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					Realising XML benefits in Life Insurance
WHITE PAPER Author: Umesh Kumar Rai, Business Analyst, Insurance Practice

XML is impacting the life insurance industry in a big way. A large number of life insurance companies has taken hold at all major life insurance companies. Most companies are in the process of exploring XML usage and the need for a standard vocabulary in order to facilitate communication. The widespread adoption and success of XML in the industry is due to comes from the proliferation of several different versions of XML that are being created by the vendors, institutions, and other organisations. For the organisations that are looking at XML, the key is to understand the way how the technology works, and the specific business benefits that it can bring. From there, a life insurer can begin to investigateing the technology components it will need in order to implement and support XML within its own operations. This paper takes a close look at how can the life insurance organisations benefit from the use of XML in their technology initiatives for sustenance and to gain competitive advantage in a changing marketplace.

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Realising XML benefits in Life Insurance

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Business Imperatives
In a world of low inflation coupled with falling bond yields and equity risk premiums, will result in the insurers moving to fee-based income streams around financial advice or leveraging the vast reservoir of skills. Many firms’ balance sheets are under severe pressure, with falling solvency levels that they are focusing on optimising the allocation of capital across the business activities. In order to remain competitive, insurers will need to focus on improving customer service through direct and indirect channels. It will help them to reach out to the end customer and to reduce costs in administration and managing delivery channels. Though the insurance sector is characterised by business-to-consumer (B2C) transactions, insurers particularly the brick and mortar companies continue to use large — and expensive — agents and brokers that operate “in the field,” dealing directly with customers, which lends to co-existence of B2B scenario for sustenance and continued competitive advantage. Life insurers currently spend millions of pounds each year distributing data to independent financial advisers (IFAs), largely via a handful of value-added service providers who charge for their consolidation service. Insurance companies believe that setting standards will foster new distribution channels and a more open market, and reduce costs significantly.

Proliferation of new selling channels
Online insurance shopping and application continues to lag behind other online financial services. Even with growing willingness from the consumers to use the Internet more extensively for their future insurance needs, insurance companies have a long way to go before they meet consumers’ high expectations for delivering speedy multiple quotes online, and the ability to purchase insurance via the Web without interacting with a broker or agent. Most insurance companies, particularly the traditional ones do not have automated systems for product offerings and quote generation, leave aside the issue to generating policies and accepting transactions online. Some of the insurance companies are reluctant to automate their product offering to the consumer for fear that such complex products cannot sell without a traditional human interface. In contrast to the financial services market, where the “big rush” for e-business initiatives is already over, there is still significant activity in the insurance sector. Insurance companies pursue the mandate of reaching out to the new customer bases, attracting online shoppers and remaining competitive, so they will continue to invest in direct sales channels. E-commerce remains a key element for the insurance companies, allowing them to offer customers interaction and transaction capabilities for the “simpler” types of insurance (such as for term insurance and protection products). However, it is important to note that remote sales will never replace the “field sales”, which provides the person-to-person contact that is vital for many complex and long-term insurance products.

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Improving customer service
The main focus will be on consumer-facing activities such as marketing, e-commerce and sales, both for the commercial and retail customers. However, interactions with partners and suppliers, such as e-procurement, are not being neglected. Hence, the insurance companies will have an increased focus on the B2B model as part of their e-business initiative. Many of the CRM components can help to meet these dual aims by facilitating more effective sales and service. For example, a CRM component such as sales force automation can enable the agents and brokers to deliver a better service, increase productivity and streamline the processing of policies. Interestingly, the emphasis for CRM initiatives appears to be shifting to favour those components that stress integration of processes and solutions. Many stand-alone solutions that support e-business and direct selling have already been implemented and now there is a need for integration to realise further synergies. These new channels are complemented by the development of a role for insurance agents and brokers that is characterised by higher service levels and in which financial planning for customers plays a prominent part.

Automation and Process Integration
There is constant pressure on the insurance companies to drive down costs and making processes streamlined for better customer focus and to reach out to a targeted market with competitive products. The insurance industry is plagued by a mix of disparate systems, applications, and databases that store information in a variety of formats, including flat files, ASCII formats, and several proprietary data formats. Currently, the biggest issue with automation and streamlining processes is that the data is distributed in various formats across the organisation. Typically, the large insurance firms who have built large and disparate home grown systems, are now struggling to cope up with the newer technologies and are looking for ways to get the best of both worlds. Often, these data formats are incompatible, making it impossible for these systems to share data, let alone utilise or manipulate it in any way. Integration and streamlining is not limited to internal processes alone but extends beyond the organisation in reaching out to the customer through various channels. Optimisation of channel utilisation and response times have been driving integration of data and processes with the direct and indirect channels and sometimes directly with the end customers.

The Promise of XML
XML is a text-based mark-up language that can be used to format data for storage or transmission between and along computer networks. It allows a new level of automated activity over networks by offering a rich, content-oriented description of data. XML can facilitate the sharing and manipulation of vast amounts of data that is stored in the legacy applications distributed across disparate, incompatible databases in the insurance industry. XML and Hypertext Markup Language (HTML) are both subsets of the Standard Generalised Markup Language (SGML), which was created over 10 years ago to facilitate the representation of data over the Internet. HTML was essentially described by the W3C to make it easier © Wipro Technologies Page : 04 of 20


Realising XML Iu Data in Life Protocols QoS for UMTS benefitsBearerInsurance

to represent data. XML is being created to enhance the value of this data by allowing users to utilise data in various ways. The W3C is addressing the rapidly growing need of the Internet users to take their Web experience from merely viewing data to manipulating it in the way they want. XML allows the identification, exchange, and processing of the data in a manner that is mutually understood by users’ systems, with custom formats for particular applications if required. Extensible Markup Language (XML) is a flexible, standards-based data format that is being developed by the World Wide Web (W3C) Consortium. XML represents a significant improvement over current Internet technologies like HTML in describing and exchanging data over the Internet. While HTML has been instrumental in popularising the Web and making it accessible to millions of people by providing a universal method of viewing data, XML promises to take Internet use a step further by providing a universal method to represent and manipulate data. Over the last few years, W3C has released specifications for XML as industry standard. A number of financial services companies are exploring the possibility of using XML to solve their business and technical problems and thereby, enhancing service delivery. In the retail banking sector in US, XML is already being used as the basis for several bill payment and bill presentment initiatives. On the other hand, in securities industry, it has been used to define an underlying data format for Financial Information Exchange (FIX) protocol that helps the investment managers exchange trade instructions with broker/dealers. A move is also underway in the wholesale banking industry, to make XML the medium for electronic data interchange (EDI) and business-to-business e-commerce, which will facilitate the usage by smaller firms, who now find it too expensive to adopt EDI. How does insurance industry as a whole benefit from adopting XML? With the need of streamlining processes and improving customer service and increasing focus on B2B approach, there is certainly a perceptible business case to look forward to and there are organisations and committees, which are working towards common industry standards.

Benefits of XML
Apart from the general benefits observed across the industries, XML delivers significant strategic advantage to the insurance industry. The need for a robust and flexible format is particularly evident to allow disparate systems and users to access and utilise data stored in multiple formats. The potential impact of XML is enormous. With XML, every participant in the value chain—agents, insurance companies, brokers, and underwriters—can streamline their paper-intensive processes and standardise the way in which they interact and exchange information. For example, insurance underwriting requires multiple document exchanges among many parties, and many decision points at which coverage can be approved or declined. XML is a critical technology for standardising and automating such information exchange processes. This is due to the main benefits of using XML, which include: Common data format: Very important for integrating different applications and standards not only within the organisation but across organisations using proprietary systems owing to the evolution of formats and standards within organisations and by industry groups and associations.

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Realising XML benefits in Life Insurance

Separation of content from presentation: Allows data content to be altered without affecting the presentation of data thereby, providing the much needed flexibility in standardisation of presentation and ‘personalised’ experience for the end customers. At the same time, this helps support the specification of deep structures that are needed in representing database schemas or object-oriented hierarchies. System and vendor independence: Because XML is platform-independent, it does not matter, which operating systems or platforms you or your trading partners are using. Thus, diverse organisations such as insurance companies, agents and underwriters do not need to share the same systems or platforms-they only need to agree on standard definitions for the document types they exchange. Low entry costs: The cost of entry for XML is also much lower than other data exchange alternatives, such as Electronic Data Interchange (EDI). As EDI is a documented standard, the technologies needed to implement it are expensive and require extensive customisation and programming. Thus, EDI is used mostly in very large organisations with sizeable IT budgets and internal resources. As opposed to EDI, XML is far less expensive and cumbersome, opening the door for small, low-tech companies to participate in online data exchange with their partners. Opportunity for standardisation: XML enables the creation of document type definitions (DTDs) that define the data structure and fields of a given document type. Assuming all the trading partners in an industry or vertical market use the same DTDs, these partners can trade data seamlessly, with little need for additional customisation or integration. To this end, insurance companies have formed consortiums to define standard DTDs for documents that are commonly exchanged among their trading partners. Validation: XML allows for “parsing” of document like SGML, i.e. checking of data for structural validity with respect to defined DTD, when received by the application. Validation ensures smooth, accurate, and efficient exchange of data between the sendingand the receiving applications. These strengths have enabled XML to handle these broad categories of application areas handled poorly by HTML: Web client operates between multiple heterogeneous databases. For example, an independent agent will need to enter policy information just once in order to submit policy applications across multiple insurance providers Web client provides personalised views of data to different users, for example, company Web site offering tailored product information based on customer’s profile Where information needs to be mined tailored to the needs of individual users. For example, Intranet search engine that captures customer information relevant to cross selling and product upgrade for sales and marketing representatives Migration of processing load from Web server to Web client (e.g., an agency management system that can act as a remote client of an insurer’s system, still integrate all agency activity in a single environment) .

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Realising XML benefits in Life Insurance

With these benefits, XML will have a profound impact on three major areas of insurance business: channel automation, syndication and integration.

Channel Automation
It is increasingly evident that online channels form a viable market for the distribution and servicing of insurance products. As insurers have recognised the potential benefits of these channels, the amount of attention that they receive. has increased rapidly. Using the Internet technologies like XML in support of an online distribution model, or business-to-customer (B2C) interaction in general, is a first step. As a second step, the benefits of XML will have solid impact on the nexus between consumers and insurance provider legacy systems for servicing, between agencies and providers for distribution, and for networked data transmission within provider themselves. The issues that arise e when adopting XML in the distribution support are indicative of the challenges experienced across industries in developing XML. They include the need for standards-setting organisations and committees, the progress of the initiatives led by life insurance companies and vendors, and the danger of an industry fragmentation around competing XML specifications.

XML IFAs/ Independent Agents/ Brokers C U S T O M E R Third Party Networks

Insurance Providers

Web Based Channels Third Party Consolidators

Tele Sales Direct Sales Product Information New offers & Promotion Quote Issuance Customer Enquiry

IT Systems
INTERNET Product/ Policy/ Customer/ Agency

Underwriting Application Processing Policy Issunce Customer servicing

Multi-channel distribution model

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Automating the front-end processing of these lines involves, first and foremost, automated quotes on new contracts and valuation of the existing policy. The Internet offers the possibility of direct interface with an insurance company’s quotation engine, which can mean the difference between an agent presenting a prospect with an indicative quote and an actual one. Real-time projections and quotations present major opportunities for increased operational efficiencies, apart from increased customer satisfaction. An Internet link between agent and insurer condenses the whole data submission process. Besides the efficiency of legacy rating, agents can eliminate the time normally taken in mailing or storing-and-forwarding of the policy amendments and riders. The benefits of real-time data transmittal in this case are obvious: it can reduce process time to hours or minutes, that previously required days or weeks. The real benefit for the agent stems from the consolidation of many front-end access points through which the agent communicates with its product providers. The movement to unify the agency interface in this manner has been developed under the banner of Single-Entry, Multiple Carrier Interface (SEMCI) in US. Through much iteration over time, the SEMCI movement has haltingly attempted to simplify the agency environment by leveraging the standards in electronic data interchange. Proponents of the SEMCI initiative believe that real progress in agency automation involves the insurance company supporting transactions in the agency system, not a Web browser. This would involve reassessing the role of the Internet in agency automation Generally, insurance companies are reluctant to let agents process business without direct approval from a company underwriter. Automating the rating and issuance of a policy would omit the opportunity for direct underwriter review and approval of risk. Consequently, insurance providers have been slow to relinquish the underwriting authority and the accompanying policy information to the agent, especially over a world-wide, open network. These concerns can be addressed by developing and incorporating company-unique business and underwriting rules into Internet-based interface architecture of the life insurer. The propensity for writing bad business can also be avoided by rewarding the agents on the basis of the quality of business they write rather than the quantity. Another approach for using XML for the agency-product provider networks can be done by adopting the application service providers (ASPs) model. The ASP business model has emerged as the Internet’s version of service bureau, which would help institutions, offset hardware and maintenance costs of in-house IT applications. This may be more significant and cost-effective for the small to middle-market business.

The other big impact XML will have on insurance companies is the ability to easily syndicate content out to multiple marketplaces and commerce sites hosted by outside parties. Insurance exchanges are web-based business centres for buyers and sellers of insurance products and services. The exchange would allow prequalified participants to conduct transactions in a neutral environment and help to determine pricing information dynamically.

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The potential of such online exchanges lies primarily in the extra commoditised lines of life products such as protection or new generation pension products, though transactional conduit would be weak for the other lines of products requiring advice and customisation. B2B exchanges impact all lines of business, however, by electronically linking business partners in the insurance supply chain: sellers, underwriters, and service providers. Whether it is between third-party to company or single-provider exchange or multiple-product provider product exchange, all of them have potential use of XML in sharing of information due to its advantages of data standardisation and validation. For any organisation, the end goal of syndication is to get its content, products or services in front of as many potential customers as possible. With literally hundreds of e-marketplaces in operation today, it makes sense for organisations to leverage them as a key sales channel. For the marketplaces themselves, accepting syndicated content from multiple suppliers gives them highly differentiated sites that will attract more customers and generate more revenue. For example, if a company formats product information pieces in XML, the various marketplaces to which this information is sent can ensure that the defined fields (policy type, state, price, etc.) are used appropriately on their sites. Manually formatting data and content for different distribution points is highly cumbersome; XML lets you do it once, and syndicate the information to any number of distribution points.

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Integration and Interoperability
Use of a common XML data format within an insurance company can make information accessible and easy to update across the enterprise. By logically linking separate applications and lines of business, this can deliver to the insurers greater success in customer relationship management (CRM). The reduction of the efforts and error can dramatically shrink the costs associated with data integration and database management. Integration across internal application environment of an insurance company can be achieved using B2B integration solutions, including any internal middleware solution (i.e., EAI) that the firm may currently utilise to integrate applications in-house. It is critical that the integration solution can be able to support the use of XML to access data stored in the range of back-office systems.

Sales Force Tele Sales/ Servicing Web C U S T O M E R


Quotation Issuance PoS Underwriting

Data Warehouse/ Data Marts


New Business Processing XML LoB Integration XML Back Office Systems Policy/ Product/ Customer/ Agency


Contact Management Campaign Management Business Intelligence

Internally, the usage of XML makes it easier for data in multiple disparate systems to be used together or shared in a common application. For example, organisations may have one legacy system for customer and policy information, and another for accounting and agency management functions. By generating XML output from a given system, the data can be shared with different systems or custom applications in order to bring the disparate systems together. XML can save significant time and effort in integrating internal systems via traditional programming and custom integration methods. For example, if an insurer needs to import data from multiple customer databases into a single repository, or if there is a need to integrate the systems of two different companies brought together by a merger, XML is a great approach. Externally, XML enables companies to extract data from their back-end systems and to put it into a standard format that external parties can easily ingest directly into their own back-end systems. For example, a company could take customer details from its channels over the © Wipro Technologies Page : 10 of 20


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extranet and send real-time quotes and illustration on its latest products or can provide billing or commission information online to its channel partners and the receiving company can direct the information to its own information systems. In the past, this level of integration would require costly custom development for every trading partner. Interoperability is one of the biggest bangs for the buck that XML offers. This includes enabling internal systems to share data with each other, as well as enabling companies to share data with external business partners. In practice, however, an insurance company’s existing technology infrastructure is often a limiting factor in the move towards automation and integration. Real-time transactions are possible only if core processing systems and data warehouses at the insurance company can support them. Restructuring of the legacy systems that are ill prepared for e-commerce can be a large and costly affair r.

Unstructured Data in Insurance
Inspite of use of imaging and electronic applications to reduce the amount of physical paper handling and filing, the unstructured component of insurance data has resisted automation. Unstructured data consists of information that does not easily fit into the predefined structure associated with the computerised data processing. Much of the data involved in the policy application and issuance, policy administration, and claims are unstructured. Even when such unstructured data is stored and indexed, it needs manual intensive interpretation by the business staff. Examples of such unstructured data include natural-language text, informal notes, still and video images, sound, and graphics. XML can be of great advantage in enabling a mechanism to streamlining the data storage and management, which will result in improved marketing performance and sharper competitive intelligence, though this usage is still limited. For example, XML facilitates provides for data reuse by applications that may need to assemble and reassemble data in different formats. This global information can be culled from common pools rather than redundantly stored in disjointed data silos. XML offers the insurance industry versatile mark-up for data that is needed throughout the life of a policy. This long-lived data must survive company and agency system upgrades, changes in data storage formats, and modifications to the communications protocols. By logically describing data with tags that are specific to a business, in this case insurance, XML enables for common referencing of data between applications and databases. Data in previously insulated information “silos” can be logically linked by XML tagging in such a way that changes or updates made in one location are automatically dispersed to affect all instances across the enterprise. This drastically reduces work and the propensity for error by obviating multiple data entry and update. Company’s nternal activity over an Intranet can be better co-ordinated with this consistent data, as can external B2B transactions, such as those with the agency network. XML’s descriptive tags allow for efficient data queries based on what data means rather than where it is presented. Focused searches on specified XML data elements are much more efficient than the full-text searches of HTML-marked data.

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Realising XML benefits in Life Insurance

Voice XML
One of the emerging variations of speech recognition technologies is its use in Web-based self service applications. All that is needed is speech interface software and the connection of this software with supporting business databases that have already been developed for text responses. Web and Intranet sites, may adopt Voice XML which combines the best features of XML with speech recognition software. This technology would enable individuals to use phone to obtain information on their PCs, servers or Intranets that contain Voice XML tags. The ultimate goal is to link voice recognition with important enterprise resources applications used frequently by customers, employees and channel partners. This would help to speed up business processing and to help insurance companies in providing better customer service. For example, insurance companies can provide facility to its policyholders to access their policy data and effect alterations on existing life policies, thereby, helping them improve customer satisfaction and also cut down costs by reduced manual processing and customer servicing staff.

Case Study: Policy servicing through the Web
An example of use of XML is providing self-service capabilities for policyholders to effect change to their policy attributes themselves. These policy changes may include standard product service features like termination, fund switching, partial surrender or withdrawals. Changes can become complex and result in a new quote and change of contract like changing effective or maturity dates, assured sum, premiums, contract type or reinstating or continuations to a new policy etc. Providing the ability to the customers to effect such changes directly would improve customer service quality and offer proactive support as well as reduced operational processing costs. For a large insurance company this would mean mediating between multiple heterogeneous policy and customer databases. Also the processing load for such a service can be high and would help to distribute processing loads to the Web client. Also, a policyholder may have multiple policies like life, pensions, and saving products and that would mean multiple options and multiple ways of presenting and viewing the same data. All these scenarios point towards the use of XML in making various types of data available through the Web client.

Policyholder Sign-On

Show custmoer & policy details

Select policy

Select Generate alteration quotes option

Produce Documents

Store Execute alteration alteration details & confirm

Back Office Systems

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At a broad level the following stages would be involved in the process of effecting a policy change through the Web. Once the policyholder signs in the Web, the client would retrieve the customer and the policy details. On selecting a policy and the option available for change, the system would generate quotes based on the inputs entered. If satisfied, he/she can confirm the alteration and system would produce relevant pre-populated documents like quotation illustration, forms, medical questionnaire, payment mode, confirmation letter etc. Once all the details are delivered, the user can confirm for the transaction resulting in the storing of the request and quotation details and the system would also need to retain the documents. The whole process would result in change to the back end databases once all conditions are satisfied as required for the change request. The process may go back and forth too, if to any point the user wants to revert back to.

The whole process would involve multiple interactions to the backend systems to retrieve various customer details, servicing options, generate quotes and other required documents and if the data were stored on multiple systems, it would be unwieldy to automate the whole process. XML can be used as shown below to handle the movement of data between these systems and the Web client and even help show various options to the policyholders at the Web client without revisiting the backend system many times. An example of an XML structure, which can be used to send details for generating a quotation, is shown below: <quote_details> <quote_generated></quote_generated> <alteration></alteration> <policy_number></policy_number> <tablecode></tablecode> <category></category> <subcategory></subcategory> <inputs id=’i0'> <label></label> <html_label></html_label> <existing_value></existing_value> <entered_value></entered_value> <html_value></html_value> </inputs> <existing_details id=’e0'> <label></label> <html_label></html_label> <existing_value></existing_value> <entered_value></entered_value> <html_value></html_value> <html_novalue></html_novalue> <display></display> </existing_details> <new_outputs id=’n0'> <label></label> <html_label></html_label> <new_value></new_value> <html_value></html_value> <html_novalue></html_novalue> </new_outputs> <quotes_expiry></quotes_expiry> </quote_details> ;

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Emerging Standards
Standardising XML has involved the language definition at on two technological levels. The W3C’s XML 1.0 Recommendation addresses the “foundational” level: the logical structure, the handling of document linking, and security of the language irrespective of industry, country, or development platform. Industry consortia seek to standardise the “agreements” level, which involves the formats, vocabulary, and definitions that are involved in a specific industry’s XML implementation. These include DTDs, schemas, and transaction standards that are circulated among the business partners using XML. Obviously, solidarity in agreement-level format is essential for true industry interoperability. Two partners operating with dissimilar XML agreement specifications are as insulated from each other as they would be with traditional proprietary data formats.

Association for Co-operative Operations Research and Development (ACORD) has supported XML insurance standards (Property/Casualty, Life Insurance and Joint Venture Reinsurance/Large Commercial standards) since 1998 and encourages industry participation in its standard development. ACORD’s Olife standards are object-oriented data models for life insurance industries. It describes a three-tier component architecture that enables applications to share common data. XML enters the architecture as the data format through which the ACORD components in the middle tier pass information from the data tier to client applications. XML allows objects in different tiers of the ACORD architecture to interact across the Internet Protocol (IP) networks and allows users to customise the data format for accepting applications. ACORD has also defined line-of-business–specific XML data type definitions (DTD) that can be used across the industry, whether or not a partner has implemented a full component architecture. XMLife is ACORD’s DTD for life insurance. Initially proposed by software vendor NaviSys in 1998, the XMLife DTD is based on the Olife data model and allows for the exchange of Olife data in XML format. In May 2001, the association announced that it would integrate all existing ACORD standards into one standard. “eMerge”, the new ACORD Global Standard Initiative, is designed to facilitate the interchange of information among insurers and their partners. It will be based on the organisation’s XML standards. ACORD has also announced plans to merge its ecommerce standards unit with the Worldwide Insurance E-Commerce Group (WISe), a nonprofit organisation based in London. The merger of these two groups is intended to streamline the global e-commerce standards for life insurance, reinsurance, and property/casualty business.

Origo was launched as a non-profit organisation in June 1989 by sixteen leading Life Assurance Companies in UK to facilitate the development of electronic trading, between principals and agents, for the Life, Pensions, and Collective Investment Business. Its mission is to

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build agreement and drive strategies to develop and implement widespread electronic commerce for all practical business purposes in the financial services market. The nineteen sponsors represent 50 per cent of the United Kingdom life business and 90 per cent of the IFA market, which comprises 21,000 registered individuals. Various implementation format options were considered by Origo for e-commerce including, XML, EDIFACT (Electronic Data Interchange For Administration, Commerce and Transport), NPD (Name Pair Data), OFX (Open Financial Exchange) or a proprietary standard. The working group accepted XML as the best option after evaluating various pros and cons of XML. The Industry Standard Data Dictionary (ISDD®) ‚ was developed to facilitate the consistent use and understanding of data within the industry and to facilitate the development and design of electronic commerce applications. It consists of a logical data model, with entity and attribute definitions, and descriptions of message elements. It also provides format definitions for attributes and message elements. The framework for the standards includes a Message Functional Guideline (MFG ) which provides details of the business functionality, business rules, and business data content within the business functional area. The Message Implementation Guideline (MIG) specifies the structure and components of XML message for a particular method of data exchange or implementation. In August 2000, Origo announced the web standards that will allow businesses to transfer stakeholder remittance information, such as employee and employer contributions, over the Web to insurers every week or month. It is vital to the success of the stakeholder pensions, which came into force in April 2001. As pension companies can charge customers only a maximum of 1% of the stakeholder fund’s total value, this would help to move towards delivering stakeholder packages online by avoiding crippling running costs. In September 2000, Legal & General along with the Internet portal, eXchange and Origo developed the first online XML-based trading standard for the insurance industry which would allows independent financial advisers (IFAs) to apply for and receive confirmation of with-profit bonds online through a portal without using paper forms. However, the system cannot yet handle payments online and financial service regulations require a paper “declaration” signature from the customer. In the wake of 1% stakeholder pension regime, Standard Life in UK is developing a XML data standard for transferring pension contribution data based on specification developed by Origo. This would allow customers to view and update their policies over the Web and also automate distribution of annual customer statements over the extranet link.

IVANS, Inc., headquartered in Greenwich, Connecticut was formed in 1983 by 21 insurance companies to provide data networking and e-commerce solutions and services to all participants in the insurance industry. Currently, it serves over 475 insurance and healthcare organisations and more than 30,000 independent agents and brokers.

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Realising XML benefits in Life Insurance

As a third-party network provider, IVANS offers an electronic link between industry partners with disparate data systems. With the recognition that XML was quickly being accepted as the conduit for B2B activity over the Internet, the JV partners (Brokers and Reinsurance Markets Association (BRMA), IVANS, the Reinsurance Association of America (RAA), and WISe) initiated a project in late 1999 to develop XML standards for reinsurance data. As JV’s EDIFACT EDI standards were already in place and in use, it was a natural progression to take those standards and to move them into XML. The project with an intention of producing an XML data dictionary for JV data and DTDs for all JV messages delivered first set of standards by April 2000.

WARP – Applied Systems
Applied Systems introduced an initiative with a goal of making agency management system a real-time processing client for insurance companies via Internet connection. This initiative involves Applied Systems’ newly developed technology, dubbed WARP since it transfers data at “warp speed”. XML is used to format data submissions and edits between WARP engines located at both the agency and provider’s system, that manage the sending and receiving of data as part of the WARP framework. WARP uses a data interpreter component, which can translate into AL1, AL3, and XML ACORD standards, as well as some proprietary formats. The approach uses a broad data description that is independent of the insurance company and can be customised with respect to a receiving insurer’s specific data requirements. Thus agencies don’t need to be concerned with company-specific business rules. This framework also allows for precise policy rating by rating systems of the insurance companies, replacing quick ratings generated by local rating software with the agencies.

Founded to develop open and interoperable specifications for a robust XML framework for electronic business-to-business financial data exchange, Interactive Financial Exchange (IFX) Forum, is working on five initiatives: Electronic Bill Presentment & Payment , Business Banking, Credit Applications Processing, Insurance and Aggregation. A November 1999 agreement between ACORD and the IFX Forum (Interactive Financial Exchange Forum) has the objective of creating a DTD for banking and insurance transactions. The effort will extend to the insurance industry the base IFX specification that defines a messaging standard for secure IP-based banking business messages. The resulting DTD will address cross-industry activity. The IFX specification is a complete XML financial messaging protocol made up of a powerful framework and interactive set of messages that support multiple types of financial services. Enabling the next generation of financial applications, in the emerging areas of business-to-business banking and payments and intelligent ATM networks. IFX 1.2, released in fall 2001, features a wide range of functions that allow financial institutions and associated service providers to access account information, download credit card statements, transfer funds, process consumer and business payments, enable bill presentment, and improve customer service.

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Realising XML benefits in Life Insurance

Centre of Excellence at Wipro
Wipro has a Centre of Excellence (CoE) as part of B2Bi practice, focussing on XML technology and the emerging standards. The group is actively involved in defining framework and Proof of Concept for executing large projects using XML technology. It also provides technical consulting services for XML based projects. The primary responsibilities of this CoE include: Understand the level of XML activity in the industry and build expertise in leading standards and technologies G Leverage on experience in various areas and identify best practices and enhance processes for XML initiatives G Build Proof-of-Concept for the industry specific project execution and extending it to cross-industry solutions G Active participation in industry and international e-business organisations to build robust e-business solutions

The CoE has developed expertise in various emerging standards and technologies supporting XML in the following areas:

Core XML: DTD’s, XML-Schema, Language concepts, Namespaces in XML, XML Parsers etc. Style Sheet Languages: Cascading Style Sheets (CSS) and Extensible Style Language (XSL), Extensible Style Sheet Transformations (XSLT) Programming Interfaces: Document Object Model (DOM) and Simple APIs for XML (SAX) XML Linking languages such as Xpath, Xpointer and Xlink; Schema languages and Metadata technologies such as Namespaces in XML, XML-Schema, RDF Metadata Framework and XMI Object to Relational Mapping technologies and Business messaging standards Content Translation technologies Mobile technologies such as WAP, WML, WML Script

Application Services




Web Brokering / Trading

Integration Layer

Catalog Content Management

Knowledge Discovery

Content Translation


Mobile Computing

Portal Layer


Intra Application Messaging

Content Model

XML Schemas

Business Messaging Standard













Infrastucture Repository/ Tools Layer

O-R Mapping/ Translation



Application Platform

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Realising XML benefits in Life Insurance

With active participation in industry forums and associations with various vendors and consortia, the CoE has developed experience on vendor products in various application domains

Web Browsers






Portal Layer

Adobe, Arbortext, SoftQuard (Authoring)

Inso, Poet (Content Catalog Mgmt.)

Jungleee, SoftQuad, Lotus, Intraspect, Middletier, (KM)

XML Server






XML Framework


















Standards / Organizations


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Realising XML benefits in Life Insurance

1. Chordas, Lori. “ACORD and WISe to Bring Standards Together” Best Wire, May 25, 2001. 2. Interactive Financial Exchange, (IFX, 3. “OLifE in the Fast Lane”, Jun, 1999, Technology Decisions 4. Association for Co-operative Operations Research and Development (ACORD), 5. “Insurance XML: Growing Interest, but Lack of Action”, November 2001, Gartner Group. 6. “The Promise of XML for P&C Insurance, II: Agency Automation”, May 2000, TowerGroup 7. “ACORD Initiatives Promise a Big Step Forward for Insurance XML” June 2001, Gartner Group 8. “W3C Issues XML Guidelines to Enhance E-Business via the Web”, May 2001, Gartner Group 9. “Out With the Old?” & “The Once and Future SEMCI”, May 2000, Technology Decisions

About the Author
Umesh Kumar Rai is a Business Analyst in the Insurance Practice at Wipro Technologies. He has over four years of experience in IT industry, primarily involved in business analysis and designing IT solutions for the life insurance industry in Europe. He brings in experience from multiple disciplines and has been involved in managing and consulting on many IT projects across business functions in the Life Insurance business including analysing impact of demutualisation on insurance companies and building strategic initiatives towards customer contact management. He holds a Masters degree in Business Administration and a Bachelors degree in Electronics engineering.

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About Wipro
Wipro (NYSE: WIT) is the first SEI CMM Level 5 certified IT services company operating in the global market. Wipro provides software solutions and services to global corporate enterprises and Research and Development services to Telecom and Electronic product companies. In the Indian market, Wipro is a leader in providing IT solutions and services for the corporate segment offering systems integration, network integration and IT services

Wipro in Insurance
Wipro Technologies offers world class software and technology solutions for the insurance industry. Wipro has successfully executed several projects spanning Life, P&C, Re-insurance Companies and Insurance Brokers. We address Sales and Distribution, Underwriting, Policy Administration, Accounting, Claims Processing and Back-office. Wipro’s unique value proposition is delivered through our pioneering Offshore Development Model and stringent Quality Processes including ISO 9000, SEI CMM Level 5 and Six Sigma.
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