XML Provides the Missing Link for SEMCI

Agents have faced the problem ever since insurance companies first introduced applications. Each company had its own form, so the agent who wanted to submit the same account to several underwriters had to write the same information over and over again. The design of proprietary insurance company applications compounded the problem. Although each underwriter requested the same information, the agent had to provide it in a different place on each application and in a slightly different format. Even before they began referring to information about their clients as data, agents were wrestling with the problem of multiple data entry. Agents and underwriters eventually got together to work the problem out, but the earliest solutions actually led to new and potentially more serious impediments to efficient workflow within the agency.

In the end, the most promising prospect for an efficient process of marketing an account to multiple insurers came from outside the insurance industry and outside the communication channels agents and insurers have traditionally used. The growth of the World Wide Web created a need to standardize communication among diverse businesses. This led in 1998 to the introduction of extensible markup language (XML), a data interchange convention developed for the business community generally by the World Wide Web Consortium (W3C). It is XML and the XML standard for the property and casualty insurance industry developed by ACORD that promise to make a real-time single entry multiple company interface (SEMCI) a reality. From an agent’s point of view, the biggest advantage XML offers is the prospect of processing business entirely from within the agency management system. Doing it in real time is just an added bonus of the flexibility and improved communications. “I explain XML as a more flexible language so that there can be better communication between software applications without the agent having to rekey data,” said Jeff Yates, executive director of the Agents’ Council for Technology (ACT). “As we move away from batch processing to real time processing the XML standards are going to facilitate communications between these various applications, which will get us beyond the multiple data entry problem, which is huge right now for agents.”

Although it has been trumpeted as the ultimate solution to the agent’s problem of multiple data entry, the new technology has actually contributed to the extent of workflow impediments facing agents. The first incarnations of XML actually resurrected a problem of multiple data entry that agents have been trying to put to rest for years. Before the advent of the ACORD standard, individual insurers began using XML to develop their own Web sites. Many had agency portals, but each was unique and used its own proprietary interface. This took agents back to the early days of electronic data interchange, when each insurance company placed its own terminal in an agent’s office. Each computer terminal connected to a single company, and each terminal required a different system that agency personnel had to master.

Fortunately, agents were in a position to influence the development of XML for property and casualty insurance, and they were quick to bring this problem to ACORD’s attention in the early stages. “One of the things the agents complain most about today is that it’s so hard to train their staff on all these different interfaces,” explained Mele Fuller, an interface architect at SAFECO and co-chair of the ACORD Claims XML Working Group. “Some agencies have a fair amount of turnover. When you have that you’ve got to keep teaching people these systems all the time. It’s very time consuming.” XML, she continued, allows ACORD to circumvent this problem by using data already in the agency management system. One technique is to populate the screens on an individual insurance company’s Web site with data from the agent’s files and simultaneously direct the agent’s web browser to the site. That limits data entry to information that is not already in the agency management system.

Perhaps the most important benefit agents can expect to derive from XML is real-time SEMCI from within their agency management systems. This allows agency personnel to learn one system and use it for all their transactions. The industry is not there yet, but there are encouraging signs that it is moving in that direction.

Insurance companies have begun to sign on to the SEMCI concept, realizing that agents are going to do business with more than one insurer no matter what, and that they will naturally gravitate to the underwriters who try to make the agent’s life easier. That has motivated underwriters to build applications that will talk directly to agency management systems. XML has been the missing link in that chain. “XML has been really the critical component of the new, real-time SEMCI process that we’ve built the past few years, and it basically is the whole mechanism that allows the real-time SEMCI process to happen,” explained Patrick Gee, vice president of Operations for small commercial and personal lines at Travelers Insurance.

Agency management systems can already interface with the Travelers agent portal, allowing agents to obtain quotes on a full range of policies for small commercial lines. Agents using WinTAM from Applied Systems can get a quote on a small commercial account in about 40 seconds. Policy issue requires visiting the company’s Web site, but that does not mean multiple data entry because the site will deliver policy issue information directly to the agency management system. Travelers is working aggressively to extend this capability to AMS products, and Gee indicated that the company is on the verge of launching a pilot program for personal auto quote and issue. Although Travelers is in the lead on real-time SEMCI right now, their competitors are nipping at their heels.

In and of itself, XML does little to enhance communication and data interchange. It is industry-spe-cific standards developed by groups devoted to a single segment of the business community that work the real magic. For property and casualty insurance, that translates to the ACORD P&C standard first released in July 2001. XML is a subset of the standardized generalized markup language (SGML), a convention developed a little over ten years ago to facilitate communication of information over computer networks. The most familiar version of SGML is hypertext markup language (HTML), the lingua franca of the Internet and the World Wide Web. The heart of an SGML convention is the use of labels, called tags or metadata, to identify data items. The principal difference between HTML and XML is that HTML focuses on controlling how text is presented while XML’s principal goal is providing a simple and intelligible vehicle for transferring information between databases.

An XML standard consists of at least two components that work together to facilitate data interchange. The first is a set of name conventions, standard tags that identify data items that an industry uses repeatedly. Data used frequently in property and casualty insurance includes the name of the insured, the policy number and the effective date, and the ACORD XML standard for property and casualty insurance has standard tags for those pieces of information. It also takes the naming convention a step further, developing standard data items that consist of other data items. “Policy,” for example, is an XML tag that identifies a data item that includes the policy number, effective date and expiration date. This makes the data transfer process more efficient by allowing a single tag to identify more than one piece of information.

The second component of an XML standard is the message or transaction. This is nothing more than a predefined package containing all the information needed to complete a common transaction. An XML message alerts the receiving computer to the type of transaction it is about to process and serves as a guide for processing the information in the message. The earliest transactions in the ACORD XML standard for property and casualty insurance, for instance, concentrated on the flow of new business. They facilitate the quoting and policy issue process, but development did not stop there. On April 12 ACORD introduced a message format for transmitting first notice of loss to an insurer.

No matter how good a standard is, it will not deliver significant benefits unless everybody or almost everybody uses it. “The key is not so much whether the standard will do it,” commented Mark Orlandi, ACORD’s program manager, XML for P&C. “The key is whether or not all the trading partners have gotten together to agree that this is what they want to do.” The popularity of XML in the broader business community has helped the ACORD standard get off to a running start, and the IVANS Transformation Station offers insurers a way to get on the bandwagon even before their internal systems can speak XML.

Because XML has become an accepted way of doing business in all industries, the ACORD XML standard is more than just a tool for communication between insurance companies and agents. It delivers benefits to any organization that needs to share information with the insurance industry, including third party vendors and statistical reporting agencies. It is also an ideal tool for sharing data within a company, allowing the underwriting system to communicate with the claims system, for example. A growing number of insurance companies are using XML for internal communication, a process that started even before ACORD released its standard. Extending its application to data interchange with the agency plant is just a logical extension of a process that insurers are adopting to increase their internal efficiency.

Agents can derive additional benefits from the broader acceptance XML has achieved. In addition to talking directly with insurance carriers, agency management systems are starting to communicate with applications from third party vendors. “We also use XML in connecting our application, TAM or Vision, to other third party applications,” explained John Higginson, executive vice president of technology with Applied Systems. “We have a product called ConneXion, a way for third party applications to connect to either TAM or Vision, and it also uses XML.” One way this cuts down on multiple data entry is by putting the agency management system in direct communication with a premium finance application the agent is using. “We recognize that the agency management system is the center of what’s becoming a larger and larger solution,” Higginson went on. “In the center is the agency management system, but there are all these niche applications, specialty applications that connect to it.”

No matter how prevalent the standard is, expecting all the players to get on board is unrealistic. There has to be some method to allow insurance companies to plug their legacy systems and proprietary interfaces into the XML data flow. With the power to translate ACORD standard XML messages into data streams that company proprietary interfaces can accept, the IVANS Transformation Station is that tool. Anna England, vice president of e-Business solutions at IVANS, describes it as a communications infrastructure that disintermediates data formats.

The accelerated level of data interchange is making security an issue that agents have to consider. They want to be certain that outsiders cannot use their good name and reputation to transmit data to an insurer, and that insurance companies do not deliver information on their clients to other agencies. Although understandably reluctant to disclose the details of their security arrangements, insurance companies and IVANS reassure agents that they have the matter well in hand. “[The Transformation Station has] got a very robust security and authentication server so that you not only know what agency you’re working with as a company participant, but you also know the desktop and the CSR that you’re working with.”

Although XML may be off to a slow start in property and casualty insurance, there is every indication that it will start making the agent’s life easier and more productive in the immediate future. “Today’s impact is not much, nothing to write home about,” said Loren Parsons, president and CEO of AMS Services. “Looking out in the future I think there’s reason to believe that XML, will advance the number and variety of transactions that move back and forth between agents and companies.”