Web Can Be Enabler On Rate Decisions

.NET (pronounced “dot-net”) is a new term that has been gathering much momentum within the insurance industry. However, understanding the value Microsofts .NET can have for the rating process also requires thinking about .NET as a business enabler, not just a technical enabler.

Lets talk about .NET in laymans terms. That way, whether youre a technically knowledgeable person or just a good insurance professional looking for a better way, informed decisions on rating software can be made.

Too often, insurance companies, particularly those processing commercial lines, have multiple rating, billing and claims software systemsoften a blend of homegrown and vendor supplied software. Each system has large letter representation on the companys “big picture” software diagram depicting the organizations enterprise automation. Unfortunately, IT discussions quickly reveal layers of automation complexity that make the “big picture” more of a future vision rather than the current reality.

Software applications vary widely in their interactions with existing systems. Some software runs across a variety of hardware, network and operating systems platforms, while other applications dont. The organization may wonder how this environment manages to work at all.

In the past, companies had limitations on technology solutions, resulting in little control over the growing complexity of the environment. After all, the job had to get done with what was available. But take comfort in the future, because the answer lies in the concept of Web services and the underlying technology platform of Microsofts .NET. These are the keys needed to create the structured, integrated, open, and easy to access and use environment that finally fulfills the undelivered promises of technology.

Web services follows the general “services model” of our everyday world. A service has a requester and a provider. For example, a restaurant patron (requestor) refers to a menu at the local diner (provider). Thanks to the inherent flexibility of the spoken word, conversation occurs between patron and waiter to complete an order. In this model, the patron can place the order in different ways or sequences, while having limited expertise in how the service is actually provided.

From the technical perspective, Web services promotes an approach to software architecture whereby components (each offering a specific service) converse, share data, and have flexibility in when and how they are invoked. Web services is not so much about the Internet, but rather about enabling components that use Internet technologies and related standards to work together.

The Web services approach also promotes the idea of easily upgradeable and replaceable components within an enterprise. Web Services is all about having IT discussions within the confines of the simplistic “big picture” diagram.

Hand in hand with Web services is Microsofts .NET, the technology platform that makes Web services a reality. Historically, the technology world of ones and zeros has forced precision and exactness in program-to-program interactions. The requester software had to maintain detailed internal knowledge of the provider software and needed to behave in perfect compliance within the providers limitations. The .NET platform enables the provider and requester software to communicate with flexibility in both syntax and content, independent of networks, operating systems and programming languages.

Microsofts .NET is one of the most substantial advancements in limiting dependencies on technology for greater software interoperability. .NET continues the evolution over the past few years of the requester program being shielded from the binary syntax (ones and zeros) necessary to communicate with the provider. In addition, .NET extends Microsofts COM+ technology to provide robust transaction management between requester and provider.

.NET and Web services are a particularly good fit for commercial insurance processing where “all in one” software solutions have proven impractical and have often fallen short on delivering a complete solution. Because no viable “all in one” solutions have been available, commercial providers have typically built “best of breed” solutions by working with multiple vendors, each providing an area of software expertise to commercial processing such as rating, billing, claims, CRM, etc.

The challenge of different solutions from different vendors has always been the integration effort to ensure that there was effective communication and information sharing to create a seamless operating environment. The .NET platform offers flexibility in format, content and conversational ability that in turn significantly reduces the costs and risks of integrating differing vendor systems.

.NET has particular appeal for commercial rating software, which is typically used to price the coverages for a risk and produce the full policy documentation. Organizations would like rating software to fit into the “big picture” diagram as a simple “black box” interacting conversationally with agency management, policy management, automatic renewal, claims, billing and reinsurance software. As such, the rating “black box” should easily access the data already collected and maintained through other software, with the rating software providing services to all the others in the commercial lines solution.

Due to the complexity of commercial line policy rating, interaction with the rating engine requires the sophistication, knowledge and flexibility to span multiple aspects from line of business to policy status (quote ready for issue, an endorsement, etc.) to jurisdiction and effective date of transaction. The process is further exacerbated by:

Different lines of business requiring different data for rating, e.g., workers compensation needing different and usually far less data than commercial property.

The amount and type of data required varying, depending upon whether the request is for a quote, policy issue, endorsement, audit, cancellation or reinstatement.

Each state having different allowable coverages. For example, mine subsidence is coverage valid in Illinois, but not Florida. Personal injury protection (PIP) is valid in Colorado, but not Florida, etc.

Effective date of the request being highly significant. For example, the uninsured motorist minimum limits follow state financial responsibility rules that can change annually.

The bureaus issuing well over 1,000 rate, rule and form changes a year, each with a specific effective date. The rating component must support these changes. Equally important, the requestor must know of or be guided around these changes.

As a result, for rating software to be effective, either the requester components have to understand all the exact data for each context (rigid provider) or engage in some highly “interactive” conversation (flexible provider). This is where the beauty of .NET really shines, enabling rating software to converse, however sophisticated it may be, with requester software components. The conversational ability of .NET allows the rating software (provider) to guide the requester software in the identification of information necessary to complete the transaction.

Embracing a Web services approach allows companies to implement the simplified IT automation “big picture” with .NET enabling the underlying construction of software components. For the rating process and its sophisticated conversational requirements, .NET is the powerful enabler the industry has long needed.

Ray Simon is president of INSTEC, based in Colorado Springs, Colo. He can be reached at rsimon@instec-corp.com.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, July 29, 2002. Copyright 2002 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.

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Web Can Be Enabler On Rate Decisions

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