Assignment 3 - Data Standards - Review Questions
A specific characteristic of a person, thing, process, transaction, or concept, describes which of the following?
Data Element
What does data dictionary consist of?
Data dictionary typically includes the data element names, a description of the information provided by each data element, and any associated business and/or technical metadata required by internal and external users of the system.
Which data standard rule, or rules, addresses the maintenance of the data elements, standards, and guidelines?
Rule 21 - reevaluation of data elements and Rule 22 - Reevaluation of Standards and Guidelines.
Name the SDOs that focus specifically on the insurance industry and briefly describe their purpose?
ACORD - facilitates the development of open consensus data standards and forms and works with its members to drive implementation of those standards. IAIABC - serves as an expert resource for research, policies, best practices, and standards; provides a forum to share information, discusses issues and solutions; assists in identifying cost reduction opportunities; develops, analyzes and promulgates standards. WCIO - develops and maintains standards for the electronic transmission of data to rating and advisory organizations.
Why is insurer solvency so important to regulators?
Insurers must be financially stable in order to meet their obligations to policyholders. Regulators establish financial standards that insurers are required to meet, for example minimum capitalization. They review insurers' financial statements and perform tests to identify insurers with potential solvency problems.
Which SDO works to create standards that reflect international consensus?
International Organization for Standardization (ISO).
Which of the following is NOT a data element rule?
variable Field Lengths
What is the definition of a standard?
A document that provides requirements, specifications, guidelines or characteristics that can be used consistently to ensure that materials, products, processes, and services are fit for their purpose.
An organization must have which of the following in order for quality standards to be effective?
A system to measure actual performance to the standard
Which of the following are examples of "representation" or "class words"?
Code, factor, rate
Explain how Rule 12, in the standard Data Element Rules, achieves data quality.
Codes are to be designed to achieve an acceptable level of credibility for the information collected by using simple language and he avoidance of complex coding structures. When the best possible configuration of fields or codes is considered not conducive to quality data, procedures must be improved to enhance quality.
Which of the following are true regarding data element rules?
Commonality is a goal to work toward but should not be a constraint.
who imposes data standards in the insurance industry and in what areas do they exist?
Data standards are imposed by regulators; some reflect traditional business practices; some have been developed by industry groups through open discussion and consensus. Areas in which standards exist include the following: • Terminology • Coverage and forms • Accounting practices • Solvency requirements • Market conduct • Rating and pricing • Business processes • Data quality and consistency • Data exchange
Which of the following statements best describe the role of a Standards Development Organization (SDO)?
Develop new standards, attempt to coordinate with existing standards and maintain current standards.
Define electronic data interchange (EDI)
Electronic Data Interchange (EDI) allows different systems to interact without human involvement and is defined as a standards-driven technology for high volume B2B (business to business) e-business transaction exchange, linking application systems across enterprises so that a transaction on one system at one company generates a like transaction on a system at another company.
List the entities for which insurers would obtain data.
Government agencies, independent claim services, valuation and loss control organizations, and advisory groups.
Describe how EDI reduces errors and inefficiencies.
In an EDI-based transaction, different organizations, or within the same organization, can "talk" to each other in a common format, elimination the need for human involvement at multiple stages in the process.
Explain the difference between a traditional transaction and an electronic data interchange (EDI) transaction. Give examples of each.
In traditional transaction for example, a purchaser identifies the items an organization needs, completes an order form and enters it into the company's system. He or she then mails, faxes, or emails the order to the company's supplier. At the supplier's office, employees enter the order information into the company's production, shipping and accounting systems. When the order is fulfilled, an employee at the supplier's office generates an invoice, which is mailed, faxed or emailed to the purchaser. The purchaser enters receipt of the goods in the company's inventory system and the invoice in the accounting system. The process is time-consuming, it involves a number of steps and delays; and each time data are manually entered, the possibility for errors is introduced. In and EDI-based transaction, different systems at different organizations, or within the same organization, can "talk" to each other in a common format, eliminating the need for human involvement at multiple stages in the process. This reduces errors and inefficiencies.
Which of the following are true regarding how data standards can facilitate the exchange of insurance information?
Increased profitability Increased operational efficiency
List the steps in the standards development lifecycle
Initiate the project Mobilize he Work Group Draft the Standard Ballot the Standard Gain Final Approval Maintain the Standard
What are the goals for rate regulation?
Insurance rate regulation focuses on achieving three goals: Rates should be adequate to ensure insurer solvency to protect consumers; Rates should not be excessive; coverage should be reasonably affordable; and Rates should not discriminate unfairly, although they may vary based on risk factors.
Explain the role of International Organization for Standardization (ISO) in data standards organization.
International Organization for Standardization (ISO) is the world's largest SDO, ISO standards are crafted by technical communities populated by subject matter experts from industry, non-governmental organizations, government agencies, and others who have been recommended by ISO members. ISO 8000 standard focuses on data quality.
The statement, "new data elements must not be developed to identify specific classes of risk/coverages, which are uniquely identified by other elements" describes which data element rule?
Rule 17 - Avoidance of redundancy.
Other than SDOS what organizations or groups define, develop, and/or impact standards?
Labor Unions, Consumer Groups and Professional membership groups.
What does NAIC stand for and what is its purpose?
NAIC stands for National Association of Insurance Commissioners (NAIC). The primary reason for insurance regulation is to protect consumers. In order to ensure that appropriate coverage is available and reasonably priced, and that legitimate claims are fairly and promptly paid, regulators such as NAIC on three areas: Insurer solvency; Market conduct; and Ratemaking.
List and briefly describe the three common parts of a data element.
Object - The initial word, identifies the entity-for-example, the person, place, thing, process or concept that has the attribute in question. Property term - The second part of a data element name, specifies the property, or characteristic, of the entity to which the data element refers. Representation or class term - The third part of a data element name, is used to categorize a data element into a particular data type. It represents the general purpose or use of the data element and should always be the last word in a data element name.
Which of the following are true regarding the three common parts of data element names?
Object and Representation or Class Term
List the entities with which insurers would share data.
Producers, reinsurers, regulators, advisory organizations, law enforcement, fraud prevention organizations, and industry associations.
Explain the difference between regulatory standards and voluntary standards.
Regulatory standards are drafted and enforced by government agencies. Voluntary standards are developed are developed through collaboration and negotiation.
How can standards reduce costs for producers and consumers?
Standardization places limits on the number of product alternatives made available. For example, while many commercial insurance policies are customized for particular insureds, for any given insurer the majority of personal lines policies are standardized. This standardization simplifies underwriting, policy issuance, claims handling, and facilitates process automation. This in turn reduces operating costs for the insurer and premiums for its insureds.
Who develops standards and why?
Standards are developed by standards development organizations (SDOs) - SDOs are voluntary organization. SDOs develop standards through collaboration and negotiation. Organizations that create standards in this open, consultative manner are not static. They spend considerable time maintaining current standards and attempting to coordinate them with other existing standards.
Why are standards important
Standards are important because they provide a foundation for success. They facilitate communication, support quality, and consistency in products and services.
What ANSI's (American National Standard Institute's) mission?
The mission of American National Standard Institute (ANSI) is "To enhance the global competitiveness of U.S. business and the U.S. quality of life by promoting and facilitating voluntary consensus standards and conformity assessment systems and safeguarding their integrity." ANSI is not a SDO as such. One important element of implementing International Organization for Standardization (ISO) standards is conformity assessment. This is the process of determining whether and organization's products or services actually comply with the requirements outlined in a particular ISO standard.
Explain the difference between a "soft market" and a "hard market."
The phrase of underwriting cycle wherein the desire for increased market share drives some insurers to relax underwriting standards and lower rates. To remain competitive, other insurers follow suit, and consumers find insurance coverage easy to obtain at acceptable premiums, resulting in, what is termed as a "soft market." Conversely, when premiums rise, called a "Hard market", some consumers unable to afford cover, or to obtain coverage a any price may cause instability in business continuation.
What is conformity assessment and how is it achieved?
There are three methods of assessing conformity: Certification, testing and inspection.
Why might regulators review an insurer's underwriting and claims procedures?
To deter insurers from engaging in unfair business practices, regulators periodically review their underwriting and claims settlement procedures, and verify that the rates and forms used are those that have received regulatory approval where such approval is required.
