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In the 1970s and 80s, in an effort to promote electronic interface, insurance companies supplied proprietary workstations by the thousands to their independent agents. Like the return of a bad movie, in the last decade we saw company Web sites. Both had value to the company but offered relatively little to the agency from a workflow standpoint.

Several agency-company “interface” solutions have even been deployed on these models, such as screen scrapers or scripting systems. While these non-standard technologies initially were easy, they werent sustainable.

The initial real-time standards focus was on policy rating. In 2000, a completely new type of transaction was introduced to retrieve data and documents from company databases and/or their Web sites. This included billing, claims and policy status inquiry. Meanwhile, real-time communication was emerging at the same time that carriers were figuring out how to publish this inquiry externally. The two just came together at the right time.

How did real-time inquiry get started? Almost as an afterthought, a technology company and a carrier collaborated on a transaction that simply allowed the agent to retrieve one of these files directly from the company in real-time. A quick XML transaction was built, following existing ACORD XML designs, and the initial inquiry transaction was born.

What started as an afterthought quickly became the “killer app” that encouraged agencies to start using the new real-time interfaces at staggering adoption rates. Agent adoption was slow in 2001-02, but within the past 18 months, there have been more agency-company partnerships established for real-time communication than there have been for batch upload in the past 18 years.

In the end, while many people built proprietary technologies around inquiry transactions, including Web site screen-scrapers and Web site scripters, the initial XML-based inquiry transaction quickly became an ACORD standard and currently represents 4,000-to-5,000 transactions per day.

Now Web service standards are emerging for the end-to-end processing chain. Carrier IT departments are embracing external messages and extending internal systems. Disparate applications running on different operating systems are beginning to communicate. Early wins involve tweaking Web services and XML into highly reliable processing solutions.

One of the largest assets within most insurance companies, outside of its people, is the information system created to process and manage corporate information. For the past 30 years, insurance companies have been trying to figure out how to effectively extend those assets into the hands (and keystrokes) of their partner agencies. For many companies, 2004 will be the breakout year that will extend their internal systems into hands, keystrokes and databases of their partner agenciesand it will be the XML-based Web services movement that will make it happen.

Why will we see insurance company mainframes effectively extended out to the agents desktops? Mainframes are the largest untapped asset within the insurance transaction chain. The continual investment every insurance company makes within its corporate data processing systems makes those systems an asset to its employees. Extending those assets into the desktops and databases within their agents agency management systems represents incredible value.

Web services allow that to happen by exposing the mainframe processing and data to external requests. Web services allow the company to treat external agency management systems simply as remote workstations. It eliminates the redundancy and inaccuracy of comparative raters. It puts the pricing and underwriting back in the control of the companies.

Also, Web services allow for robust approaches for each company to streamline their unique offerings into the independent agency channel. Standards will be the core, but different sorts of standards: vertical standards, supplied in the ACORD process; and horizontal standardsWeb services (WS-I, OASIS, etc.).

But make no mistake: Standards wont be the complete solution. Each company will have its own unique data elements to support rating, underwriting, claims handling, etc. And each carrier will have its unique data editing to support back-end message handling, transaction engines, security and value-added services, such as brochures, proposals and third-party services (inspections, loss control, etc.).

Technologies now allow each company to extend and enhance the base ACORD standards into highly reliable transaction messages and be seamlessly integrated into the agency workflow. Some transactions may not have, nor require standards. Sometimes you need to focus on the solution first and the method second. Inquiry was an example of a transaction whose solution came before a standard. The inquiry transaction with an XML message approach was submitted to ACORD by a vendor and became the ACORD standard. Other approaches are proprietary, but both are in use.

Success will be achieved by the companies that effectively extend the assets of their corporate data centers into the desktops and databases of their agents agency management systems. They will use standardsvertical and horizontalwhere appropriate. They will extend and enhance those standards where appropriate. And they will build services where there are no standards.

It has been 30 years, but an agency-company communication solution is now visible.

(djohnston@appliedsystems.com) is executive vice president, interface services, for University Park, Ill.-based Applied Systems Inc., a technology provider in insurance and financial services.


Reproduced from National Underwriter Edition, May 21, 2004. Copyright 2004 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.