How Standards Impact Structured Settlements

I.  Introduction to Standards

A.     Definition

A "standard" is guideline documentation that reflects agreements on products, practices, or operations by nationally or internationally recognized industrial, professional, trade associations or governmental bodies. This includes formal, approved standards, as contrasted to de facto standards and proprietary standards, which are exceptions to this concept. 1 Without standards, the free exchange of digital information among professionals would be extremely difficult and time-consuming.

   

B.    History

Although standards have existed for thousands of years, their modern history dates back to 1864 and the development of a uniform system for screw threads.2 By permitting interchangeable parts and mass production, standards played a critical role in the development of our international economy during the 19th and 20th centuries.

 

Twenty years ago, standardization was the reserved field of a few specialists, mostly engineers. Today there are close to 800,000 global standards. 3 Standardization is recognized as being an essential discipline for all economic participants who must play an active role. Otherwise, they must be prepared to accept standardization, which is established without consideration of their interests.

 

The important developing standards relate to digitization and information technology including wireless technologies and the Internet. As an unregulated industry, the computer field has created thousands of languages, formats, protocols and interfaces. The document formats currently being used are frequently incompatible and non-interoperable.

 

C.     Content

Although Standards are varied in character, subject and medium, they generally share these common characteristics: 4

 

1.      Coherent and consistent;

2.      Validated by consensus;

3.      Based on actual experience;

4.      Reviewed and updated;

5.      Provide reference status in contracts and court;

6.      National or international recognition;

7.      Available to everyone;

8.      Voluntary not mandatory.

II. Development of Standards

A.     De Jure vs. De Facto Standards

De jure standards are developed by a group of individuals working on a particular subject under the auspices of a government agency, a trade or professional association, or an international organization. While de jure standards are endorsed by recognized standards organizations such as the International Organization for Standardization and the American National Standards Institute, some of the most widely used standards are de facto and/or proprietary. Microsoft standards represent one example of de facto, proprietary standards.

 

B.       Organizations

Standards organizations that potentially impact structured settlements include:

 

1.      International Organization for Standardization (ISO) - see: http://www.iso.ch/iso/en/ISOOnline.frontpage

2.      American National Standards Institute (ANSI) - see: http://www.ansi.org/

3.      National Institute of Standards and Technology (NIST) - see: http://www.nist.gov/

4.      Web Standards Project (WSP): http://www.webstandards.org/about/sitemap/

5.      World Standards Services Network (WSSN): http://www.wssn.net/WSSN/index.html

6.      World Wide Web Consortium (WWWC): http://www.w3.org/

C.     Categories

The International Organization for Standardization (ISO) has organized an international classification of standards comprised of 41 fields, subdivided into 340 groups, which are further subdivided into 530 subgroups. 5  Major categories of standards include those which:

 

1.      Concern vocabulary, syntax, conventions, signs and symbols; 

2.      Test methods which measure characteristics;

3.      Define the characteristics of a product (product standard) or a service (service activities standard) and the performance thresholds to be reached;

4.      Deal with the functional description of companies and company relationships, as well as the modeling of their activities;

5.      Are known as "generic management system standards", where:

i.        "Generic" means that these standards' requirements can be applied to any organization, regardless of the product it makes (or whether the "product" is actually a service activity); and

ii.      "Management system" refers to what the organization does to manage its processes.

iii.    Two of the most widely known series of international standards falling into this category are the ISO 9000 series for managing quality systems, and the ISO 14000 series for environmental management systems.

D.     Life Cycle

The creation of a standard generally consists of the following phases 6:

 

1.      Needs analysis including knowledge availability;

2.      Work program registration;

3.      Drafting the standard(s);

4.      Consensus building;

5.      Validation and finalization;

6.      Approval for publication;

7.      Review and revision.

E.     Copyright

National standards represent a collective work and are therefore protected, as early as the draft standard stage, by a copyright owned by the national standards organization. 7 International standards are protected by the copyright of the international standards organization. The national standards organization is obligated to take appropriate measures to protect the intellectual property of ISO and IEC in its national territory. No standard or part of a standard may be reproduced, recorded or transmitted in any form or by any means, electronic or mechanical, including photocopying and microfilm, without the written consent of the national or international standards body concerned. The national standards organization must be consulted prior to opening any public or private electronic network (Internet, Intranet or similar) aimed at disseminating, transmitting or exchanging texts or parts of texts of standards.

 

III.                Standards and Structured Settlements

A.      Significance

As the structured settlement industry moves from paper to digital documentation and work processes, standards will become increasingly important in achieving effective collaboration and information exchange. Properly developed and utilized, standards, benchmarks and best practices can assist structured settlement professionals in understanding and utilizing emerging technologies. Among the standards of preliminary interest to the structured settlement industry are those relating to definitions, certification, documentation, and information exchange.

 

B.    Issues 8

Developing an intelligent structured settlement standards strategy raises the following issues and challenges:

 

1.      Information Sharing and Knowledge Development

i.        Overview

(a)   Are the right issues being monitored and the right information being collected and disseminated to the right organizations to make decisions that will benefit the structured settlement industry including purchasers and claimants?

(b)   What needs to be done to develop a solid knowledge base that links the structured settlement industry with national and international standardization decisions and with broader decisions in the social, economic and regulatory fields?

ii.      Challenges

(a)   The need for a centralized mechanism for collecting and disseminating structured settlement standards information.

(b)   The need for leading-edge information management methods and technologies to help the structured settlement community understand standards issues and options.

(c)   Sound decisions can only be made based on a thorough knowledge and understanding of standardization options and of the wider context in which these decisions will be implemented.

(d)   Consideration must be given to include all structured settlement communities and interest groups.

(e)   Small and medium-sized organizations generally lack the resources to research standards information and the contacts to monitor new standards developments.

2.      Effective Participation

i.        Overview - The effectiveness of voluntary standards depends on obtaining broad-based, balanced and expert input into their development and adoption.

ii.      Challenges

(a)   Engaging new structured settlement standard participants;

(b)   Training and support for structured settlement standard volunteers and sponsors;

(c)   Balanced representation;

(d)   Financial costs;

3.      Leadership, accountability and coordination

i.        Overview

(a)   As the roles and responsibilities of structured settlement standards participants evolve, the issues of coordination, leadership and accountability will become critical.

(b)    Structured settlement standards-development processes must ensure that all stakeholders receive high-quality, cost-effective service and information. 

(c)   Growing pressures to reduce the time and cost of achieving consensus in the standards-development process will raise questions of responsibility and accountability.

ii.      Challenges

(a)   The scope and depth of voluntary standards development and conformity activities generally has been accelerating.

(b)   Management systems standards represent a new standards feature, as do the new specialty accreditation programs for specific industries.

(c)   Mutual recognition-type arrangements have introduced new forms of regulatory cooperation and competition into the regulatory landscape.

(d)   Quantifying the various benefits of standards activities is difficult. Appropriate mechanisms and processes need to be established to provide regular analysis and evaluation of standards priorities.

(e)   Industry-wide associations have not generally identified standards as a priority issue, or even as part of their mandate in representing their respective industries.

(f)     Timeliness and efficiency have become increasingly important in the standards-development process.

4.      Linkage with regulatory and policy priorities

i.        Overview

(a)   As the standards system becomes an increasingly open system, standards activities both impact, and are impacted by, activities in other spheres, particularly the regulatory, social and environmental spheres.

(b)   Governments have made increasing use of voluntary standards practices in regulations. For example, by incorporating standards into regulations, governments use standards as alternatives or supplements to regulations.  They also have begun using private-sector conformity assessment processes to promote and monitor compliance with regulations.

ii.      Challenges

(a)   Regulatory reform has created a general demand for voluntary standardization solutions to traditional regulatory challenges.

(b)   Standardization offers opportunities for developing solutions to many social, economic and political issues, including the special needs of structured settlement recipients (many of whom are persons with disabilities).

(c)   However, the social, economic and political policy issues associated with structured settlement recipients may become controversial. Polarized and/or competing interests will impact structured settlement standardization work.

5.      Promoting and sustaining standardization activities

i.        Overview

(a)   There is a general lack of knowledge within the structured settlement industry about the role standards play and the benefits they offer to a broad range of structured settlement stakeholders.

(b)   An assessment of funding requirements and responsibilities is required to ensure that the costs of standardization activities are equitably distributed among structured settlement stakeholders.

ii.      Challenges

(a)   Increased awareness and understanding of standards and conformity assessment activities is needed within the structured settlement industry including potential roles, applications and benefits.

(b)   Regulators and structured settlement companies are not taking full advantage of standardization opportunities due to a general lack of knowledge about the standards system.

(c)   Individual standardization efforts tend to duplicate each other unnecessarily.

(d)   The general volume and variety of standards-related work has increased dramatically.

 

IV.               Recommendations 9      

A.     As the leading structured settlement organization, the National Structured Settlement Trade Association (NSSTA) should organize a standards strategy that includes goals, budget, deliverables, resources, responsibilities and deadlines.

B.    The structured settlement standards strategy should

1.      Start small and build momentum through effective communication and facilitation;

2.      Include an advisory board to oversee the standards process.

C.    The structured settlement standards advisory board should:

1.      Include representatives from all structured settlement countries and constituents and be advised by legal counsel.

2.      Address the issues identified in III supra.

3.      Identify and evaluate resources with experience in developing standards for similar organizations and industries.

4.      Consider the need for reviews and/or surveys of practices and products in the structured settlement industry.

5.      Evaluate accepted models, as well as the experience of other organizations, for developing standards.

6.      Identify and prioritize structured settlement standard categories including definitions, data exchange, documentation, work processes and certification.

7.      Provide recommendations regarding standards strategy and related issues.

V.                 Footnotes

1.      Telecommunications: Glossary of Telecommunication Terms, General Services Administration Information Technology Services, 1996.

2.      Surowiecki, "Turn of the Century: Case Study in the Power of Standards", Wired Magazine, January 2002.

3.       Id.

4.      World Standards Services Network (WSSN): http://www.wssn.net/WSSN/index.html.

5.      Id.

6.      Id.

7.      Id.

8.       See "Toward a Canadian Standards Strategy", Standards Council of Canada, June 23, 1999 at http://www.scc.ca/publicat/canstrategy/css_issues_e.html.

9.       These recommendations parallel recommendations included in a Standards Executive Summary prepared by the National Structured Settlement Trade Association Technology Committee in October 2002.

VI.               References

A.     National Library of Canada: http://www.nlc-bnc.ca/

1.      Susan Haigh and the National Library of Canada - Glossary of Digital Library Standards, Protocols and Formats: http://www.nlc-bnc.ca/publications/1/p1-253-e.html

2.      Toward a Canadian Standards Strategy: http://www.scc.ca/publicat/canstrategy/css_issues_e.html

3.      Toward a Learning Strategy: the Digital Contribution: http://www.nlc-bnc.ca/8/3/r3-407-e.html

B.    Guide to the Topic Map Standardization: http://www.y12.doe.gov/sgml/sc34/document/0323.htm

C.    Standards Australia's KM Standards: http://www.knowledge.standards.com.au/ including:

1.      Introduction to Standards: http://www.knowledge.standards.com.au/KM/FRAMEWORK/STANDARDSINTRO/STANDARDSINTRO.HTM

2.      The Standards Story - Australia Case Study: http://www.knowledge.standards.com.au/KM/INFO/STANDARDS/STANDARDS.HTM

D.    See also the Standards Organizations websites listed in II B supra.