Extensible Markup Language, or XML, has received a whirlwind of hype since its creation in 1998, promising the ultimate universal format for all exchanges of company data.But to seasoned technology experts, this promise was initially made more than a decade ago with EDI, which also portended massive efficiencies and savings in business-to-business transactions.

Supporters of XML declare that it can be deployed as a vehicle for exchanging data between companies within an industry, enabling straight-through processing and closer collaboration between organizations. XML also supports internal system-to-system interactions, thereby facilitating enterprise application integration initiatives.

Last June, the Agency Company Organization for Research and Development (ACORD), based in Pearl River, N.Y., released ACORD XML for life insurance, the first insurance-specific XML standard. This standard also has drawn the support of Boston-based MIB Inc., which represents about 600 life insurance companies. ACORD members are scheduled to vote on Version 1.0 of ACORD XML for property/casualty insurance in June.

Augmenting EDI

Initially, XML will augment EDI rather than displace it, industry observers say. Insurance companies that already support ACORD Automation Level 3 (AL3) EDI are likely to run XML side-by-side with older EDI systems, as opposed to scrapping the older EDI systems, says Susan Ousey, senior vice president of ACORD.

Currently, there are more than 100,000 carriers, agencies, brokers, and service providers worldwide that have adopted AL3, she estimates. Due to XML's reliance on Internet standards, new implementations from this point on are more likely to be XML-based, Ousey predicts.

The primary difference between AL3 and XML is that AL3 transmits information in batch mode-uploaded and downloaded on a regular basis-while XML data can be displayed to end-users in real-time.

"Our P&C model came from the same dictionary that we used with EDI for the last 18 years," Ousey explains. Most major carriers employ AL3-enabled systems on a daily basis to upload and download data with independent agents, she states. "We expected our older EDI to stop growing when we got XML for Life Insurance on the street. But they haven't turned it off. It still keeps growing. Until all of the agency management systems in the world run only on Internet time, they'll need to keep an AL3 system in place."

As companies develop their Web channel for personal lines of insurance, the ability to deliver real-time interaction will grow, Ousey adds.

"A lot of consumers are shopping on the Internet for life, homeowners and auto insurance," she explains. "As a consumer, I'm not going to wait 24 hours for a quote; I want it in minutes. XML allows for real-time response."

Ultimately, the industry is anxious for a single standard that will enable transactions across companies, says Robert Lane, chief information officer for InsureHiTech, a Princeton, N.J.-based company that operates as an online insurance brokerage.

This month, ACORD plans to name 25 companies that are successfully conducting transactions via XML. Carriers participating on ACORD's XML steering committee include AEGON USA, American General, Chubb, The Hartford, Manulife Financial Corp., Metlife, Mutual of Omaha, New York Life, Royal & SunAlliance and Safeco.

ACORD's XML for P&C will address quoting and application-form data standards for commercial lines covering business owner, commercial auto, director and officer, and workers' compensation insurance. Personal lines standards will cover fire, homeowners, inland marine, watercraft and personal auto insurance. Standards for surety bonds also will be announced.

Agents of change

To date, the primary proving ground for XML within the insurance industry is carrier-agency interactions. The primary business benefit is that agencies are able to submit a single application-either completed by a client online or by the agency-to multiple carriers with XML-enabled systems.

"XML enables companies to take forms that were manually filled out and electronically submit and route them without human intervention," says Dave Potterton, research director with Meridian Research, Newton, Mass. "The real promise lies in the ability to achieve straight-through processing, and being able to store the data with metatags."

XML's metatags support metadata-data about data. XML distinguishes various data types and it separates presentation from content.

Recently, St. Paul Cos., based in St. Paul, Minn., developed an XML-based form submission process with InsureHiTech. InsureHiTech's system submits client applications that have been completed online to VisionPak, St. Paul's automated rating and underwriting system. Quotes are prepared and returned to InsureHiTech within minutes.

St. Paul's VisionPak, which is targeted at insuring high-tech companies, was developed as a Web-based forms interface to cut down on paperwork going between the agency and carrier, says Jon Farber, senior underwriting director of St. Paul's technology underwriting unit.

However, agencies may still be burdened with rekeying data for multiple quotes. VisionPak "is a St. Paul proprietary system looking for a St. Paul type of quote," he says. "XML takes the process a step further by avoiding proprietary systems altogether."

Faster Quoting

When agents typically sought a quote from St. Paul, they had to log onto the carrier's VisionPak extranet, manually enter the information into online forms, and get the quotes back for presentation to clients.

Now, agents can send clients' information-which may have already been keyed in by the client-directly to the St. Paul system, where it automatically populates the database and triggers the quote engine.

It took St. Paul about four months to develop the interchange, Farber says. "We had already done a significant amount of work on the structure of our data elements and database. Our IT folks worked with InsureHiTech to make sure they were able to capture the information that we needed on their system, and that it could feed properly back into our databases."

Travelers Insurance also is opening agent interactions to XML. Agents accessing Travelers' quote engine, dubbed Issue ExpressNet, can do so via the Internet, and receive an almost instantaneous response.

Ready For Semci

XML is underpinning Travelers' effort to leverage the long-awaited SEMCI (single-entry, multiple company interface) standard, in which agents can submit multiple quotes with a single entry, says Patrick Gee, vice president of operations for small commercial lines and personal lines at Hartford, Conn.-based Travelers.

"When agents generate an application via SEMCI from their agency system, all that data then interfaces with our Internet application," Gee says. "No rekeying is required. All they'll need to do is give us billing information to issue the policy."

Currently, Travelers is deploying the system to selected agency partners. However, because Travelers was one of the first carriers to XML-enable the process, agents have not been able to take advantage of submitting applications to multiple carriers, Gee says.

XML also may help companies realize investment protection in the large back-end systems they have built up over the years.

"Many people thought at some point in time that mainframes might not survive in their current mode," Gee says. "Our application relies heavily on the mainframe. We have more than 4,000 agencies, so at any given point in time, up to 25,000 people may be using these applications. We need our mainframe horsepower."

Travelers runs its rating engines on its mainframes, while its rules database and presentation layers are run on separate platforms. "We're able to leverage each technology where it's most useful," Gee adds.

The entire process was years in the making. Travelers had developed its vision for real-time SEMCI capabilities about four years ago, just as XML was first being formulated, says Gee. "We had a choice of either working with the agency management system vendors with our own standard, or pacing our development with ACORD standards," he says. By tying its development with those of ACORD, Travelers is ready to accommodate data from any XML-compliant agency system.

Repeating EDI's mistakes?

Although traditional EDI works well for companies that have painstakingly deployed it, the costs and efforts involved in building and organizing such a system has limited the reach and potential of the technology.

The same challenges may hold true in today's XML-based implementations, which have been hampered by a confusing array of standards, and slow adoption rates, experts caution.

"It's not magic," says Meridien Research's Potterton. "There's still a lot of work that has to get done, including work in back-end systems. That's work that takes time and money."

Currently, more than 350 XML initiatives are underway among various industry groups, but most merely replicate EDI work, says Joseph Baran, chief technology officer at Extol Inc., Franklin Lakes, N.J.

With the fragmentation that is taking place between separate XML efforts, "we're repeating a lot of mistakes we made with early EDI," Baran warns. In addition, these issues with XML implementation are the same that drove up the costs of EDI. "Day-to-day transaction processing is not that hard or expensive," he says. "Setting up and integrating with business processes is the hard part."

Joseph McKendrick is a technology consultant and freelance writer based in Doylestown, Pa.

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