Insurance industry standards body ACORD will expand its standards framework to include business process, owing to a contribution by IBM of elements of the vendor's Insurance Application Architecture that define common industry business process services. The contribution consists of business process models for more than 100 specific processes, standard terminology and software code drawn from the vendor's Insurance Application Architecture, which has served a large proportion of leading insurance companies over the last 20 years.
IBM's insurance process models are built around a service-oriented architecture. They assume that any insurance business process -- whether in home and auto insurance, or commercial property and casualty insurance -- will be built around a set of services. By adopting the high-level IBM process models at the outset, insurance companies can build out a service-oriented architecture that shares industry terms and meshes with other systems throughout the company, as well as with those of business partners such as independent agents and reinsurers, easing future integration issues, says Cindy Maike, global insurance market-segment manager for IBM's software division.
"The process of viewing a policy is the same, whether the view is for seeing whether a claim is covered or for billing a customer," says John Kellington, senior VP and CTO of Ohio Casualty Insurance Co. Kellington, chairman of the Global Standards Committee at ACORD, uses IBM's process models, having implemented them for a new policy administration system in 1997.
IBM's contribution of intellectual property -- business-process knowledge and some of the underlying code to implement that knowledge -- "is a first step toward developing a service-oriented architecture for the insurance industry," Kellington says. ACORD will take the contributions, which include a data dictionary with more than 2,000 defined terms, and use them as a baseline for building out standards that all insurance companies can follow.
While it's years away from having a complete set of such standards, their emergence will gradually erase some of the technology advantages enjoyed by the industry's largest companies. With such standards, small and medium-sized companies "are more likely to participate in service-oriented architectures," opening their internal systems to independent agents the way major insurers such as Traveler's Insurance Co. and The Hartford Financial Services Group Inc. do, Kellington says.
Independent agents frequently shop for insurance by going to each supplier's Web site and entering prospective customer information. They'd like to enter the information into their office-management system once and then share it with multiple providers, Kellington notes.
IBM's Maike says adding to the number of insurance companies that adopt service-oriented architecture will expand the market for IBM's WebSphere middleware, but the ACORD standards won't be IBM-specific. Any middleware vendor, including BEA Systems, Tibco Software and Oracle, will be able to capitalize on the standards, she says.
Denise Garth, ACORD's VP of development, says IBM's contribution of business process models gives the standards body a chance to produce SOA standards at a higher level than those it established for form and message exchanges based on EDI and XML. The IBM models "define the basic components of a process, but they don't define the workflow or business rules to be applied to the components. That remains up to the individual companies," she says. She adds that having the components defined, however, speeds the ability to develop services and have them interoperate with other parts of the industry.
Editor's note: This article, originally published by Insurance & Technology sister publication InformationWeek, includes a contribution from Anthony O'Donnell.