Gregory Maciag

PIANJ President Savino Speaks on Broker Dis-intermediation

Traditional economics tells us that disintermediation is the free market removal of intermediaries in a supply chain, often explained with the phrase, "cutting out the middleman".  It is a natural course of free markets seeking the lowest cost overall and the most efficient use of resources.  Ecommerce has empowered firms that create products and services at the source of the value chain to directly sell to customers, thus eliminating the need for costly intermediaries.  In theory, the competitive firm will pass part of these costs savings on to customers in the form of lower prices, thus retaining and attracting new customers.

Technology providers talked about friction-free capitalism back in the 1990’s as the internet was getting traction.  It’s the idea that ubiquitous and equal access to information will create the closest thing yet to Adam Smith's perfect market.

Friction has been decreasing for some years now. Affordable air travel, overnight delivery and improved communications have shortened distances. Credit cards and the internet have spawned home shopping from sources across the world.  In principle, we can sell products and services to a worldwide audience as easily and effectively as our largest multi-national competitor.

Not all friction is bad.  Ecommerce opens more doors than it closes to intermediaries who understand it, grasp it and build business around it.  Keith Savino has been an evangelist for modernization, technology and industry standards from the outset.  He is an industry leader representing the brokerage community and passionate about debugging legacy thinking.  He likes to say “It’s about the business.”  You’ll enjoy his perspective. 

Here is the link to Insurance Day

If they break this link over time, you can look at the Insurance Day Section of this website where I archive all these Op/Ed features.

Data is a Boardroom Issue

Colin Rickard sees Solvency II as a crucial opportunity for the European insurance industry to get its data management house in order:

“As a veteran of the data management industry, I have witnessed organizations across different sectors grapple with the challenge of ensuring high quality business data, but never before have I seen such a direct regulatory mandate for board level supervision of data. This is an opportunity, not a threat.

Data and IT professionals within insurance companies have been presented with the foundation for a business case to tackle the long-term data problems the industry has faced. Data is now a boardroom issue and that necessitates investment, KPIs and ongoing governance.”  Colin Rickard

Single Sign-on Anyone?

At no time in human history have so many people used so many "secret passwords" in order to go about their normal business. Password overload is common, and what a lot of people do is just give up, and start using the same password everywhere.  Something that needs more security now has less.

On the personal level, there are ways to come up with a few ID/Password combinations that you can use to access low priority sites where security and privacy are not big issues. I can appreciate the advantage of customizing a website based on the needs of the user, so the idea of authenticating a user makes sense.  The need for a good ID/Password system becomes critical for financial accounts and business transactions.

At the lowest level of security, you can come up with a simple system for many sites that use a combination of alphanumeric characters and symbols.  It’s better than using names or dates and gives you some peace of mind.  When security and privacy are important, one would think that a strong password can be used for all your accounts.  That’s not always possible because of requirements of the system.  Length is the least of the challenges as upper/lower case, symbols and expiration dates will vary across sites.

The problem is compounded dramatically in the corporate world. Brokers representing many insurers need to manage staff passwords for internal systems and all the ID/Password combinations required by their trading partners.  Will there be a better way to deal with all of this craziness? Will there be a biotech, DNA, 99.9% foolproof solution?  Perhaps, but it makes no sense to do nothing.

I am pleased to introduce you to the ID Federation.  Their mission is to provide our industry with common legal and technical standards to remove the need for multiple passwords while increasing security and the ease of doing business with one another. Below is a link to their website and the first issue of the newsletter.  Cal Durland (ACORD) attended the meeting this week in Boston. Go to the website, register and get involved

Trust Framework

Download Trust Framework Newsletter Issue 1   

Every Industry Has Its Standards

DDEX is a data standard for the digital content industry. This note about DDEX is one of the clearest and most concise accounts of what standards are and why industries need them that I've seen.

Mark Isherwood says: “We also knew that just about every other industry we could think of operated according to a set of standards. A standard is an agreed, repeatable way of doing something and standards are the basis of most industrial transactions. So, the manufacturer of widget A makes them to a specified standard in order that the manufacturer of widget B can include widget A in their product. The manufacturer of widget B is safe in the knowledge they can do so without any surprises or any significant need to update their products and processes every time they take a new delivery of widget A.” Digital Music

Data Standards in Healthcare

Some research figures for the benefits of data standards in the health care industry:

 “To assess perceived and actual benefits of implementing a data standards system within their organization, all survey respondents were given a set of supply chain performance indicators and asked to indicate observed and/or potential impacts of data standardization on these indicators. The most frequently observed supply chain performance improvements attributed to data standardization are: improved product tracking through the supply chain (36 percent), increased collaboration/partnering with other members of their supply chain (33 percent), and decreased cost/increased efficiency of contract management and administration (31 percent).

 “The most common potential benefits of data standardization include: achieving higher quality metric targets for your organization’s supply chain (69 percent), defining more effective quality metrics for supply chain performance (65 percent), decreasing labor costs associated with purchasing including rework (64 percent), decreasing cost/increasing efficiency of contract management and administration (63 percent) and increasing patient safety (63 percent).”  Industry Take on Standards

Data Management and Application Performance

Loraine Lawson blogs about an Ovum study that finds a strong connection between poor application performance and poor data management. “Specifically,” she reports, “85 percent of the companies complained of application performance problems and the leading culprits trace back to bad data practices such as a lack of standardization, inadequate archiving practices and too many point interfaces. The study also found that 20-30 percent of data is duplicated across applications, which increases application maintenance costs and creates problems for data migration, synchronization and retention.”

It's always useful to have figures for these kinds of effects. Numbers help us quantify and share the impact of data management practices. Without the numbers, we know we've got problems, but we don't know how to make our colleagues appreciate them.

It's also unusual in my experience for application performance issues to be traced back to data management competence. Since application performance is something that affects everyone's daily experience, we should be making more of the link. If your applications aren't responsive then you're losing valuable time. If your applications are giving you the wrong data then the business is at risk.

IT Business Edge

Standards Are A Public Good!

When people mention the benefits of standards, they often take an IT perspective, citing improvements in developer efficiency and systems integration. At ACORD, we of course acknowledge the technical benefits of standards, but we emphasise the business values more.

I recently came across this partial list of benefits, aimed at the financial services industry:

1. Visibility built on data standards will support global financial stability.

2. A standards-based universal coding system is a public good that should not be locked-up in proprietary ownership. It should be run by a not-for profit, industry-owned organization.

3. Industry stands to gain from data standardization. It is well understood that improvement in efficiency through standards would yield billions of dollars in annual savings.

Point 1, on stability, speaks to the general sense that the global financial industry doesn't have a coherent picture of who owes what to whom. The third point is an "everybody know that" argument, which nevertheless needs filling in. How many billions, and how soon?

The middle point is, to me, the most striking. The builders and implementers of standards are indeed custodians of a public good. Standards belong to the communities they serve. We should see standards bodies as defenders and promoters of their members' common interests. The not-for-profit, industry-owned route is the best way to ensure the inclusiveness, accessibility and above all relevance of our precious standards.  Financial Data Standardization

London Awards - BMS Group's iPad Project Wins

No sooner did we leave Fort Lauderdale and the annual awards reception, did we head over to London for the Insurance Day Awards. Insurance Day has 26,000 readers in 67 nations plus 24,000 visits on their website.  As you know, we partner with them on the Insurance Technology Congress. held in October of each year.

The BMG Group  was awarded the Technological Initiative of the Year for their iPad project in London tonight.

Communities Drive ACORD Standards: Ruschlikon

Most people equate ACORD with the standards we maintain on behalf of the global insurance industry. I wouldn't have it any other way.  But ACORD is also a community of communities, a movement and a focus when you think about it.  We bring together people and organizations to develop common standards that benefit everybody today and help to build a brighter future. We lead the movement towards smarter use of information, closer collaboration and better customer service. And we provide focal points for groups interested in breaking new ground with standards.

The Ruschlikon initiative is such a group part of the ACORD community. It is making excellent progress and it's got that quality that all successful initiatives need – momentum. I salute everyone involved in the group.  READ MORE FROM  INSURANCE DAY