All too often we at CLIEDIS hear the feeds are bad. They aren’t “standard”. “We have to do better.” “If it’s not perfect we don’t want it at all.” However, the expectation of 100% homogenized data across all companies and all products is unrealistic when nothing in our industry is standard. Perfection in data standards in this particular industry is impossible.
Why then is CLIEDIS even here?
Before answering that question, we must first consider what makes our business unique.
- Competitive advantage is not mainly price driven. Life insurance is not a commodity. We differentiate ourselves with products, services and ease of doing business. Differentiation and a drive to be unique is in direct conflict with homogenous data.
- Insurance products are complex. Companies innovate by offering unique coverage types, product features, combinations, and associated compensation structures. The more complex the product, the more difficult it is to comply to a standard.
- Companies have different processes and systems… and actuarial rules and compliance requirements and application processes and underwriting guidelines and so on. From a data standpoint, this means companies capture different data at different points in the process. While a standard may require a data point, there’s not much that can be done when it is simply not available.
- Extensive legacy must be maintained. This is by far the greatest obstacle in data standardization. Have you ever received an updated set of terms for your credit card? Or been advised that your bank account now has different features or rates than what you originally signed up for? Of course you have. It’s easy to move clients to new technologies when you can just move them to a new product. The insurance industry doesn’t have that luxury. If a policy was purchased 40 years ago, you can’t just tell the customer what their new product is now. The original version with all its shortcomings must be maintained. Legacy data has limitations caused by old systems, company mergers and limited data capture from back in the day. The feed may be correct, but the data is lacking. Even when the data in the feed matches what is in the system, it causes problems.
The law of diminishing returns will prevent us from ever reaching a state of nirvana with 100% homogenized data feeds. Insurance companies made decisions long ago on what investments to make to clean up legacy data. Processes and data are influenced by the technology in place. Companies need to continue to weigh the trade-offs and cost considerations to make changes to their processes and systems that will move them towards more homogenized data. At some point, the cost outweighs the value-add and the incremental changes can’t be justified.
Back to our initial question: Why is CLIEDIS even here? If the feeds can’t be perfect should we just quit? Absolutely not. As we learn to accept limitations, we can focus on what we can change. We can continue to push companies towards standardization by surfacing data and process issues for them to take into account. We can ensure users know what companies can and can’t provide with each data feed. We can provide a mechanism for reporting, sharing and tracking issues so that users can make informed decisions about available data and how to use it.
That’s why we are here.
CLIEDIS works with its members to ensure companies provide usable data. We push companies towards compliance. We verify they are doing their absolute best. We ensure that users know what they are getting, including what requirements are satisfied and any limitations identified. Communication is king.