No matter what type of distribution channel insurers use today, the need to make critical data available to business partners has reached the point where insurance carriers can no longer afford to be patient. This view was presented in a recent report, Technology and the Evolution of Insurance Distribution, prepared by research group Celent Communications insurance industry analyst Craig Weber.
Insurance carriers see themselves today as more manufacturer than manufacturer/distributor, Weber believes. The emphasis is on tapping the distribution reach of a number of partners, and that frees carriers to focus on creating products, administering the products, and managing the benefits, he says.
That has led insurers to Web migration. To the extent they can, insurers are taking data out of core systems and making it available on the Web, says Weber. That reduces costs and allows them to give access to that information in ways that are easier, particularly for independent channels. He believes the next phase for carriers involves the implementation of data standards, in particular the ACORD XML standards.
Such standards give insurers and their partners a common language in which to share data and can lead to cost savings for carriers. You take the data analysis piece out of your systems development, and thats a pretty big savings, says Weber.
But Weber believes standards can achieve even greater benefits in the distributed transactions framework. This is where the real power and benefit of XML will be realized. Distribution systems that are prominent in this distributed transaction framework might include new business systems, he says. Somebody in the field could be entering an electronic application, and when the information is completed, the system would then begin a distributed transactiontalking to a medical requirements vendor system in real time, analyzing what requirements are needed and ordering them up, and conceivably even pulling the results down and evaluating them live and in real time.
To do all this, Weber believes carriers need to accelerate the use of XML so they can realize the immediate benefits of data standards. His research discovered a surprisingly low number of carriers on the property/casualty side making data available to data management systems. Its somewhere between one-third and one-half of the top 100 P&C carriers, he says. That suggests to me a great opportunity.
Weber claims one reason insurers are not using XML is a lingering confusion over the standards. ACORD XML finally is reaching what I refer to as critical mass with carriers, says Weber. Not in its use, but in acceptance of the standard as being mature. It offers carriers a richness of data and a universality.
Weber believes the second issue is focus or lack thereof, and he finds this more troubling. Carriers have a lot to think about, he says. They have shrinking budgets, and if something works today without a data standard in place, youre hard pressed to get them to bump an XML project up the priority list.
If carriers dont have XML standards in place, Weber recommends they begin to incorporate some data standards as they perform system updates. Anytime you are making a major revision to your extranet, for example, you may want to reposition the extranet to make use of an XML data feed, he says. That is particularly true for carriers dealing with independent agents. Independent agents are going to go after XML aggressively, and carriers are going to have to provide data to them in a way that channel prefers to do business, says Weber. Thats the direction the independents are going. Its very clear.
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