IDMA TPA Data Standards White Paper

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IDMA DATA STANDARDS PROPOSAL

Recognizing the need for standards to support electronic data exchange, we
have created:
A standard for the exchange of claims data among trading partners
An industrywide data element dictionary for policy data that can be used
as a tool to develop data exchange standards

OVERVIEW

To communicate effectively, people have developed many languagesspoken and
unspokenand bridges linking these languages. Components of a language are a flexible,
commonly understood vocabulary and supporting rules for grammar and syntax.
Comprehensive dictionaries are tools commonly used to document word definitions and
build bridges across languages.

The principal means of communication within the insurance industrythe exchange of
datais lacking a common vocabulary (data element definitions) and associated business
rules. This has added significant time and expense to the overall process of data exchange
while having a negative impact on the quality of data.

For decades, industry, government, and national consensus groups have been meeting
both jointly and independently to discuss the coding, processing and reporting of insurance
data. The complex systems now in use affect many diverse groups, both in the private and
public sectors. Unilateral decisions or actions to change or adopt one system over another
may result in conflicts among groups and impose additional administrative burdens.
Uniform coding systems can only be developed when there is collaboration, consensus,
and incentives for the parties involved in the process.

Now there appear to be financial, data quality, and utility incentives for the adoption of
uniform coding systems and data exchange standards. With electronic commerce and the
automation of insurance processes, diverse groups can jointly determine which systems
provide uniformity and standardization in the coding and electronic transmission of
insurance data.

There have been many efforts geared toward the development of data and data exchange
standards. Industry organizations involved in these efforts include:
American National Standards Institute (ANSI)
ACORD
International Association of Industrial Accident Boards and Commissions (IAIABC)
Workers Compensation Insurance Organizations (WCIO)
Risk and Insurance Management Society (RIMS)
UN/EDIFACT
WISe (World InSurance e-commerce
Insurance Data Management Association
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BACKGROUND

In 1999, the Insurance Data Management Associations Executive Committee approved
the creation of a Data Standards Committee. The Committees task is to support the
development of data and data quality standards by:
Being a clearinghouse for information regarding data standards development
Providing an environment under which data standards work groups can function
(where none currently exists)
Encouraging the development of open standards
Providing a vehicle for feedback on data standards and activities
Identifying resources and volunteers

To address the lack of claim data exchange standards for third party administrators (TPAs)
and insurers, a TPA Data Standards Work Group was also created. The task of this work
group is to discuss an initiative to develop industry standards (implementation guide) for
the exchange of premium and loss data between interested parties including TPAs, service
providers, technology vendors, insurers, insureds, brokers (not encompassing the
reporting of data to statistical agents and regulators).

Once the work group settled on working parameters, two subgroups were created to
separately address policy and claim issues.

These collaborative efforts resulted in two products:
IDMA Claims Data Exchange Standard
IDMA Policy Data Element Dictionary


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WORK PRODUCTS

IDMA CLAIMS DATA EXCHANGE STANDARD
Representatives from insurance carriers, third party administrators, service providers and
vendors met to address the issue of reducing the cost of claims data exchange. They
formed a work group of the Insurance Data Management Association to develop an
industry standard for the transfer of claims data. Open-invitation industry meetings were
held. In addition, feedback was gained from clients and other industry groups. The final
product of the work group is an implementation guide.

Intended to become the basis for improved data exchange between interested parties, this
guide includes:
A data dictionary
Code tables compiled specifically for this guide
Reference to code tables adopted from other sources
Record layouts in three formats: flat file, ANSI X12N, and XML

The range of data, which includes all commercial lines of insurance, will enable the trading
partners to exchange information for various purposes. The trading partners include, but
are not limited to:
Third party administrators
Insurance carriers
Brokers
Self-insureds
Insureds

The information required for claim handling that is exchanged between the trading partners
may include account/policy/employer information and claim information. Claim information
includes:
Financial amounts at the summary and transactional levels
Descriptive narratives for loss reporting
Data required for statistical or regulatory reporting
Claim information necessary for loss control
This standard does not intend to duplicate existing standards.

IDMA POLICY DATA ELEMENT DICTIONARY
Because many standards for the exchange of policy data exist, the work group
concentrated on documenting existing data element specifications instead of developing
new data standards. The resultant Policy Data Element Dictionary is a compilation of the
information that may be exchanged among various trading partners throughout the
insurance industry. This dictionary, however, is not intended to replace industry source
documents, which should be referenced if additional information is needed. While the initial
draft addresses commercial lines data elements defined by the Workers Compensation
Insurance Organizations (an organization of workers compensation data collection
organizations) and the Insurance Services Office, the intent is eventually to include all data
elements currently defined in the industry. This dictionary is intended to be a part of other,
more global industry initiatives aimed at the implementation of straight through
processing.
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IDMA POLICY DATA EXCHANGE STANDARD (to be developed)
To address the need to exchange the policy data necessary to establish a claim, the work
group intends to identify these data elements, develop standards, and add this information
as a separate section of the Claims Data Exchange Standard.
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VALUE STATEMENTS

The benefits of transmission standards and processes include:
Improved time to market for new trading partners
More efficient and effective systems for all entities
Reduced maintenance costs
Increased flexibility to exchange data with new trading partners
Increased customer satisfaction
Increased data utility
Quicker solutions to data management problems
Access to additional data
Improved and consistent data quality
Streamlined data exchange processes
Compatibility with e-commerce strategies and technologies
Compatibility with straight-through-processing concepts

OBSTACLES

The following issues need to be addressed:
Economic incentives to offset the cost of adopting new standards
The impact on legacy systems
Competitive advantages of proprietary coding systems
Data ownership, maintenance and control issues
Trading partners trade secret concerns
Data confidentiality and privacy issues associated with increased access to data
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GUIDING PRINCIPLES

1. Open Standards
Where possible, only data standards open to all interested parties were used.

2. Public Domain
It is intended that these work products be in the public domain and that they may be
used without paying royalties.

3. Insurance Acceptance
Where possible, these data standards were based on known industry standards.

4. Statistical Robustness
Where adequate data standards do not currently exist, additional data standards
have been developed.

5. Widespread Acceptance Usage
Where possible, the most widespread/all encompassing data standards were
referenced.

6. Receptivity and Collaboration
Where redundant or conflicting data standards currently exist, the Policy Work
Group encourages the development of universal data standards by documenting
known redundancies and conflicts.

7. Timely Updates
Where necessary, these standards will be maintained and updated on a timely
basis. Maintenance of the Policy Data Element Dictionary may depend on the work
of the defining entities.

8. Intellectual Products
Where these data standards reference proprietary or copyrighted materials, only
reference to these materials are made. The appropriate defining entities must be
contacted for access to proprietary or copyrighted materials.


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CONCLUSIONS

By following the Groups recommendations and using these products:

1. Duplication, overlap, and mapping of data elements and data element values are
significantly reduced.

2. Significant cost savings are achieved by using a single reporting format to gather
similar data, enhancing comparability and data analyses, and simplifying data collection
processes.

3. Coded data become uniform under this format because everyone will be using the
same data schemes for the collection and distribution of any given set of data. Closer
communication between all participants will encourage the development and adoption
of universal data standards and standardized language for reports and data analyses.

4. The use of standard language for the reporting and discussions of insurance data
facilitates communication between the many industries and interested parties.

Ultimately, the insured, the insurer, the public, regulatory authorities, intermediaries, and
the vendor community benefit from the implementation of these recommendations.


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GROUP MEMBERS

Katherine Burns, Claim Regulations/Special Projects Coordinator, Kemper Insurance
Rose Castro, AVP Commercial Lines Data Management, The Hartford
Gerard Chiorazzo, Assistant Director, American International Group
Carol F. Eskola, AVP Data Management, Crawford and Company
Jeanie Griffith, Business Analyst External Data Services, ACE-USA
Beth Grossman, Director of Industry Relations, ACORD
Gary W. Knoble, VP Data Management, The Hartford
Judy Lachance, Project Leader Special Projects, Liberty Mutual Group
Peter Marotta, Principle, Data Management Consulting Co., Insurance Services Office
Randy Molnar, Sr. Business Analyst, NCCI
Christine Siekierski, Wisconsin Compensation Rating Bureau
Jeanette Varkal, Consultant, Trumbull Services
Charles E. Wight, Managing Consultant/SVP, Marsh USA Risk and Ins. Services