Service-Oriented Change

Heterogeneous systems are at the core of many insurance carriers' IT infrastructures. Yet, companies still struggle with how to seamlessly integrate these often disparate systems across their enterprise. But a rapidly evolving architectural strategy is quickly changing the landscape.

Information Sharing

The carrier historically ran its portals through mainframe, Intel and Unix servers. By adding a Web-based tool set that accesses and delivers these legacy applications to users, "we gained an integrated architecture," the executive explains. "Users across the enterprise can mine data from legacy systems and make data available through our Web-based portals," he adds. "From a service and revenue-generating perspective, it is an opportunity for us to get information out to our sales force."

Similarly, Western & Southern Financial Group (Cincinnati; $37 billion in total assets) uses SOA for its CDI (Customer Data Integration) initiative. "Relying upon identity management standards, Web services and auditing ability, we can deliver a unified picture of the customer over multiple channels," says Doug Ross, the carrier's vice president and CTO.

By taking advantage of SOA, "we are standardizing and reusing" existing applications, he explains. "Rather than hard wire an interface to retrieve legacy data, services broker the requests and perform the heavy lifting. The application owner no longer has to reinvent the wheel time after time."

Maturing Standards

While SOA is unofficially called the "next generation" of systems integration, this concept would not be possible without the maturity of open standards. "The need to connect different sources of information located in various applications on various platforms throughout the organization is driving standards-based architecture," such as SOA, says Sandy Carter, vice president, WebSphere and SOA, at Armonk, N.Y.-based IBM. "A standards-based approach enables these different sources to freely 'talk' to each other without requiring additional coding or extensive, additional investments in technology or resources."

More specifically, some experts believe "the rapid acceptance of horizontal standards such as SOAP and SAML has spurred widespread vendor support and more interest in the industry," says Western & Southern Financial Group's Ross.

For example, SOAP (Simple Object Access Protocol) specifies how to encode an HTTP header and an XML file so that information can be passed among separate computers. Similarly, SAML (Security Assertions Markup Language) is a framework for exchanging authentication and authorization information.

Both have allowed vertical standards such as ACORD to gain momentum, Ross adds. A recent XML standard for the insurance industry, ACORD XML consists of nearly 600 standard messaging formats in XML that execute transactions and exchange policy information across property/casualty, life and reinsurance. "This is helping companies achieve interoperability not on a binary level, but on Web services," says Todd Breyman, chief architect for iWORKS, a division of SunGard. The Atlanta-based company provides IT products for the insurance industry.

Advances in standards will continue to ease the SOA integration process. Meanwhile, advances in technology, such as VoIP, will accelerate the business need for an SOA, IBM's Carter says. Clearly, the future remains uncertain, and obviously, "it is difficult to plan for specific future changes," concludes Celent's Josefowicz. "However, only an architectural shift can support a carrier's reaction to these changes."