Longtime readers of my scintillating prose will no doubt recall that over the years my relationship with ACORD–the data standards provider for the insurance industry–has had its ups and downs. Yet one thing has remained constant throughout all the debates, and that is the idea that data standards are good for our industry and good for our customers. As you will see below, even our politicians seem to get it when it comes to standards.
The House Committee on Science, Space and Technology’s Subcommittee on Technology and Innovation recently held a hearing to examine the principles of effective domestic and international standards development processes.
“Standards play a critical role in both the domestic and international economies,” said Subcommittee Chairman Ben Quayle (R-AZ). “Along with providing market certainty to producers and consumers, the process by which standards are developed is also crucial to competitiveness and innovation.”
Quayle added that a market-driven, voluntary consensus approach to standards development “has proven to be effective because it allows relevant stakeholders, including small and medium-sized enterprises, to contribute in the development process, ensuring the final standards have broad market relevance.”
Dead on, Mr. Q. Looking at insurance and financial services, we see this attitude reflected in the way that data standards have been developed over the past 15 years or so. ACORD in particular has been proficient at trying to involve stakeholders at many levels in the development of the standards it supports. The key, however, is that standards should not only be developed to promote efficiency (which they do), but because they reflect their markets and thus benefit all who play in those markets.
Describing how U.S. industries have adopted standards, Joe Bhatia, President and CEO of the American National Standards Institute, said “It is the market itself, through an open, consensus-based process, that determines when a standard should be developed.”
Interestingly, some who testified at the hearing brought up the fact that some countries have adopted standards apparently designed to be disadvantageous to U.S. exporters. Again looking back at our own industry, there is a lesson to be learned. Standards are extremely important when they are designed to make transactions better, faster and more secure. Like anything else, however, their purpose can be perverted—and when that happens, we all suffer.
Fortunately, I’m not seeing this kind of development in insurance and financial services. Forewarned, however, is forearmed.