No-one wants out-of-control expense ratios… indeed, if you ask global standards-setting body ACORD how the (re)insurance industry should go about addressing the issue, it has one simple answer: straight-through processing (STP).
ACORD’s latest quarterly London event, titled Global Reinsurance and Large Commercial (GRLC) Framework – Empowering London Market Straight-Through Processing, pointed to the method as “the only viable long-term solution” but it was stressed that STP is about people as much as it is about technology.
“Those who have successfully been through the process have found that the costs associated with implementation don’t arise from flaws in the technology or the standards, but rather from human error in using them,” noted Chris Newman, managing director of ACORD in London.
“The success of straight-through processing isn’t just about implementing a system and adopting standards but on managing the change around them, shifting people’s mindsets, making them aware of the benefits, and providing them with adequate training.”
Newman believes that the event – which was participated in by executives from the likes of Willis Towers Watson, AXA XL, and Brit – was able to highlight that those who have made great progress towards STP have not done so overnight.
“The scale of change can be overwhelming, and a common success factor is to start small – run tests, fix bugs, get comfortable and confident with the process, then roll it out more widely,” he noted.
Meanwhile a spotlight has been shone on the Ruschlikon Initiative, which connects (re)insurance industry players to advanced back office processes such as technical accounting, claims, and settlement using the ACORD GRLC Standards.
“There is a burning platform for change in the insurance industry,” stated Newman. “Disjointed and unaligned processes are frequently generating thousands of queries, wasting millions of pounds, and requiring the need for extensive administrative support that adds no value.
“But the good news is that the infrastructure exists to drastically reduce the administrative burden on all stakeholders in the insurance value chain by using one set of consistent, inter-linked, GRLC messages that build a straight-through processing model for commercial insurance transactions.”
In the MD’s view, the ability to have everyone plug into the same system significantly reduces the amount of pressure on (re)insurers and brokers.
“People have been developing a range of platforms to help enable straight-through processing but the lynchpin is that we all need to be talking the same language – ACORD Standards deliver that consistency,” he asserted.