The narrowing but persistent gulf that exists between the promise and reality of standardization was top of mind at the ACORD Implementation Forum this week in Fort Lauderdale, Fla.
Cultural, technical and political reasons all seem to contribute to this apparent disconnect. “When I began, I was surprised there was so little understanding between the people responsible and regulatory compliance and IT,” says Ann Henstrand, AVP Industry and Government Affairs for ACORD.
Yet, while internal rifts may be easily overcome, the promises caused by differences in regulatory regimes are not so readily surmounted. The federated nature of insurance regulation in the United States means there will be differences not only in state laws but in the capabilities of the state insurance departments themselves, Henstrand noted. “State insurance departments vary an incredible amount,” she said. “In point of fact, all of the states don’t conduct their business the same way.”
Henstrand says that although progress has been made in areas such as producer licensing, there remain many important areas that lag behind. “There is no one standard for consumers to submit a complaint to a state insurance department,” she noted, adding that some have suggested selecting a popular social media platform for the default complaint format. “If that happened, I can just see the people responsible for consumer complaints within an insurance company clutching their heads and moaning.”
An optional federal charter (OFC) for insurers has long been posited as a way to standardize regulations, but Henstrand said the chance of legislation establishing an OFC making it through Congress was anyone’s guess. “There’s now more of a chance of an OFC than ever before, but it will be a fraught battle. Anyone who thinks they know for sure is a fool.”
A less contentious federal effort is the creation of an office of insurance information (OII) within the U.S. Treasury Department. While proponents of state insurance regulation at first balked at the notion, they eventually came to support it after the legislation was amended to ensure the federal office did not supercede state insurance laws. Henstrand credits new National Association of Insurance Commissioners President and CEO Therese Vaughan with helping to craft a compromise that both sides of the OFC debate could accept. “Most of the changes to the OII bill can be laid at her feet,” Henstrand said, noting Vaughan chooses to work out of Washington D.C. rather than NAIC headquarters in Kansas City.
Just as differing state laws vex efforts to establish standards in the U.S., a fragmented market in Europe slows efforts to standardize. “Europe has commonality, but no common market,” said Juergen Heck, program director Europe for ACORD. “The scale that you assume is there is not.”
Yet, Lloyd Chumbley, VP standards for ACORD, noted that countries as diverse as China, Australia and South Africa have all recently embraced standards. What’s more, individual companies abroad have implemented ACORD standards without waiting for their respective governments to act. “We know of phantom implementations in Brazil, India and Japan,” Chumbley said.
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