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Industry Standards: Where We Are, Where We’re Going

Featuring Gregory A. Maciag, CEO, ACORD

Posted on 21 Jul 09

In this issue we’re featuring an interview we recently did with Gregory A. Maciag, CEO of ACORD (Association for Cooperative Operations Research and Development), a global, non-profit standards development organization serving the insurance industry and related financial services industries. Since 1970 ACORD has been promoting the use of standards on behalf of the insurance industry and over the years has grown and evolved to ensure that it addresses and meets the strategic and tactical needs of its membership.

Greg has been with ACORD since 1977 and has more than 40 years of industry experience. At ACORD, he has served in various roles including Vice President of Automation, Corporate Secretary & Treasurer and Executive Vice President prior to being appointed CEO/President in 1994. Among his many accomplishments, he has written two books, The Business Information Revolution, and most recently, The Real-Time World Enabled by ACORD Standards. We spoke with Greg about the progress of the insurance industry in adopting standards, the challenges we still face, and a number of other issues that he addresses in The Real-Time World.

Annie George (AG): What was the impetus, motivation behind writing The Real-Time World?

Greg Maciag (GM): “As with the first book, my rationale is two-fold: First, to transfer knowledge to people engaged in adopting industry standards. Second, to introduce the art of implementation to new people in our industry. The number of new people we work with each year is very large, and individuals within the industry are constantly changing jobs. This [book] helps provide a body of knowledge, a reference point of what we are doing and why we are doing it.”

AG: In terms of the industry as a whole, how are we doing in terms of our commitment to adopt industry standards and truly integrating them in our day-to-day operations?

GM: “Organizations and markets readily accept the need for all kinds of technology and data standards today. Most software is built on any number of marketplace standards and platforms and computers would not exist without them. Data or information standards have been largely proprietary in the past when the only way data came in or out of a firm was on paper. Today, everyone understands the value proposition for electronic trading.

“The ACORD footprint has expanded internationally over the past two decades. We now cover all lines of business and support cross-border business with large commercial and reinsurance messaging. Lloyd’s of London and the entire London Market use ACORD Standards and we serve members in Canada, Europe, South Africa, Australia and China, among other places around the world.

“Just take a look at how far we’ve come since 1994, when we had about 23 vendors; today we have about 230, including IBM, Microsoft, Oracle, Sun, SAP, HP, etc. There are more vendors involved, more companies involved, and our member revenue has doubled over the last 10 years. Also, at our annual conference in 1994, we had 350 attendees; in 2008, we had 2,600 participates at our conference in Vegas. Are people interested in standards? You bet they are, sure. Yes, we still have a lot of work to do, but we are making a lot of progress.”

Greg explains that notwithstanding corporate support, getting individuals to focus on how they can deploy standards as part of the projects for which they’re responsible is a challenge. Therein lies one of the principal reasons for writing his book.

“Standards are never a stand-alone decision but part of a large development project of some kind that involves moving information among trading partners or even to other internal systems. Therefore, there are many decisions, priorities, and timelines that come into play. And sometimes the need to do something fast means buying a non-standard product that’s available today. And if a vendor does not have a standard-compliant product, they are not going to stop selling it. The usual strategy is to adopt standards as products are upgraded and re-designed. I find that it’s always best to include industry standards in what you already need to do and with a budget and timeline that makes sense for you. Sure, I would like everyone to always be compliant, but it’s never a straight line between where you are and where you are going. We need to be reasonable. It takes time and patience. There’s plenty of legacy systems in place today.”

Typically there are three reasons why insurance agents have not incorporated standards in their processes:

1. As mentioned above, the vendor doesn’t provide agents with what they need to do what needs to be done.
2. There is a conflict with carriers in that they don’t all provide the capability to move data more effectively.
3. The agents themselves are reluctant to upgrade their systems or make the investment in technology.

Greg cites that AUGIE, ACORD-User Group Information Exchange, and ACT all have campaigns designed to encourage agents and regional carriers to do business in real time, with the objective of applying standards and moving data more efficiently.

“You question why you have to convince people to do this…,” says Greg. “ But everyone is busy, they are selling, marketing, servicing, and technology is not the first thing on their minds so you have to convince a lot of independent agents to do what they really need to do.”

Greg again emphasizes that progress is being made, even though challenges still exist. “ACT (Agents Council on Technology) and AUGIE webinars on Real-Time have been really great. The last webinar had nearly 800 independent agents participating. And ACORD will continue to work with ACT and AUGIE to convince all three parties [vendors, carriers, and agents] to do the right thing.”

AG: What other obstacles or challenges do agencies, companies and vendors face in adopting standards?

GM: “A key obstacle is changing personnel in all three sectors, which is a challenge for us. You start adopting standards, and then the individuals with whom you’re working leave, and you have to begin the process again…this has always been a challenge.

“People in key positions change constantly, a new decision maker comes in and he is from the banking industry and unfamiliar with ACORD, and the process begins all over again.

“I think that insurers should ‘bake in a policy’ so they don’t have to concern themselves with the vagaries of people changing all the time. If they adopt a policy for ACORD Standards compliance for everything they do and they have a plan in place to become compliant over the next 2, 3, 5 years, and this is incorporated into their policies, procedures, and purchases, including RFPs, then even when personnel changes, the policies are in place.”

AG: What about the younger generation coming into the industry and the fact that technology is second nature to them…has this changed the way things are done, viewed?

GM: “The younger generation will help influence change as individuals move into middle management and senior positions. But it takes time to make changes, to change IT policies. Here are a few examples. A large insurance company doesn’t allow video streaming on its website, for security reasons, and management doesn’t want staff watching videos at work. At ACORD, we do a great deal of educational programs via video streaming, so this insurer and its employees are missing out on a valuable platform. Another company overseas uses ISDN lines, and won’t allow the Internet to be used at work. This makes no sense. Furthermore, recently I was talking to a large consulting company and its employees were using social media sites. Management didn’t like it. The employees explained that this is how they talk to their clients…this is how ‘my generation communicates.’ These are large organizations with large IT divisions and these policies have been established for some time, therefore it will take time for the young guys to get in there and make policy changes.

“Before, change happened so slowly and not much actually changed; now, change happens so fast you feel frustrated by your inability to digest it… to deal with it…there is a lot to be done but you have to change your attitude, which is why I talk a great deal in the book about people’s attitudes…the need to manage change and frustration.”

AG: In light of what has happened in the past year in the financial services sector and the call for transparency, accountability, how do you see these issues further underscoring ACORD’s advocacy of industry standards?

GM: “You can validate standards in lots of ways…what happened with the financial community certainly supports the reason for standards, because just look at what everyone was talking about: Data. ‘I didn’t know, I didn’t have the data, we didn’t know what they were doing. We didn’t get the data in a timely manner.’ A lot of insurance companies have silos… Silos get everyone into trouble and it was clear that some organizations’ divisions are not able to smoothly exchange information with others. So I trust that this has been a wake-up call for everyone about the need for a lingua franca. Unless we all define our words and terms the same way, how can you ever exchange data in a business transaction accurately? Even the word ‘premium’ is a slippery slope when it comes to how firms calculate and use it. When you talk to accounting firms at large organizations it’s amazing the number of spreadsheets involved. Hundreds of thousands of spreadsheets are needed to come up with the analysis and information needed to develop financial models. But a lot of these spreadsheets are just that…and they don’t move data around effectively. Yes, what happened in the past year or so does underscore the clear need for identifying data and moving it quickly.“

AG: Lets discuss the need for standards and the benefits of implementing them.

GM: “Everyone needs to make a decision as they build or buy systems about information input and output. If you want to avoid re-keying all the data coming into your organization and your customer, partner, supplier or distributor can send it to you electronically, how can you do it? They all have different systems. Do you mandate that they send you data in a certain way? That’s not easy to do unless you agree with all of them to use an industry standard. Otherwise, they would be doing something special for you and something different for each and every other firm with which they do business. This makes no sense and therefore industry standards that are mutually agreed upon and maintained is what is logical.

“Some organizations may think that they have specialized knowledge or products that will allow them to require trading partners use proprietary systems or standards. They may think they have a market presence to demand compliance with their business models. This kind of legacy thinking is coming apart at the seams as ease of doing business becomes the mantra for trading partners today. You just can’t control customers like that anymore. Those customers will find alternatives to your products or services. Imagine trying to open a bank today with your own cash machines and no means to conduct business electronically. It doesn’t exist. Moving insurance information across such a complicated and complex value chain is now essential. We’re not all there yet, but we all know what we need to do and [are] working on it.

“Whenever someone suggests that they can avoid industry standards, I ask them to tally up the cost of doing business with all their trading partners and the cost of establishing and maintaining all those one-to-one, non-standard relationships. I always tell them that in the long run, industry standards will always be less expensive… always.”

AG: In your book, you discuss the need for organizations to determine where they are on the “standards continuum”….that this is beneficial, to know where you are so you can see where you are heading. Can you elaborate on this?

GM: “Organizations and projects can get complicated. So yes, I think it’s important to have someone know what standards are available and how they apply to the development and upgrade projects that are planned. Unfortunately not every firm has someone that understands how to apply standards effectively. Our business is complex and the standards reflect our business. Small firms rely on vendors; larger firms may have different teams with different priorities and timelines. Pulling all of these resources together and aligning them can be a challenge.

“ACORD not only certifies transactions on systems, but we will begin certifying people as ACORD Certified Experts next year. This is a new designation program that will require passing examinations, with ongoing continuing education to be launched in 2010. The benefit is that every organization serious about adopting and implementing industry standards should have at least one expert on staff, preferably a few. Even more importantly, we expect that every vendor selling agency systems will want to have experts on their staff. It makes it easy for any software buyer to ask simple questions. Are they ACORD Standards ready or compliant? Do they have one or more experts on staff? They can always say yes to the first, but they cannot say yes to the second because we will publish and maintain a list of all experts on our website. If a firm is serious about industry standards, they would invest in training staff to understand the standards.”

AG: You write in The Real-Time World that technologies change, but standards have staying power; they are the defining glue. We see this with the advent of the Internet, and now social media. How does a business operation continue to take advantage of these new technologies while maintaining standards consistently and continually?

GM: While nothing is forever, technologies change a lot faster than standards. And the standards that change usually mirror the changes in our business. But remember that all we do at ACORD is agree on the definitions of words that represent data and the grammar for connecting various data elements that represent information. So ACORD Standards are fairly stable and can transcend waves of technologies that come and go. We are also developing the ACORD Framework, a series of business models around capabilities, information, processes and data. This is a powerful tool that we will use to develop and maintain industry standards. And ACORD members can use the tool to adopt and implement standards in their own environments.”

AG: You speak about a shift to customer engagement and that this requires standards. Let’s discuss the role of standards in customer engagement, including when it comes to new media, technology.

GM: “Today, we have the web, e-mail, instant messaging, Twitter, social networking platforms, and other emerging technologies that people use as part of their need to communicate and share information with others. These technologies have become extensions of us, whether they are Facebook pages, blogs or avatars. This is not going away and will become second nature. Look at what the youngsters are doing today. They’re producing videos and talking to people across the globe on hand-held devices. All of these emerging and some exploding technologies will become weaved throughout the fabric of our human relationships and business transactions. It will become the norm. And both technology and ACORD Standards will be key to making all of this work together. So whether one is shopping for insurance, updating a policy or filing a claim, you can bet that the agents and underwriters will leverage these platforms to share information.

“And none of this needs to commoditize the personal relationship. Successful players will learn to leverage these technologies to solidify relationships and in some ways to more deeply personalize relationships.”

AG: What do you say to those who bring up ROI in terms of industry standards?

GM: “First we cannot confuse ROI associated with technologies and systems and think that it can be applied the same way to industry standards. What’s the definition of ‘return,’ anyway? It will be different for everyone. Is it to lower development cost, maintenance costs? Is it to accelerate new products onto the market? Improve customer service and retention? Access to new markets? How do you measure ease of doing business? Isn’t that what your customers decide it is? And if the development project is about claims or new business or endorsements, then one needs to look at the ROI for those projects… focus on what you’re doing, not the industry standards that are used to move and share data.”

Greg emphasizes that everyone has a say in moving the adoption of insurance standards forward. “Many people don’t think they have tremendous influence over what we do as an industry, over what their companies do… but they do. It isn’t only the decision makers that affect change. For every decision maker there are hundreds of influencers, and most people making decisions rely on other people’s advice. Never underestimate the value you have over influencing where your company is going, the direction it’s taking. If you feel strongly about something, whether it’s the use of an ACORD form, or a system or standards, speak your mind. The more people talk about these issues, the more these ideas will resonate with the people who are making the decisions. And we can get there a lot faster. “

Frustration is good, according to Greg, and serves as the fuel for getting things done. “If people are complacent and don’t complain, then where is the motivation to change? This is how ACORD came to be in the first place in 1970. Insurance agents were frustrated. They didn’t create ACORD more than 40 years ago because they were delighted, they created it out of frustration -- they had a problem and wanted to make changes. We are a result of that frustration; I believe anyone who has been around and watched ACORD evolve and grow would be proud of what those agents did and what ACORD has become. And we will continue to move forward, and change the landscape as to how we set standards and how people adopt standards. Individuals who have come back, like Bill Smith of Fireman’s Fund, who was the first director of ACORD in the 1970s, came up to me at a conference a couple of years ago and was astonished by what he saw…seeing all those exhibitors showing their wares and systems…and said, ‘Greg, I can’t believe this.’ I told him, ‘Bill, this is what you started.’”

Greg also had one final thought before we ended our interview, which ties into what ACORD is all about and how each and every person in the industry is part of its continued growth and impact. “I was speaking to an agent at a conference, and he was discussing ‘we versus me,’ the power of collective thinking and people working together. He said, ‘None of us is as good as all of us.’ And that’s exactly right. We need to do this together, because individually we can’t get this done. ACORD can’t do it alone, and we can’t do it only with vendors, only with companies, only with agents…everybody has to be a part of the process in advancing industry standards, and that is where we are today. We are all in the same swimming pool… we just have to make sure we get to the other end together.”

For more information about ACORD, please visit, And to order a copy of The Real-Time World Enabled by ACORD Standards, please go to at: