Copyright © 2006 by ACORD Corporation

Introduction & Background

Our industry, as a whole, is changing. It is and be beneficial to the industry as a whole.
being transformed by any number of As pointed out by the Harvard Business
influences including natural disasters, Review (see below), this is not a unique
investigations, regulatory requirements, new concept, many industries are working
business models, mergers and acquisitions, towards these objectives in efforts to
and new customer and partner demands. This modernize, streamline, and create business
creates an even greater demand on data for and cost efficiencies.
quality, consistency, and transparency. These
forces also require increased data availability The ACORD Standards Strategy lays out a
and integration. road map for ACORD to ensure the standards
are aligned with current architecture
Whether transforming their business methodologies. In particular, this requires the
processes, connecting to their value-chain elimination of "line of business" silos to
partners, or attempting to drive efficiency in facilitate adoption and implementation of
their implementation infrastructure, standards for all lines of business.
insurance companies face ever-increasing
integration challenges making inter- and
intra-enterprise integration essential. They
must enable this enterprise integration
through a broad framework of industry "The standardization and
standards. commoditization of processes will also
require changes in strategy. As an
As the insurance industry moves away from increasing number of processes become
monolithic, silo-based organizations, it is common within and across industries,
gravitating towards networked models where executives will need to revisit the basis
enterprises combine to deliver value. As for competition in their businesses.
individual insurers and the industry evolve, They'll have to decide which of their
participants will need to leverage best-in- processes need to be distinctive in order
class capabilities both internally and to make their strategies succeed and
externally and tap sources throughout the which can be performed in a relatively
industry. More non-core capabilities will move generic and low-cost fashion. Even in
outside the main enterprise and be provided today's environment, most executives
in a services-oriented architecture (SOA) or have yet to decide what processes are
Web services environment. This is a core and noncore, but doing so will
necessary transformation and creates a true become much more critical in the future.
imperative for a standards framework that Process standardization may also mean
will support the industry. that it's feasible to combine certain
processes with competitors'; if these
The need for interoperability among systems processes offer no competitive advantage,
and the necessity of sharing data is essential why not? Creating shared-services pro-
in today's business world. Through the use of cesses across companies can offer scale
standards, data can be shared among efficiencies."
systems internally and from external sources
to support regulatory reporting requirements, — The Coming Commoditization of
improve customer service, and comply with Process, Harvard Business
financial reporting requirements. Review, June 2005

Through the use of standards, organizations

can achieve the long time goals of data
availability, quality, consistency, and
transparency. The standardization of business
processes will further support these efforts

ACORD Standards Strategy Overview

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January 2006
Today, ACORD maintains three standards This document discusses the current status of
domains: ACORD standards and what will be needed to
evolve the standards to better meet member
• Life, Annuity, Non-medical Health needs. Also included is a discussion of the
Insurance and Life Reinsurance (Life & incorporation of business processes into the
Annuity or L&A) ACORD standard.
• Property and Casualty Insurance and
Surety (PCS)
• Reinsurance and Large Commercial
Insurance (RLC)

Industry Standards Framework E xpansion

F uture: Standards
for SO A,
Integration, W eb Use of Industry
Standard Process
$N Services and Best
M odels and
Strategic Business value

Practice M etrics
Business Service
D efinitions

Use of Standard
M essages ACO R D X ML
(P&C , Life,
AC O R D R einsurance
F orm s Use of Industry
Standard
forms

AC O R D D ata
Use of Standardized D ictionary
data and M odels
$

Level of Industry Standards Adoption

Exhibit 1

ACORD Standards Strategy Overview

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January 2006
ACORD Standards Today
Today, ACORD standards remain in silo- The current initiative will leverage existing
based domains, reflecting an older work, add additional industry content and
paradigm. The industry is moving away IP, and provide a transition for the detailed
from this in favor of an integrated messages to the framework deliverables,
architecture and ACORD must as well. In thereby minimizing the impact to current
addition, the standards have inconsistent implementations. It is important to also
deliverables that: factor in that industry drivers have changed
the landscape. An enterprise approach to
• Impact enterprise implementations. standards deliverables is now required. New
• Necessitate duplicate support when requirements for transparency, contract
using multiple standards. certainty, and risk management from an
• Limit interoperability and transparency enterprise perspective demand ACORD
due to multiple data dictionaries. standards support them in a new standards
• Lack business process models. framework, aligning the three domains with
• Need a consistent data model. cohesive deliverables.

ACORD Standards Evolution ACORD's new standards framework will first

look for commonalities in standards and
To enable the industry transformation, the needs across all three domains. Then,
ACORD Standards Framework (Exhibit 1) differences will be examined. This will foster
must be expanded and enhanced to provide a unified cross-cultural view of the
standards for business processes, enterprise that is consistent with the
messages/ transactions, forms, and data. industry and our members.
This framework will increase the value of
standards for the industry by illustrating
their benefits and increasing standards
adoption levels. It will help fulfill industry
demands for flexibility, innovation,
transformation, and transparency.

Exhibit 2

ACORD Standards Strategy Overview

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January 2006
Standards Framework
ACORD standards today are inconsistent in The expansion of the ACORD Standards
their deliverables and components across the Framework (Exhibit 3) will create a value
three standards domains (L&A, PCS, and proposition for the industry that will enable
RLC). This inconsistency limits the industry’s and support business solutions in a manner
ability to use ACORD standards across an that is technology neutral. More importantly,
enterprise, support common needs, and it will stand the test of time as the
encourage consistency in the technical "transport" technology. It will ensure that the
architecture of the standards. The current ACORD vocabulary and grammar remain
standards deliverables are reflected in Exhibit platform neutral and can be mapped to
2. Please note that shaded items do not various technological representations,
currently exist. The L&A data model is a providing longevity in the face of ever
hierarchical XML model and not a business changing technologies and delivery systems.
data model.
ACORD’s strategic objective is to create a
There is a lack of overall consistency within standards framework that will include a single
and between domains for standards set of business process models, a single data
components, architecture approaches, tools dictionary, and a single data model across all
to support the standards, and methods to domains. In addition, there will be common
support cross-domain initiatives. The business messages to be used within the two
domains lack elements of the framework domains and separate messages for Non-Life
including process models, a data model for and Life that support the end-to-end value
PCS, a business data model for Life & chain data flow and transparency.
Annuity, and a combined data dictionary
reflecting data consistency for the end-to-end This is the strategic objective and will occur
value chain. This inconsistency impacts a over time. The initial focus will be on
member’s ability to have a full standards consolidation of business content (process
framework to support enterprise efforts as and dictionary) followed by the data model.
well as interoperability, transparency, and This will create a foundation for the industry
consistency. supporting Life and Non-Life as well as
position them for further alignment of

Exhibit 3

ACORD Standards Strategy Overview

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January 2006
messages. ACORD is focusing on alignment from business messages, but there is also a
of the standards based on business content need to maintain knowledge of how they
with the process models, dictionary and data relate and are connected. We will develop
model being the foundation of the alignment. and maintain a business data model that
supports both Life and Non-life.

Business Messages
Business Process Models
The business messages are an abstraction of
The business process models will be high-
the business data/information dictionary.
level processes for the end-to-end insurance
They are in direct support of specific business
value chain. They will be developed and
processes. There is a need to relate and
maintained across domains and support end-
connect the business messages to the data
to-end processing. They will also be used to
model as well.
define business service components to
support SOA and Web services development.
All messages will be defined and referenced
The process models will reflect a layer of to the business processes to provide
decomposition of the business process, but consistency.
will not include specific business rules.
Business rules and unique workflows are the Standards Framework
differentiators for companies to compete; Development and Use
their competitive edge.
In the development, maintenance,
Business Data/Information Dictionary management and use of the standards
framework, there are some key concepts and
The business data/information dictionary is
guidelines that will be recommended and
comprised of business terms and definitions
used.
for the end-to-end insurance value chain
across all product lines and geographies. A
• There is a difference in how and what is
common business data/information dictionary
needed to architect the business
is the foundation for the industry to build a
information vs. architect a business
model, forms and messages to support the
message.
business processes.
• Business processes, data models
highlighting relationships of data, and
The data model and business messages are
data definitions are necessary when
abstractions of the business data/information
architecting the business information.
dictionary. These business definitions and
• Data models, core components (if this
their relationships are defined within a data
methodology is adopted) and definitions
model and are key to achieving
are used to architect the message.
interoperability. The business definitions
identify the what; the data model with
As companies use the ACORD Standards
messages created from the model help define
Framework as a foundation for their
the how for achieving interoperability.
enterprise data architecture, they will need to
incorporate their company's unique and
Data Models specific requirements. They will customize
The data model will be a referenceable the framework, and then will need to:
(logical) and conceptual model and is process
and technology agnostic. It provides • Be responsible for understanding and
normalization and relational aspects of the managing their customization to the
data via objects or groups. It is an ACORD framework, including the
abstraction of the business data organized dictionary, model and messages.
around the objects and design pattern. There
is a need to use a data model independent

ACORD Standards Strategy Overview

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January 2006
• Recognize that this will add a layer of maintained in the same way with the same
mapping that each company needs to software using the same methodology so that
document and manage. we can consistently manage and publish the
• Have some rationalization and data standards framework components. For many
mapping to the standards framework of these deliverables, there are a number of
which is an industry framework that will options for the format as well as a variety of
not represent unique or custom needs for tools to manage the information. ACORD will
organizations. review the options and select the best suited
toolsets.
ACORD Standards Deliverables
The components of the tools and support
Supporting the Framework
framework are:
• Business Process Model
To support the Standards Framework, we will • Business Data/Information Dictionary
need to provide tools, services and support • Business Data Model
for our members to help them use, manage • Business Forms
and implement components of the framework • Business Messages
as well as to help us manage the standard.
All three domains will migrate to the same
internal ACORD toolset. They will all be

Standards Strategy Plan

As we develop the Standards Framework, we For more information or to obtain a copy of
will need to support tactical standards work the complete ACORD Standards Strategy,
as well as strategic development of the please contact:
enhanced standards framework. In support of
these efforts, the tools and services used to Denise Garth
manage the deliverables will be a part of Vice President, Membership & Standards
these efforts. It is a balance of "top down" ACORD
and "bottom up" industry work that will result [email protected]
in a stronger standards framework as well as 402-963-0198
richer content.

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January 2006 +44 (0)20 7617 6400
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