While Web services hasnt exploded in the insurance market yet, experts believe it will once everyone understands what it is.
Matt Josefowicz, senior analyst for Celent Communications, says he often asks insurance carriers if they are doing Web services. More than once, the answer has been, Yes, we have a portal for our agents, he says. Those people are doing services on the Web, not Web services.
Josefowicz, author of a new Celent report, Web Services in Insurance, believes the term Web services is one of the things holding the technology back. Its very misleading, he says of the name, coined by Microsoft back in 2000. I think the confusion has been over the term and over the uses of [Web services]. It certainly has inhibited insurance [companies] from embracing it as wholeheartedly as they might if the name was presented in a way that made it clear [Web services] was about to solve two of [the insurance industrys] major problems. Im not trying to introduce a new term, but its not really clear what Web services does.
What Web services can do is solve important problems pertinent to the insurance industry. One is internal systems integration, says Josefowicz. Youre dealing with a large heterogeneous internal infrastructure [in which its] very difficult to make systems of varying platforms, ages, programming languages, and data models speak to each other and communicate effectively. The other problem is being able to exchange information with business partners easily and efficiently.
He describes Web services as a way to use open-platform, text-based messaging over open networksHTTP networks.
Because it runs on HTTP networks, thats why its called Web, but it doesnt have to be used in a Web application, he says. It generally is used via HTTP over a TCP/IP network. So carriers can connect to their internal systems as well as with the systems used by business partners. The value it has is it lets you use an open network as opposed to using a closed, proprietary EDI network that typically is more expensive and less flexible, he adds.
Some insurers have discovered Web services as a way to address integration problems, Josefowicz says, and as the success stories build, it will become a preferred way to handle such problems. However, there was a lot of hype around Web services when it was introduced, he says. A lot of the original thrust, from the pure technologist point of view, was about creating dynamic any to any connections. Any system that needed to perform any kind of process would go consult a public directory of available processes and find where that process was availablesomewhere on the Internetand connect to that service. The system would send the data it needed processed and get the results back automatically. It would enable any kind of distributed computing and dynamic business structures and a whole bunch of stuff that sounds good on paper but really doesnt have much to do with the insurance industry the way it runs today.
Although insurers arent spending a lot of money on Web services now, Josefowicz believes that will be changing soon. There are a couple of [insurance] companies that have taken the plunge and are deriving real business value, he says. But in terms of overall spendingwhat the industry spends for integrationwe estimate Web services is about five percent right now, but we expect it to take close to 40 percent [of integration spending] over the next couple of years. A very large portion of the new project integration work that happens in the insurance industry will be Web services based.
As with most new technology, insurers are a patient lot. The value of Web services will become clearer, and the technology will be less new, he says. More carriers will be familiar with it and consider it as an option. The business value also will become clear and more obvious. ROBERT REGIS HYLE
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