Even in the case of technological standards, it seems there can be too much of a good thing. So it goes with XML, which, a decade following its inception, is now entrenched as the lingua franca of B2B and intra-company communications not just for the insurance industry, but also for the digital universe as a whole.

Insurance technologists, who have always needed to move information around in a way that was standard and convenient, can hardly be faulted for falling hard for the open standard. Indeed, the data-intensive nature of the industry coupled with the ever-widening array of agents, vendors and regulators the typical insurers digitally interacts with, have made communication standards a necessity both internally and externally.

“Standardization was the primary driver for our adoption of XML,” says Peggy Scott, AVP for agency services, Liberty Mutual Agency Markets, a business unit of Boston-based Liberty Mutual Group. “Consistency across various applications reduces cost and time to market. The key driver for Agency Markets’ companies is quality and improving agents’ ease of doing business, allowing them to conduct much of their day-to-day business from within their agency management system. It also affords them the freedom of choice in selecting vendor partners for multi-carrier quoting options.”

Yet, the convergence around XML is hardly the industry’s first attempt at standardization. Many past attempts to standardize failed to gain widespread acceptance, due largely to the rigid, inflexible nature of the standards themselves. Not so with XML, which works across multiple languages and output formats, and is loosely-coupled, permitting insurers to mix and match applications of their choice. Moreover, XML is easily customizable, enabling companies to add information and alter code without affecting processes already in place.

“XML provides a way for companies to read the information easily, as well as add to it,” says Tana Sabatino, president of San Francisco-based Vallue Consulting Inc., who formerly headed up XML development efforts for ACORD, the Pearl River, N.Y.-based insurance association. “What we’ve seen is that instead of XML being phased out, it is being used a base for everything else, such as SOA and Web services. XML as a base language has really held its ground across all industries, not just insurance.”


XML’s ease of use, versatility and ability to overlay sundry computer languages and data standards, makes it a natural choice for insurers, especially those burdened by a tangle of legacy applications. Thus, XML has become the tactical weapon of choice for insurers in their quest to achieve strategic aims such as straight-through processing and service-oriented architecture.

A joint survey conducted by ACORD and Stamford, Conn.-based Gartner Inc. bears this out, finding that XML adoption continues to rise year-over-year among insurers and reinsurers. The survey, conducted in the third quarter of 2007 with a global sample of 176 respondents representing life insurance, property/casualty insurance and reinsurance, found XML is becoming a core technological component for both supporting application integration and interactions with external partners.

“As an industry, we need to start implementing standards from the very core of our systems and processes to achieve our overall strategic and operational objectives,” says Denise Garth, VP, membership and standards, ACORD. “The true benefits of standards can be best achieved when companies organize their efforts strategically with a governance structure that guides development and implementation of standards, which are a core component of projects and enterprise architectures. This ensures that standards are woven into all the business functions and systems across the enterprise, which will help achieve greatest value to organizations.”


Yet ubiquity is not an unalloyed positive. The study found that although adoption rates continue to rise annually, many insurers pursuing XML do not follow best practices in XML governance, funding or oversight. It also found that many companies lack the governance and management structure to optimize XML use. Specifically, the study found that only 42% of life insurers, 33% of P&C insurers and 38% of reinsurers currently have a corporate strategy in place to guide their XML projects and investments. Also, less than half of respondents with XML projects in place have a corporate XML strategy to guide investments and project plans. Additionally, few insurers or reinsurers had dedicated leadership for their XML projects. Both of these are considered key governance best practices for promoting business and technical benefits from XML use.

Adherence to a well-designed data model, such as ACORD XML is another prerequisite for good XML governance. “The essence of governance is managing and understating how XML is being used across all the systems, and to promote the use of standards—whether its an external standard such as ACORD or an internal one,” Sabatino says.

Obviously, governance needs vary widely with the size and type of insurer. The XML governance challenges of a large multi-line insurer with 25 departments and 300 systems will exceed those of an small or monoline carrier. Few know this better than Gary Plotkin, VP and CIO of The Hartford. At an SOA summit held by Insurance Networking News in January, Plotkin said his company was adopting ACORD XML standards for internal usage as part of a larger enterprise wide SOA undertaking. “We can’t afford to do things different ways for every line of business,” Plotkin said.

Whether big or small, proper XML governance may require a change in IT culture, Sabatino says. “It’s an organizational challenge but, in order to make it happen, there are technology needs,” she says, noting while three years ago there wasn’t much technology available to aid in XML governance, solutions are now entering the marketplace. “When we were doing flat file data exchange, it was all system-to-system and nobody oversaw it. However, with XML, companies are seeing that they do need to oversee it because there are many advantages to be gained when they all start calling things the same way.”

Getting insurers to use commonly accepted terms has long been a priority of ACORD, which is no doubt aided by the critical mass generated by its largest number of carrier participants. “ACORD’s focus has been on defining the insurance vocabulary,” Sabatino says, noting insurers have little to gain by clinging to unique names for common terms. “Being different is not better in this case. Saving money is better.”

Hartford’s Plotkin says he too is a proponent of adhering to ACORD messaging standards, both within his organization and without, in order to lock in consistency. “I like to think ACORD standards will be used across the industry, but at the very minimum, I use the ACORD standard for internal messaging because then I know we have a single standard,” he says.

Yet, it is important that carriers remain cognizant that XML itself only provides so much functionality, and it is best to regard it as bedrock or a base on which to build. Carriers need to bear in mind that despite XML’s ease of use, it does add another, often complex, layer to an IT environment. “XML as control layer makes a lot of sense. If you are doing large scale analytics, or moving gigabytes of data around for data warehousing, having all that go through XML doesn’t make a lot of sense,” says Bill Miller CTO of Colorado Springs, Colo.-based XAware Inc., a maker of open source data integration software.

Sabatino says that instead of XML becoming antiquated it’s now part of everything else.

Thus, for all its strength and ubiquity, XML should not be seen as a panacea. “XML is not perfect for everything in terms of moving and manipulating data, but it does serve a large number of purposes,” Miller says. “You are adding a bunch of overhead by having all this metadata and description in XML, so there can be issues around performance, bandwidth, security and governance.”


To help address these concerns, new XML-based tools continue to emerge in the marketplace. Some of the most compelling are based on a complementary, non-proprietary standard called Darwin Information Typing Architecture (DITA), which was developed by IBM but is maintained by an open-standards consortium, Organization for the Advancement of Structured Information Standards (OASIS), Billerica, Mass.

Rather than creating monolithic documents, DITA enables the creation of topic-based XML chunks. These modular components can be reused and assembled to create new docs. DITA, rather than creating documents that are monolithic artifacts, provides a framework for creating reusable topic-oriented components. This bottoms up, loosely coupled approach streamlines the implementation of change, proponents say.

“Similar to SOA where you are decomposing monolithic business apps into reusable services, it’s the same concept just applied to the creation and management of content,” says Jake Sorofman, SVP of marketing and business development for Tokyo-based JustSystems Inc., which recently released a stepped DITA maturity model. “For a specification this young, it has tremendous market momentum, and it is seen as the way forward for authoring and reuse of content when management is a concern.”

One of the promises of DITA is that it helps blur the formerly distinct demarcation between an application and document. This could pay dividends in a call center, where it could eliminate the need for a customer service representative to search both for a document and the pertinent information contained within it. “The document becomes the application,” says Sorofman. “You gain a level of control by breaking information down into smaller units. You are able to process it at a lower level and get the output that you want.”

Because DITA, like XML, is an open standard, those purchasing solutions based on it have a chance to participate in the future development of the standard. They also retain the option to specialize it to meet their needs without reliance on others.

However, this easy customization may come at a cost. The new tools, while accelerating development, imperil consistency and raise concerns about the introduction of errors. Some tools enable non-technical authors to work in XML without ever seeing an angle bracket, Sorofman notes.


While not discounting these concerns, insurers would be wise to educate themselves about the wealth of new technologies available to them. One of the other benefits of XML is the technologies are not necessarily insurance specific.

“You’re seeing horizontal vendors filling this void across all industries,” Sabatino says, adding this may be somewhat novel to insurance industry CTOs conditioned to solutions being built for specifically for them. “What were seeing is because these products can be sold across all markets, we’re getting better products for governance and XML mapping tools.”

Sabatino is sanguine about nascent intelligent transformation and mapping tools, which although still in their infancy, exhibit great promise. “We’ve seen a shift where a lot of new tools have entered the market, but it’s going to take another three to five years until these tools are truly mature and integrated at an enterprise level.”

It’s not just new applications from new entrants altering the XML landscape. Core application vendors are amping up their support industry XML standards. Kyle Blair, practice leader of insurance solutions for Westlake, Ohio-based Hyland Software Inc. says the company is developing an ACORD XML-based module for its popular Onbase offering in response to customer demand. Blair says that although Hyland’s efforts were enhanced by the groundwork ACORD has laid, the efforts to bring the module to market required a lot of work, just based on the size of the standard.

“The standard itself is so large,” he says. “The most challenging part is filtering through that all-encompassing standard to only leverage the XML statements or messages you would need to perform these communications with external sources.”

For more information on the importance of governance, funding and oversight of insurance industry standards, please visit www.insurancenetworking.com and search “XML Flies Under the Radar.”

(c) 2008 Insurance Networking News and SourceMedia, Inc. All Rights Reserved.

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