Copyright © 2001 National Underwriter.  All Rights Reserved

"Claims Data Standards Sought" July 30, 2001

By Caroline McDonald

A joint claims standard initiative involving the Risk and Insurance Management Society and ACORD will be announced this week designed to improve data quality for commercial buyers while making loss information more portable, the project's sponsors say.

The "RIMS-ACORD Data Standards 2002 Project" will leverage XML technology to get "as many people as possible to prove that the ACORD standard for claims, on a global basis, can result in people exchanging data that is managed in different proprietary systems," said Jack Hampton, executive director of the New York-based RIMS.

RIMS plans to kick off the initiative in late August, when the project’s scope and business requirements will be determined. ACORD certification of successful implementations is scheduled for March 2002, in time for the RIMS annual conference in April in New Orleans, Mr. Hampton noted.

Elizabeth Morrell, vice chair of RIMS’ technology advisory council and senior risk analyst at Southern Company in Atlanta, said the first business application to be standardized will be for "aggregated loss information," a goal which was decided upon by risk managers at a meeting in March.

Ms. Morrell listed comments given by risk managers when asked about their immediate needs. "One risk manager said, ‘I’m tired of losing data every time we convert to a new system or change third-party administrators or carriers,’" she said. "Someone else said, ‘We’re looking for consistency in how reserves are reported.’"

One company reported "a multi-million dollar reduction" in what they were carrying on their books as loss reserves when they switched risk management information system vendors, she said. The previous RMIS vendor had mistakenly loaded the carrier’s total reserves as outstanding reserves, "so when the second vendor came in and audited the data, they recognized the error," Ms. Morrell continued.

"The risk management department was delighted because their actual losses were $6 million less than they had been reporting," she said. "But they were dismayed at the loss of credibility conveyed by the original data."

She added that "because you don’t always know from one RMIS vendor to another how they will approach the same TPA data file, it can lead to tremendous inconsistencies."

Areas to be standardized include common fields such as claim date and accident date, and claim number, Ms. Morrell said. ACORD’s data dictionary will be harmonized "against data dictionaries from other sources, such as the Insurance Data Management Association," she added.

Setting standards will provide "concise definitions for the data elements themselves," and will standardize their transfer among the different parties, according to Benita Gayton, program manager, commercial and specialty lines at ACORD, based in Pearl River, N.Y.

The application of standards, including a harmonized data dictionary, "will increase the quality of the data that risk managers receive, so when they receive a piece of information, they’ll be able to identify what piece of information it is regardless of the sender," Ms. Gayton said. The process will ultimately allow more timely access to reports, she added.

Who will participate? "We’re still inviting participants through the entire value chain," Ms. Gayton said. "Given our past experience, when we partner with the customer, most of the major carriers participate. We had widespread participation the last time we did a large commercial project, which defined exposure templates for submission."

The new initiative will strive for "improved quality and consistency," she said. "Standards also reduce administrative processing and answer the risk managers’ request for portability of data."

Estimating cost savings at this point is difficult, she explained. "Many of the benefits will accrue from time and dollars lost in error correction. This project will be the first to demonstrate the benefits of standards to risk managers," she said.

Elizabeth Morrell, vice chair of RIMS’ technology advisory council, says risk managers want consistency, reliability and portability in setting claims data standards.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, July 30, 2001. Copyright © 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.