PEARL RIVER, NY--ACORD released a new Strategic Briefing, Impact of Technology and Data in Rating A Company's Financial Strength, that provides insight into the process used by one of the industry's leading ratings agencies when evaluating the technological capabilities of an insurer, reinsurer, or intermediary.
The document was written by John Bareiss, senior director, Fitch Ratings, and provided to ACORD for distribution as an ACORD Strategic Briefing. It details the questions Fitch commonly asks during CIO ratings interviews and offers commentary on the "big picture" insight sought. Among those questions are some designed to evaluate a company's data architecture strategy and use of standards-based interfaces.
"This is a very important development for the industry, and for the accuracy of ratings. IT, and especially data quality and accessibility, is an absolutely critical part of assessing a company's operations," stated Matthew Josefowicz, manager, Insurance Group, Celent Communications, adding that "analysts must take this into account when evaluating competitiveness and stability in order to present a true picture of the company."
According to Bareiss, the CIO interviews provide Fitch with "an understanding of a company's general approach toward technology, how well it uses technology to enhance its competitive position, and an understanding of whether costs are managed effectively."
Of note is the significance placed on data architecture strategies. Bareiss writes: "We like to see a data architecture strategy that recognizes the value of data as a corporate asset that must be standardized to ensure data quality and transparency internally and externally. The lack of data standards may question the quality and transparency of data." The document also stresses the importance of companies making the leap from "information gatherer to information user."
The briefing lists commonly asked questions such as:
· What is your company's Information Technology philosophy and operating principle?
· Are you familiar with XML strategy, industry data and XML standards, and implementing best practices?
· After a merger, how do you decide which system to use?
"We are pleased that Fitch is taking into consideration the role of data standards implementation in ratings. It underscores the growing significance and successes in the marketplace of standards-based strategies and solutions. We also hope that through ACORD Strategic Briefings like this one, we can provide ACORD members and the industry as a whole with the tools they need to grow their business, and motivation to achieve greater success through standards," said Denise Garth, vice president, Membership and Development.
