Each year, insurers identify the flexible, non-proprietary and enterprisewide benefits of Web services, although insurers continue to cite three prevailing reasons to table e-services investments for another day. These reasons include reliance on multiple legacy system operating environments, security issues and overall costs.In a survey of 132 property/casualty insurers conducted in October, Troy, N.Y.-based MapInfo Inc., a global provider of location-based geo-spatial software solutions, determined that there's been increased adoption of Web services and integration technology. The survey was largely targeted to IT managers and senior-level executives.
MapInfo, which has a growing stake in Web-services adoption by insurers and other industries, revealed that the benefits insurers identified for Web services adoption are the ability to improve customer service and reduce operating costs. Thirty-four percent of respondents cited policy administration as a key application, while 27% plan to use e-services for sales/territory management and claims processing.
Respondents ranked .NET as the most important standard, followed by J2EE and ACORD. Lack of Web services adoption was marked by technology obstacles associated with legacy systems, cost and security. Several insurers contacted who participated in the survey declined to discuss their input.
On the radar
MapInfo, which commissioned the study, has a vested interest in e-services across all industries it serves.
The insurance industry is no exception: Two years ago, MapInfo's global insurance revenue was less than 1% and currently stands at about 10%, says Kimberly Morton, director of location intelligence for MapInfo.
But unlike other industries served, insurers appear to just now being receptive to migrating to this operating mentality, says Morton.
"Telecommunication companies want the latest and greatest of technology-they want to be early adopters," says Morton. "I think that insurers are very cautious to be the first to try something. There are some that are progressive but I would not call them early adopters. Automating processes, however, is critical, and the scalable qualities of Web services can help automate these processes."
Operating in legacy environments and the overall cost to embark on Web services were clearly the main reasons to hold off an investment (see chart).
The legacy dilemma-while independent of cost considerations-is linked to costs because of the stake insurers have made in legacy systems.
"Insurers would rather keep legacy systems intact and fall back on 'band aid' measures to improve policy administration and underwriting, rather than shift to full Web services to support these business processes," Morton says.
When asked to identify the current or future role of integration, 28% of insurers cited "connecting with partners and customers" as the chief reason, with "integration of traditional applications within the enterprise" (23%) as the secondary motivator.
However, as it pertains to integration beyond the enterprise, there are issues insurers must confront. For instance, a question looms about whether agents and customers are prepared to accept and support Web services capabilities, if offered. If an agent or broker lacks the requisite upload and download capabilities for data exchange, insurer investments in Web services are at risk of being marginalized.
The Agency Council for Technology (ACT), an operating unit of Alexandria, Va.-based Independent Insurance Agents & Brokers of America (IIABA), is working on a number of issues to benefit its agents and brokers.
Jeffrey Yates, executive director for ACT, says it's vital for agents to put download capabilities in place to optimize Web services investments made by their insurer partners. By the same token, insurers must provide paper-based communication options for those agents who lack e-services capability.
Yates also says that ACT is eager to see Web services evolve to benefit consumer-policyholders. Insurers can accomplish this via customer self-service capabilities on the Web, which in turn benefits agents and brokers. That's because as individuals handle mundane policy matters independently, this frees agents and brokers to concentrate on more important issues to build and maintain customer relationships, adds Yates.
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