Depending on the specific application, electronic networking hubs have experienced a checkered history within the insurance industry. Hubs devoted to the claims side of insurance, for example, have met with a great deal of success in that they've enabled affiliates in the claims value chain to communicate quickly and effectively in settling claims.In launching what is touted as the first electronic networking hub to serve the life reinsurance segment, Washington, D.C.-based American Council of Life Insurers (ACLI) is hoping to "revolutionize the reinsurance business process," the association states.
Focusing exclusively on the North American market, the electronic hub is built on a highly-secure Web-based platform, which will enable life insurers to communicate via one public network. Designed to make transactions instantaneous and create a single, comprehensive archive of information, the electronic hub is expected to go live by late September.
"This is a cross-sector initiative which strikes right at the heart of the frictional cost load on the life industry," says Don Preston, ACLI's managing director for reinsurance. "The industry has been looking at potential solutions to this problem of data transfer for the past five years, but in truth the previous technologies simply weren't powerful or scaleable enough."
ACLI designed the Web-based hub in conjunction with London-based ri3k, a developer of XML-based infrastructure technology with expertise in developing reinsurance hubs for the non-life European market.
To foster quality control and ensure that the hub was designed effectively, ACLI enlisted the support of a cross section of direct writers and reinsurers who served as technical advisors. Among the participants were Nationwide, New York Life, Northwestern Mutual, Bankers Fidelity, MetLife/New England Financial, Swiss Re Life & Health North America, RGA Re, ING Re, Manulife, and Clarica are members of the group.
Currently, direct writers pass treaty and transaction data to reinsurers, using their own formats. Reinsurers must then translate, cleanse, manipulate, and enter some of that data manually onto their own systems-a process that creates inefficiency.
The ACLI/ri3k venture will eliminate the labor intensity of this process, creating a seamless end-to-end flow of data between life industry counter-parties via a single electronic infrastructure for direct life insurers and reinsurers.
The utility will be able to receive data from direct writers and output the information in a standardized 1998 ANSI and ACORD format. Users will require no software other than a Web browser.
"There are two aspects that make this effort more likely than other efforts to succeed," says David Atkinson, CEO for Chesterfield, Mo.-based RGA Reinsurance. "First, this is a joint effort between direct writers and reinsurers, facilitated by the ACLI, that is structured to benefit all participants, not just the reinsurers. Secondly, with ri3k, we have a technology provider with relevant experience and a successful track record."
Other re-insurers that have endorsed the hub believe that the utility will allow broader access to life reinsurance and provide improved administrative efficiency. "By automating the interchange of data, ACLI and ri3k will be helping the industry stay competitive and better serve its millions of policyholders," Jack Bailey, senior actuary for Milwaukee-based Northwestern Mutual, says.
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