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Senior-Level Support Crucial to Standards Success

The success of an insurance company's standards initiative hinges on level of senior level support and an organization's willingness to fit standards initiatives into tight budgets, said Matthew Josefowicz, senior analyst, Celent Communications at the Insurance Standards Leadership Forum: "BusinessStrategies for Industry Transformation," held in New York City last week.

"You need a carrot and a stick and the carrot will only get you so far," related Matthew Josefowicz, senior analyst, Celent Communications (New York), about the importance of senior-level support and an organization's willingness to fit standards initiatives into tight budgets.

Josefowicz delivered his remarks during his presentation, "Reality Check: What it Takes to Achieve Standards Success," to an audience of insurance leaders at Insurance & Technology's and ACORD's Insurance Standards Leadership Forum at the Roosevelt Hotel (New York).

Although obstacles to implementing standards include business partners who are not yet using standards and fears associated with being a first mover, if embraced universally, the insurance industry could save over $250 million in technology costs annually, he explained. Still "it takes the will to swallow that first mover cost," says Josefowicz, who relates that as adoption spreads, initial standards implementations are not going to get significantly cheaper. Although wider standard adoptions will create increased efficiencies when it comes to the speed of integration with external business partners and technology vendors, efficiencies as great as 80 percent are currently being realized by some carriers, with the majority of carriers projecting 20 to 30 percent efficiencies due to standards use. That is why Josefowicz advises carriers to implement standards now in order to start saving sooner.

Josefowicz presented a case study of a large carrier with multiple lines of business as an example of the savings that can be achieved through standards usage. The carrier was utilizing multiple legacy systems each with their own interface by channel. Maintenance and development of separate business functions for each system was creating significant costs. After implementing XML-based Web services built on webMethods' (Fairfax, VA) EAI, business units within the carrier have realized efficiencies of 25 to 50 percent on integration. Additionally, the company has seen efficiencies of 60 percent for integrations with external vendors.

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