Extensible Markup Language enables carriers to reach a higher plateau within their data exchange strategies. But many experts also tout XML's ability to integrate disparate systems.Wausau Insurance Co. is among an increasing number of carriers that understands the importance of using the Internet to conduct business. But operating efficiently on the Web has been an elusive undertaking for carriers like Wausau and its business partners for one fundamental reason: Lack of end-to-end convergence between back-end mainframe computers makes it difficult to process transactions in a crisp and timely fashion.

Determined to remedy this communication dilemma, the Wausau, Wis.-based insurer in late 1999 began using Extensible Markup Language, or XML, as its electronic data interchange protocol.

XML functions as an intermediary language that enables different technology platforms to communicate with each other. Through the use of customized codes-or tags-XML defines electronic text so a computer can decipher and display it.

Encouraged by an industrywide XML standard released late last year, insurance companies like Wausau are jumping onboard the XML bandwagon, launching pilot initiatives with their agents, brokers and other external business affiliates. Although the ancillary benefits of XML are projected to be numerous, Wausau found that the implementation of a Web-based interface data exchange model powered by XML enables the company to forego the expensive and timely task of designing a customized data exchange interface between the company and its business partners.

"We were using the ACORD Level 3 [AL3] standard for electronic data interchange prior to XML, but in the context of document layout, AL3 was more prone to error," says Ray Hall, vice president of operations for Wausau. "Now, our EDI transactions are built on XML using ACORD data tags. This makes real-time quoting possible through end-to-end convergence." For example, the process of issuing a new policy used to take Wausau anywhere from one to three weeks; now it takes one business day.

Wausau is not the only carrier that has recognized the capabilities of XML. In May, The Hartford Financial Services Group Inc., Hartford, Conn., established a real-time single-entry, multiple company interface, or SEMCI, to transact and process commercial lines policies for small businesses, based on ACORD XML standards.

Conducted live within an agency environment, the new interface is being piloted by The Mahoney Agency, Casa Grande, Ariz., a Hartford independent agency. The Hartford in June rolled out XML-based, real-time SEMCI for small business policies.

Real-time quoting

Another carrier, Travelers Property Casualty, Hartford, Conn., plans a third-quarter rollout of an integrated small-business system for its independent agents that's based on ACORD XML standards. Travelers expects the program to enable real-time quoting directly from an agency management system, eliminating redundant data entry, synchronizing information between the agent and carrier, and reducing agents' training and processing costs.

Because of the multi-faceted functions inherent within XML, industry experts predict it will inevitably supplant both Standard Generalized Markup Language, the root language for XML, and Hypertext Markup Language, more commonly known as HTML.

"Rather than hard-coding an interface, XML lets users tap into a common, broad language understood by two parties," says Ed Cecere, research analyst with The TowerGroup, a Newton, Mass.-based financial service consulting firm specializing in technology. "While HTML simply describes the format of a document, XML enables documents to be treated as data. XML not only allows but encourages users to extend its dictionary with their own dialects."

Speaking a universal language

XML solves a conundrum familiar to insurers, agents and even consumers. Traditionally, if a consumer contacts an agent for an insurance quote, agents sometimes submit the data to multiple carriers.

Under this scenario, agents have to select a data format that complies with each carrier's systems. Worse yet, if an insurance carrier lacked download capabilities, the carrier would have to fax the data back to the agent, who then would have to re-enter the information.

Unfortunately, this scenario in the insurance industry has been more the rule than the exception. "The majority of large insurance companies are still using proprietary networks to move information," says Robert Blake, vice president of development for Scene Genesis, a Rochester, N.Y.-based software company that recently used XML in developing Sceneaccess.net for the property and casualty industry. Sceneaccess.net enables insurers to compile, transmit and store scene information such as photos, reports and estimates and provides access to all parties involved in the claim, inspection or risk assessment.

A simple format

"XML is a very simple formatting language to understand and read, and should not be viewed as an operational burden to carriers. However, often new technologies such as XML are," Blake says.

Recognizing XML as a potential solution to data-exchange inefficiency, industry trade association ACORD, based in Pearl River, N.Y., began crafting a non-proprietary XML standard for property/casualty insurance compaies in May 1999, culminating in the development of a comprehensive XML vocabulary based on the ACORD ObjX and AL3 standards last September.

The initiative, done in conjunction with the Alexandria, Va.-based Independent Insurance Agents of America, assembled an XML dictionary that encompasses all property/casualty data requirements for all existing ACORD standards including personal, commercial, claims, accounting and surety.

Following ACORD's release of its XML standard, The Hartford last November completed a two-way transfer of ACORD data using XML. Transferring policy information in real-time over the Internet, data was captured on electronic versions of standard ACORD forms using an XML standard developed by both IIAA and ACORD.

Once the data was received, The Hartford performed edits, established a policy record, rated the policy and returned a reply within seconds.

The primary benefit of XML, experts say is that it gives software programmers more codes and commands with which to build applications. This is crucial because software designers can develop software that conforms to every format used by a carrier or agent in receiving data. As a reasonable alternative to SGML and HTML, XML melds the ease of use of the latter with the power of the former in encoding and presenting Web-based information.

"SGML can be hard to learn, tricky to implement and costly to fix when problems occur," says TowerGroup's Cecere. "Writing a program that can process XML documents takes a matter of days, as opposed to the weeks or months it may takes to develop an SGML-based program."

XML migration

Armed with this knowledge, Wausau Insurance decided to migrate to XML language formatting, and implemented it into its system last fall.

The objective was to refine workflow and to better serve its customers.

"It's truly an EDI transaction format built around XML using ACORD data tags," Hall says. "We have more than 200 tags defined; however we're never committed to using them all for every worker's compensation transaction we do. We only use the ones we need."

Later this summer, when Wausau rolls out commercial auto and business owners' policies on its newly launched eWausau.com Web site, www.ewausau.com, the XML tag dictionary is expected to balloon to 500 tags, Hall says. That list may proliferate as Wausau forges business relationships with insurance marketplaces.

"Currently, these aggregators are capturing huge amounts of data from consumers, and sending them to multiple carriers," Hall notes. "Transmitting this data through to these carriers without a system like XML is breaking their backs from a work flow standpoint."

Technology transition

Conducting business in real-time over the public Internet is a significant departure to companies such as Wausau who had invested heavily in proprietary data networks, only to cast those networks aside to essentially conduct business in a global and open environment.

However, assessing the potential of XML has helped ease the conversion for many carriers. When Wausau's EDI function was carried out on its own proprietary system using AL3 technology, a Wausau broker conducting business with a prospective small business customer would have to fax a paper application to Wausau headquarters. Or, they would have to carry out a 24-hour batch issue where the data would be entered into Wausau's policy management system.

Wausau would transmit the data back to the broker, but the time from the initial contact to binding of the policy could take a week or longer, Hall says. Using an XML-formatted document to define the data, a broker can now transmit the data to Wausau's headquarters, where a customer service representative can instantaneously access it and electronically process the data without having to manually re-enter it. Within the same day, Wausau can present a policy quote back to the broker who opts to either reject or accept it.

"Many carriers and agents have been married to their proprietary technology networks, believing that their systems provided them with a competitive edge or brand identity," says Kevin Kelly, worldwide insurance industry manager for Microsoft Corp., Redmond, Wash. "Now, the Internet comes along and ACORD develops a broad-based, non-proprietary XML standard for the industry. What this means is that carriers have had to reconcile the fact that they now operate on a global network along with their competition."

Exercising restraint

Carriers such as Wausau, Travelers and The Hartford have had to wrestle with another challenge surrounding XML: They've had to exercise restraint in developing their own XML initiatives and defer to the non-proprietary standards pursued by ACORD.

"We had been in the process of rewriting our legacy systems and had searched for a data exchange standard that would be compatible to that conversion," says Patrick Gee, vice president for select personal lines business for Travelers Property Casualty. "We had been aware of XML for some time and began to develop our own proprietary standard. However, we slowed down the acceleration of that initiative to keep pace with ACORD. We found that it was meaningful to have an industry-wide XML standard."

The patience has paid off for Travelers. The company is expecting to reap major dividends by conducting business in real-time on the Web with its network of agents through a program called Issue Express Net. This agency management system is built off Travelers Issue Express program-a quote, rate and issuance process that was enabled by ACORD's OBjX data standard. Adopted in 1994 and using Travelers' proprietary platform, agents could quote policies in five minutes.

However, Issue Express Net enables Travelers' agents to access via the Web real-time quoting capability directly from their agency management system or via Travelers' proprietary system.

Issue Express Net is expected to help Travelers Property Casualty eliminate redundant data entry, synchronize information between agent and carrier and reduce agents' training and processing costs.

More importantly, by avoiding an investment in a customized data exchange interface, Travelers expects to save significant money, "in the seven-figure range," Gee says.

"This new capability allows us to provide a more streamlined policy application and issuance system for independent agents," he continues. "Agents who use multiple carriers to get quotes can now be fully confident they'll obtain the most accurate real-time quote the first time it's submitted."

When the rollout commences, more than 100 Travelers agents who now use the WinTAM agency management software from Applied Systems, University Park, Ill., are expected to be involved with Issue Express Net, Gee says.

Agency adoption

Although carriers have become XML proponents, the efficiencies that the process is providing at the agency level is also being realized.

Through The Hartford's new agency interface model, The Mahoney Agency can perform quote inquiries through multiple carriers "in a matter of seconds, saving us considerable time and handling costs," says Zebra Keck, Mahoney's automation manager.

"When the quote is electronically returned in that six-second span, that data is automatically sent to our agency management system with no download delay. If there are no edits, because we have policy binding authority, the policy can be issued immediately," Keck adds.

The Mahoney Agency, like other carriers and agents, found that relinquishing a data exchange process built on a proprietary network in favor of a Web-based system wrapped around XML has been well worth the conversion.

Keck says that the nine-office agency had experienced workflow redundancy in transmitting data under a file transfer protocol.

"We would seek quotes for customers from no less than five carriers," Keck states. "We could upload data, but if a carrier did not have download capabilities, they would have to fax the data back to us where a customer service representative would manually re-enter information. This happened about 40% of the time."

Ultimately, the ability and desire to provide optimal customer service will be the litmus test for the carriers, agents, brokers and Internet marketplace providers as they explore Web-based data exchange enabled by XML.

For example, some third-party Web portals that offer insurance through multiple carriers have leveraged off the convenient and quick policy turnaround time they can provide an online shopper, say industry analysts.

However, this edge is rendered useless without a technology such as XML that enables a Web-based real-time business environment.

"Without the incorporation of real-time, consumers visiting an online insurance marketplace for a quote may find that even after entering their data on that site, that they still might have to call an insurer and resubmit all the data," says one industry observer who declined to be identified.

"The question then is, if they have to submit the data twice, then why wouldn't that customer just call the carrier directly and bypass the aggregator?"

Consumers won't have this dilemma if XML becomes the insurance industry's standard Web formatting language.

"Looking 18 months out, I predict that carriers will be using XML to conduct transactions in swarms," says Microsoft's Kelly. "EDI will be realized on a much greater capacity. Consumers can now switch insurance carriers at a click of a mouse, so there will be a heavy premium on customer service. And XML will be that key enabler."

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