ACORD Information Standards and AL3: Simplifying the Insurance Industry

Anyone who has ever worked in the insurance industry, whether it is at an insurance company, brokerage, agency, or third party company, can tell you that it is highly specialized work that requires a lot of collaboration with other groups.  This can be a very complicated and require a lot of manual processing and duplicate data entry.  To address this problem ACORD (the Association for Cooperative Operations and Development) an group of insurance professionals dedicated to providing standard practices for the insurance industry sought to set up standard file types and information exchange protocols so that exchanging information would be simple; thus helping systems communicate in one language and helping software companies to adhere to one unified language rather than building bridges or translators for two systems to communicate.  This set of standards came to be known as AL3.

How it Works

There are a lot of ways to store information and a lot of ways to pass that information along.  In a way it is like deciding how to communicate in real life with a person in a different country.  You have to choose a method of communication that both people have, that is cost effective, and in the two people’s common language.  For instance, you can’t call a person in Russia, if they don’t have a phone.  Likewise, you cannot effectively communicate with that person if you don’t speak Russian and they don’t speak English.

With so many different ways of transferring information out there, many members of the insurance industry were unable to talk to each other’s systems.  For instance, if a customer switched from one agent to another or one agency bought out another, a lot of information had to be manually re-entered into a new system.  To solve this problem ACORD combined forces with programmers and created a common library for those programming insurance industry software to pull from.  This library and set of programming standards was called AL3.  AL3 helps the exchange of information along the insurance chain from insurance company, to brokerage firm and finally to Agencies.  AL3’s set of definitions insured that all of those adhering to the standard had files saved as the same type and used the same or compatible information transmission methods.

When agencies, insurance companies, and other financial professionals integrated these changes, their systems were able to communicate easily.  This meant that instead of having to fax a copy of a customer’s file and re-enter the data into a new system, they could simply push the data over to the inquiring company in a format that would automatically update their databases.  The AL3 standard was developed at a time when business on the web was just developing, and it presents a number of challenges for programmers.  One of the biggest problems is that this is an old language, very complex and not easy to master.  Also, the documentation provided by ACORD for AL3 includes a thousand pages which sometimes makes it difficult for new systems to adapt to this language.

As the state of programming changed and web 2.0 gave rise to web based management programs, AL3 was joined by ACORD xml these integrations made real time information exchange possible and far more simple.  This is set of standards, specifically for web programming, was designed to help various insurance software systems talk to each other even when they are web based programs.  In addition, when used together, the AL3 and ACORD xml standards help newer web based programs easily talk to older versions of the program and vice versa.

Why is This Necessary?

This cycle starts from the top where Insurance Companies start the transmission of data and then goes through the chain. Some companies have adapted to newer standards and use ACORD XML as their base language however the majority of the companies have used AL3 for decades and find it more cost effective to continue with their existing systems.  As a result, it is essential that systems being designed today adhere to both AL3 and ACORD XML formats. Therefore, it is important that any developers who work in the insurance industry learn to integrate both AL3 and ACORD xml into their software.

 

How Does This Help You?

If you work in any Insurance related industry, it is highly likely that you use AL3 and ACORD XML without even realizing it because most of the communication happens in the code that lies beneath your various software programs.  If you are part of an IT team that deals with this code, you likely have come to realize the burden of working with this language and how difficult is to find experts in the field.  In addition, if a software product currently does not have an AL3 or ACORD XML translator, this task can be quite cumbersome and very costly to build.  Programming in AL3 and ACORD xml is as specialized a skill as the insurance industry itself, so it can be difficult to find developers with the skill necessary to develop ACORD based tools.  At Nourtek, we have specialized in insurance industry products from the beginning.  Our experienced developers have spent a great deal of time working with ACORD standards and have a history of developing AL3 and ACORD xml integrations that .  To find out how Nourtek can help you get connected contact us today!

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