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As with any new technology, eXtensible Markup Language (XML) was greeted by some as the missing piece of technology that would help the insurance industry control costs, increase speed to market and enable SEMCI (single-entry, multiple-company interface), along with a host of new business models.

Some even seemed to think that XML alone would solve the long-standing challenges of developing consistent business rules and interfacing with legacy systems.

So goes the myth of XMLa perception that the finish line is near.

The reality is equally exciting. However, its more the excitement youd feel at the start of a triathlon.

XML is a markup language that shares similar syntax to HTML. Simply put, XML is a text-based method of defining information that consists of tags, elements and attributes that help give structure to and describe the information.

Since its emergence onto the scene in 1998, XML has been surrounded as much by mythology as it has by excitement.

The Myth: XML is an extension of HTML.

The Truth: In HTML, the tags and their meanings, or semantics, are fixed for the strict purpose of instructing a Web browser on how to form content. XML, however, does not specify semantics or tags, but leaves it open to be defined by the user.

The concept of HTML is based on a relatively small set of standard tags; the XML concept consists of an infinite set of custom tags.

Why?

HTML is intended for people to interact with systems, while XML is intended for systems to communicate with each other.

The Myth: XML enables universal access to data

The Truth: Access to XML-based data is dependent on the ability to interpret its structure. Since users can create their own semantics, the key to unlocking an XML document must be published, much like a blueprint. Typically, these are described in Document Type Definition (DTD) files, or XML Schemas. Even with these blueprints, XML-based data is not readily accessible to the electronic universe without published standards, secure access to systems, and applications to process and translate XML documents.

The Myth: XML enables integration of disparate systems.

The Truth: On its own, XML does not enable the integration of anything. It does, however, enable data and instructions to be exchanged between systems by providing a common language. This is why XML is often referred to as the “lingua franca” of the Internet. If users of a given set of systems come together and define standard tags, XML would play an essential role; however, it would be only one piece of the puzzle.

The Myth: XML enables business transactions.

The Truth: XML will not, on its own, facilitate business transactions such as billing or claims inquiries. However, it can provide an easily adaptable format to describe the data and instructions necessary to conduct meaningful transactions.

Setting aside all the hype, the reality of XML is still compelling. XML gives us a way to describe data that we want to share across our own systems or with our partners. Furthermore, it gives us a single, understandable syntax for documenting any kind of structured data, including relational data.

Benefits to the insurance industry include platform independence and low cost of entry when compared to EDI technologies. XML also creates a tremendous opportunity for standardization, which is critical to realizing new business models.

The key to understanding the true power of XML is to envision it as part of a greater solution for partner interfaces that will evolve over the coming years.

XML will be the tool for building “smart” interfaces in which participants on either side can choose the data they want and how they want to process it. At that point, the full realization of SEMCI will be within reach.

Moving forward from here will be challenging. A major consideration for all carriers is the complexity of legacy systems. Meanwhile, competing vendor solutions provide alternate routes to the next level of interface.

But if there are speed bumps in the road, there is much that carriers can do now to help move us all to the next level. These tasks include:

Quantifying the business value to be realized by the next level of partner interface and developing a long-term strategy for getting there.

Participating fully in standard-setting organizations such as ACORD, as well as users groups. Only with collective understanding of the issues can we start to map out the road ahead.

Defining a comprehensive data dictionary that bridges functional silos between underwriting, claims, premium processing, etc.an essential first step in an XML strategy.

Developing and marketing of a partner interface model and e-business process, which is critical for the industry to come together and succeed.

Moving towards Web services and service-oriented architectures that support business functions and work flow. This will enable new business models that justify technology investments.

If XML does not live up to the myths, so what? XML is an important vehicle to accelerate partner interfaces at the application level. Just like wearing the right shoe in a triathlon, were not going to get very far on the long journey toward SEMCI without it.

is senior vice president & chief technology officer of CNA Insurance in Chicago.


Reproduced from National Underwriter Edition, May 12, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.