There's no question that both agents and carriers are enthusiastically embracing many of the Web services standards now available across the industry. However, we're still only in the early stages of this process, and there is much work to be done to smooth the integration and transfer of customer and policy data between agents and carriers.Some leading carriers, in fact, report their overall XML-transaction volume is still relatively low compared with other messaging modes. Leading the way in XML efforts is ACORD (Association for Cooperative Operations Research and Development, Pearl River, N.Y.). ACORD's XML specifications-covering property/casualty, life and reinsurance-are designed to help move the industry away from monolithic and proprietary systems and toward networks that enable interoperability among systems and the sharing of data between carriers, agencies, brokers and third-party services.

A recent survey from SEEC Inc., Pittsburgh, Pa., confirms that 58% of carriers have adopted ACORD XML standards. Along with direct cost-savings to operations, the survey found that 62% of surveyed carriers see ACORD XML as a vehicle to improve service delivery to agents.

"We are definitely past the early adopter stages with not just ACORD XML, but with real-time workflow and interface technologies in general," says Hugh Anderson, director of connectivity solutions for AMS, a Bothell, Wash.-based provider of agency management systems. "We're seeing a tremendous increase in interest in this space, among our customers, carriers and some of the players out there that are helping drive the agenda.

"We saw more than a doubling of the usage of ACORD-XML driven workflows this past year," he continues. " The more adoption there is, the more momentum there is for the carriers to get on board."

Anderson says that AMS has calculated the savings of using an ACORD XML interface-versus a proprietary interface or more traditional Web-based form-to be "as much as five minutes per transaction on a service transaction."

He adds that "if you add up the number of service transactions the end user performs over the course of the day or week, it's a tremendous hard-dollar productivity savings."

That's certainly been the case for The Hartford Insurance Cos., Hartford, Conn., which has had comprehensive ACORD standards deployments underway to handle both external links to agents and internal enterprise integration.

The Hartford has been working closely with ACORD, as well as up to 20 agency management system vendors, on standardizing agent-to-carrier transactions, says Jim Rogers, director of e-business and technology for The Hartford.

"It enables us to pre-fill information into our systems, so we don't have any keying issues," notes Rogers.

"It allows us to turn around our middle market proposals to our customers more quickly and with a higher degree of accuracy. Agents can send us auto, workers' comp and property liability data as ACORD XML with the click of a button. It will immediately tell them that we've received the application. Then, within two hours, we e-mail them back who their underwriter is, and all that information uploads right into our own system."

About 50 agencies now trade data with The Hartford this way, Rogers says. "We're going to continue to expand that out into 2006 using ACORD standards with more management systems."

Such benefits have also been seen at the Drive Insurance unit of Progressive Casualty Insurance Co., Mayfield Village, Ohio, which also has been working closely with ACORD in recent years.

"We already had a lot of Web services functionality in our environment," says Alvito Vaz, senior IT manager in the Drive Business IT group of Progressive.

"We had the ability to do a billing inquiry or policy inquiries, and were able to take the ACORD standard, and map to it to provide the response back to third-party systems."

For example, Vaz illustrates, "when an agent sits down at their management system, pulls up a customer, pulls up a policy, and asks for the current status of the policy or billing status, and shoots that transaction off to Drive using ACORD XML, we receive it and send the response back to their management system. The user is still living within their management system, but getting a real-time response back to an inquiry in the past would have required picking up a phone and calling into our call center."

Vaz notes that this means quicker service to agents and customers, since phone calls are not being traded back and forth.

Agents are seeing advantages from the standards as well, not only in the enhanced ability to speak to multiple carriers' systems, but also see the near-real-time delivery of information and policy quotes as well.

Adoption of ACORD standards is "facilitating more and better real-time interfacing between agents and carriers," says Jeffrey Yates, executive director of the Alexandria, Va.-based Agents Council for Technology, an arm of the Independent Insurance Agents and Brokers Of America.

"The standards make it easier for carriers to work with multiple types of management systems and comparative raters and minimize the customization they have to do with each vendor. As vendors adopt it, they're going to attract more and more carriers, which is in the agents' interest. ACORD XML standards provide agencies the universality in real time that we want," he says.


Much of the agency-to-carrier standards integration work is being conducted under the auspices of the ACORD User Groups Information Exchange (AUGIE), a collaborative effort between the agency management system user groups and ACORD.

AUGIE was formed to give agencies a voice in the standards creation process. "It's an agent-driven project with ACORD," says Yates. "A lot of the standards work gets very technical. One of the values of AUGIE is to provide agent input into efforts to build out application standards. We've come up with areas where we would like to see more standards or implementation guides, such as commercial download and professional liability coverages."

However, groups such as ACORD and AUGIE have their work cut out for them in the realm of agency-to-carrier delivery of information. There are still numerous compatibility issues that arise between multiple carriers and multiple agents working with multiple technology platforms and multiple versions of XML.

"You're not going to get 200 different companies writing 15 lines of business in 50 different states all to agree on the same version of XML at the same point in time," says Doug Johnston, vice president of interface services at Applied Systems Inc., University Park, Ill. "Then you have different states that pass new regulations and require different data elements. It's an ever-changing thing."


That's why agency management systems vendors such as Applied Systems ascribe to intermediary platforms such as IVANS' Transformation Station, a managed data exchange using Web services and ACORD XML for real-time transactions between agency and carrier systems.

AMS offers a similar capability through its TransactNOW intermediary workflow system.

"In the past, before we had a centralized communication service, every time there was a change to a state, or a line of business, or an ACORD standard, we had to update all of our agency products, and the companies had to update all their stuff," says Applied's Johnston.

The Hartford's Rogers urges independent agencies to use either Transformation Station or Transact-NOW to quickly step up to ACORD XML transaction capabilities.

"Independent agents need to leverage more and sign up more for what the management system providers are offering," he explains. "It's a very simple process to sign up. It takes 10 to 15 minutes to get connected."

Interestingly, Applied's Johnston does not see a permanent role for such intermediary services. But the market demands such a service for now.

"Fireman's Fund is going to want one version of ACORD XML, and Travelers is going to want another, and The Hartford is going to want a third," he explains.

"If you're a small vendor, you can't afford to maintain all of those different versions and also build the unique communication that each insurance company is going to want. That gets really expensive," he says. "However, eventually, I expect the standardization of service-oriented architectures to eliminate the need for such services."

Unusual Edits

There are some interface challenges remaining even beyond the scope of agent-to-carrier communication intermediaries.

For example, there's the issue of unique edits, according to Yates. "Every company has additional questions, additional data they want to get," he explains.

"The whole issue of how you handle these unique company edits is a challenging one. And the carriers not only have their unique edits, but they also have to provide those to the various vendors, which have their own edit systems." ACORD and AUGIE have been focusing on this issue, Yates says.

Carriers also acknowledge that unique edits create compatibility issues.

"The issue of edits affects more than just the agencies. It cuts across the carriers as well," says Progressive's Vaz.

"The process of trying to update those edits both in our systems and remote systems is fairly time-consuming. Just trying to synchronize edits across multiple systems-even if they were systems that we owned completely-would be difficult enough. But trying to synchronize edits across systems you have little or no control over is even more difficult."

There are numerous places such a standard needs to reach, Vaz points out.

"How can you manage multiple carrier requirements through a single interface?" he asks.

Batch to Stay

Ironically, while there has been much progress on the XML front, carriers and industry watchers report that much of their agency transactions still move through batch transfers, facilitated by the ACORD AL3 standard.

AL3 was devised as an electronic data interchange format some time before XML came on the scene. "There are millions of lines of code written all over the country, at carriers and at agency management systems," says Johnston.

"An AL3 file is basically a flat file that's tight and efficient compared to XML. XML has tons of advantages, but when you're sending a batch file of 200 policy images down to an agency, XML can get a little bloated. We're probably doing 20% to 30% more AL3 volume today than we were five years ago, and that's going to continue."

Even The Hartford, which has been moving aggressively to XML-based transactions on all fronts, does not see any major phase-out of AL3-based batch downloads.

"Up until this year, we used to support a batch AL3 upload from agents, but we turned that off when we started to implement our real-time XML," says Rogers. "Our downloads, however, are still AL3, and I don't see that going away for a long time. The management systems have supported it for 15 years, and I don't see a need to change that."

Rogers adds that XML adoption has only taken place for "a small percentage" of its transactions. "We've got a ways to go yet," he explained. "We'd love to see it grow more. We now have XML-based services such as billing inquiries, claims inquiries, policy view, first notice of loss, and uploads, and have seen our transaction counts grow quite a bit. But not every agent in the country yet is using it, compared to our proprietary system."

At Drive, the overall percentage of transactions coming in via ACORD XML is still "relatively low, when we compare that to the overall transactions on our Web site," says Vaz. "In fact, it's surprisingly low. We saw a little bit of growth early on, and after that, it's been fairly flat. So overall the transaction base has been growing, but I think it's primarily through additional carriers coming on board, and additional transactions. So agent adoption is not as heavy as we would have expected."

More Services to Come

Carriers, agents and vendors are optimistic that ACORD standards will increasingly enable real-time, seamless transactions.

The Hartford's Rogers says it won't be long until more intelligence is built into these interfaces as well.

"You'll start to see more services extended directly into agents' platforms," he predicts. "We're going to be looking at how we can push out our information so that agents can have it at their fingertips. We're looking at systems that are proactive."

The Hartford, like many other carriers, is committed to delivering ACORD XML interfaces to its applications. "Everything that we develop within the Hartford is done with ACORD XML in mind," says Rogers. "It's part of the project framework here at The Hartford. We use the standards not only with our partners, but internally between our systems as well. As we come up with new projects to internally integrate between various platform systems, we use the same XML that we eventually use with partners."

Joe McKendrick is an author and consultant specializing in information technology, based in Doylestown, Pa.

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