Web services has yet to mature fully in the world of information technology, but insurers are finding that getting their machines to talk to each otherfor core functions including rating, underwriting, and claimsis driving them to take a closer look at this emerging technology.

BY ROBERT REGIS HYLE

The legacy of legacy systems has been systems that refuse to fraternize among themselves. The mainframe environment is loaded with information, but getting access to all that data through a single process was a dream many thought would go unfulfilled. Enter Web services. Two machines talking to each other is how META Group consultant Todd Eyler refers to Web services. Where we see it as far as a strategy is interoperability within your own organization and across the industry, says Vince Campisi, IT leader for claims, risks, and actuarial for GE Insurance Solutions.

Web services hasnt been around very long, and its immaturity often leads to confusion. The word Web really doesnt have much to do with the traditional use of the word when referring to the Internet. Some business leaders in insurance believe if you provide a service over the Internet, you are offering Web services. Gartner is surveying insurers for a future report on the topic, and analyst Kimberly Harris indicates only when carriers are asked if they base their Web services on SOAP, WSTL, or UDDI standards does she really know whether the carriers are using Web services or simply providing service on the Web. You have to have one of those three standards, or it wouldnt be Web services, says Harris. Web services are defined as Web-based enterprise applications that use open, XML-based standards and transport protocols to exchange data with calling clients.

A factor that will push the adoption of Web services will be companies using the J2EE or the .Net development environment for their core systems for policy administration and claims systems, Eyler believes. When that happens, I think technologically it will be a lot easier to develop and deploy Web services, he says. The insurance industry is in a good position to use [Web services] because unlike other industries, it really didnt adopt client/server technology that much, so a lot of the logic is sitting on a mainframe and being deployed on a dumb terminal. Given the business logic is in only one place instead of two places like with client/server, theoretically it actually should facilitate the industrys ability to turn that business logic sitting on those mainframes into Web services. You just attach an XML interface and deploy it as Web services.

Tightly Wound

Historically, IT leaders developed systems that were all intertwined with one another, Campisi asserts. So, you go from Step A to Step B and Step C, and its all stitched together very tightly, he says. Going forward, if you develop systems in such a way to leverage Web services, you can build an ability to search for a claim, for example, across multiple systems. Ultimately, you can expose that service to customers so they can leverage that same component you built, allowing them to search for their own claim. They would never exit or leave their own system to do so. Theyd never see the fact our system exists. As an example, he points to Amazon.com. You go to make a purchase online, and you go to track the status of the purchase, he says. UPS ultimately is doing the heavy lifting, and the tracking of the product is within its system, but you never see that. You just see an Amazon.com presentation layer. You actually are tracking it through the UPS technology. Thats applicable to what we do.

Glenn Headley, vice president and CIO with The Republic Group, says his company offers its independent agents a point-of-sale solution. The functionality we provide is quoting personal lines products, he says. We provide the opportunity for [agents] to do policy maintenanceendorsement processing, change requests, billing inquiry, claims inquiry, and view documents. We are a paperless company with automatic workflow. We deliver access to those files to our agents. They cant see everything on the file, only what they are authorized to see.

Pick Your Poison

There really hasnt been a debate within the insurance industry over whether to go with the J2EE server application platform favored by IBM or the .Net platform Microsoft offers, Eyler says. IBM is so important in this industry, and IBM has thrown its weight behind J2EE, he says. Two-thirds of carriers have deployed the J2EE server application platform. There is less for .Net, but .Net actually is growing because it is easier [to use]. Java is just a harder development environment. It requires much more expertise and is more expensive. People are more comfortable using Visual Basic and the Microsoft technology, particularly smaller carriers. If they can afford to use only Windows or Microsoft technology, theyll do it, but if its something thats complex where you have to agree with multiple applications, they still have to use J2EE.

The Republic Group has gone with Microsoft technology, although it is not using .Net. The way weve engineered this is the front end is Microsoft-based technologyWeb presentation screenand some databases for data collection, says Headley. Weve developed all the data collection screens necessary for agents to enter a minimum amount of information to receive a quote. Thats presented to them with a browser. When they hit the quote button, that shifts the transaction, fires off the rating engine we use in our normal policy administration system, rates the policy, and ships a response back that is displayed to agents on a browser. In our situation, the rating engine we use is the same for the Web quote and for issuing the policy. We wanted to ensure whatever we quoted we would issue at, and the only way to do that was to use the same programrate tables, same everything. Theres some Visual Basic script in there and a little bit of Java.

Eyler adds: In the front office when deploying a new applicationsuch as compensation management platformsmany of those are Microsoft client/server applications that are being upgraded to .Net. Thats an example where a business guy wants to come up with a new compensation scheme for his distribution force and wants to implement it very quicklythats where .Net is a good thing, when you want to do something very quickly.

Legacy Rules

The backbone and the bulk work done within many organizations remain in the legacy environment, according to Campisi. We try to leverage the J2EE and other environments to enhance those applications and bring out some of the benefits those technologies can offer you24/7 processing capability, having access to data and information anywhere in the world at any time, he says. We dont frown on the legacy environment. Its been our bread and butter and will continue to be for some time. But as you build new applications and technologies, you look for different platforms to leverage, and J2EE is something that really helps mask some of the inefficiencies and weaknesses of the legacy and brings out some of the benefits you get from the Web world.

For GE Insurance Solutions, the initial enabler for the Web services was bringing in a middleware platform with workflow and imaging capabilities that would accommodate its customers, even those who still resided in the paper-based world. We shifted all our processes and operations onto this workflow middleware layer, and not only does it give you better visibility to your processes and metrics, but it gives you the flexibility to hide some of the disparate systems you have, says Campisi. It gives you one operating environment and one standardized process thats flowing through the organization. Weve continued to build new products and tools that plug into that middleware that interfaces with anything. You have this service-oriented architecture (SOA) that can flow seamlessly to connect to the appropriate person or department. The fundamental start was getting everything on a digitized workflow, which really started changing the culture of the organization and making people embrace technology. It becomes more saturated in their daily work vs. looking through stacks of paper. They become more accustomed to doing things on their PC. Once you break that, the skys the limit.

Trapped Information

Most of the companies Gartner speaks with about Web services are looking at a type of initiative related to policy management or a legacy system, according to Harris. There are so many companies that have information trapped in the back-office policy system. They are having users, both internal and external, try Web services to create a service environment that will enable using the legacy information with these parties, she says. Were hearing a lot about legacy now and a lot about agents/brokerswhat type of transaction and information do you need agents/brokers to be using for their day-to-day operation. Were starting to hear a lot of Web services discussion around some of the distribution initiatives we are seeing in the industry.

Eyler sees Web services more in the P&C side, he says, particularly with auto insurance rating engines. Thats an application that easily can interface with other applications via the Web using Internet protocols, he points out. [Insurers] also have the ACORD XML standard, which is much more advanced in P&C, particularly in the front office, so you see real activity there. Where it makes sense to me over the next couple of years is if you look at some of the failings of Transformation Station, which is trying to make agency management systems interoperable with SEMCI so an agent can answer as few questions as possible and get accurate quotes from as many carriers as possible. With agency administration systems come the difficulty agents have in reaching out, carrier by carrier, to get access to their underwriting rules and get a real quote, he says. An advancement I would expect over the next couple of years is [carriers] offering their core underwriting engine as Web services that can be accessed as needed by agents. So, if Im an independent agent and I do business with 10 carriers, I can answer only as many questions as I need with the questions being driven by the rules that are on those underwriting engines, which are being offered out as Web services. That will be a big area in both P&C and life insurance, as well.

A few carriers are using the WSDL, SOAP, and UDDI protocols, Eyler adds, which most people think are central to Web services. But they actually are too formal of a definition, he says. They are in the back office and trying to attach XML interfaces to their back-end systems to make integration, both internally and externally, as easy as possible using the ACORD standard. Although [not all insurers] are using the SOAP, WSDL, and UDDI that much, they still are doing [Web services]. If you ask me, its basically just an XML interface.

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