give organisations the tools to improve data accuracy and consistency, enabling the use of advanced analytics to create effective processes.

o   Standards allow the organisation to scale data gathering while also providing them with the option of tailoring processes to fit specific needs. Ultimately, it allows the organisation to account for what it can control, address the unexpected effectively, and focus on achieving results in a timely manner.

  •         Organisation: Adopting data standards gives organisations the capacity to put their best people on the biggest opportunities and not the biggest problems.

o   Organisations are more effective when their people are focusing on tasks of higher value such as customer acquisition, retention, and management rather than data entry.

  •         Technology: Data standards allow organisations to increase adoption and deployment of new solutions. With constant advances in technology, insurance organisations need to keep pace.

o   Standards give organisations the tools to implement these new technologies into their respective networks and business operations.


Insurance stakeholders can improve the efficiency, effectiveness, and flexibility of their capabilities-processes, organisation, and technology through the implementation of standards. From insurance industry leaders to vendors and researchers, the consensus is that standards are essential for improving strategic and tactical positioning of firms within the industry.

As the desire to leverage data increases exponentially, the benefits of standards are becoming even more apparent. In order to survive and thrive in the emerging business environment, insurance stakeholders must be able to leverage data in a standardised manner. The implementation of ACORD Standards is a pivotal enabler.


ACORD, a nonprofit organisation serving the global insurance and related industries, facilitates fast, accurate data exchange, and efficient workflows through the development of electronic standards, standardised forms, and tools to support their use.

For nearly 50 years, ACORD has been an industry leader in identifying ways to help its members make improvements across the insurance value chain. Implementing ACORD Standards improves data quality and flow, increases efficiency, and realises billion-dollar savings to the global insurance industry.

Currently, ACORD engages more than 4,000 participating organisations spanning 20 countries, including insurance and reinsurance companies, agents and brokers, software providers, financial services organisations and industry associations. With the tools and resources provided by ACORD, these participants are equipped to deal with the current business environment while influencing and shaping the future of the industry.

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