Web Technology Pays Off For Insurers

What are Web services? Basically, Web services provide the technology infrastructures for different software applications to work together. These services can now bring together technology solutions that were not originally designed by a single vendor. Web services allow disparate applications to work seamlessly through a standard interface, thus delivering new or enhanced business functionality.

The most familiar Web service application is the standard browser, which connects Web sites to users anywhere in the world via the Internet. And the most common language for Web-based communication is XML (eXtensible Markup Language), a "self-defining" data structure that allows the recipient to extract only the data needed without having to know the exact structure or overall content of the message, unless the content has been changed.

Web services can significantly boost insurers productivity in todays changing property-casualty marketplace.

A transition is under way from monolithic legacy systems that simply improve workplace efficiency to newer, interoperable technologies that reduce processing gaps between property-casualty products and services. To achieve improvements in cost and performance, insurers need to extend transactional and service capabilities in real time to all participants within their distribution frameworks.

To this end, advanced browser-based applications, powered by Web services, are being layered on existing IT (information technology) infrastructures. For example, next-generation Web services technology already allows rating and underwriting functions to be performed transparently and in collaboration with various participants in the business value chain–agents, other intermediaries and customers.

The most basic Web service application answers standard requests for information, generally through the Internet. The more information an insurer has on a risk, the more quickly and accurately the risk can be priced. Information on risks is now widely available through Web services. The content can be readily accessed and compared with data provided by the insureds to quantify and qualify risks better.

Advances in business applications now allow insurers to conduct real-time rating and intelligent underwriting to identify exceptions. Underwriters can efficiently route the information via Web services to other professionals for further evaluation. This is crucial as more risks are now being shared among carriers, reinsurers and other coverage providers.

Large, complex risks require agents, brokers and underwriters to work together in negotiating coverages and rates. Web service gateways allow the seamless sharing of policy information and assessments. Agents, underwriters and reinsurers can collaborate on the same applications and policy-evaluation information. They can simultaneously review and modify coverages, deductibles or rates to ensure more productive workflows and cost savings.

Web services technology can also be utilized to deliver round-the-clock self-service support to customers and agents. Web services-based pricing and customer service systems can provide information to insureds or agents, as needed, at lower costs.

The Web is often thought of as the panacea for eliminating redundant processes, enhancing efficiencies, and reducing sales and service costs. That may be true, but only with well-designed policy pricing, quoting and issuance systems at the point of sale. Complementing Web presence with nimble insurance products backed by intuitive, customer-responsive quote-issuance-service processes can lead to distinct competitive advantages.

Agile, business-driven Web services technologies can help insurers develop effective and more profitable sales and service presence in their markets. There are a number of rating, underwriting and policy service processes that leverage Web services to improve insurers operations.

Algorithm and Rules Engines. Both Web users and traditional customers demand immediate answers. Insurers must evaluate and classify policies in real-time to determine appropriate risk levels and choose the correct rating program. Rating engines today are designed as on-demand calculators that can choose from multiple sets of rating loss costs and algorithms to satisfy pricing needs for any line of business–anytime, anywhere and on any platform.

Efficient Rate Management. A progressive rules-based rating engine has the added advantage of dramatically simplifying ongoing rate maintenance. Rate changes can be rapidly implemented to reduce costs, slash deployment cycles and enhance economies of scale.

Detaching, or externalizing, rating functions from the policy management system and delivering them via Web services also makes it possible for agents and customers to use browser-based user interfaces for accurate pricing and real-time quotes over the Internet, intranets and other networks. These processes use the exact same rates as the carriers internal systems.

Automated Underwriting. Advanced rating solutions also process logical rules for immediate, automated underwriting. Reflecting all custom edits and guidelines, a rules-based rating/underwriting system enables a valid binder to be issued at the point of sale. In addition, the combination of collaborative technology, powered by Web services, allows the specifics of the binder to be easily transferred to the insurers policy-management system for immediate and accurate policy issuance.

Improved Policy Service. Insurers compete not only on price but also on service. To retain customers in a competitive market, the efficiencies of Web services allow business users, agents and others to work together more productively across remote locations. Properly implemented, Web services technology can improve customer service, reduce service costs and help retain profitable accounts.

In our hyper-competitive economy, the shared efficiencies of Web services allow all insurance process participants to work together in promoting new account acquisitions and retaining profitable insureds. Properly implemented, cross-enterprise technology, driven by Web services, can measurably boost customer care and reduce costs throughout the new-business-to-renewal workflows.

Insurers who want to be winners in todays property-casualty market must include Web services in their business and IT infrastructure plans. The combination of Web services architecture and secure, Web-based applications can deliver enterprise-wide value. Smart Web service-based technology planning and deployment can lead to quantifiable cost efficiencies, extend the life of existing systems and deliver value across every link in the insurance value chain.

Charles J. Boodro is president of AscendantOne, a unit of Insurance Services Office Inc. (ISO), based in Nashua, N.H. He can be reached at info@AscendantOne.com.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 25, 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.