Europe’s insurance sector is expected to be the forerunner in the adoption of SOA.
Spend on common distribution platform projects is expected to reach $844 million by 2009. By adopting SOA, insurance firms can transform into ‘plug-and-play’ operations to cost-effectively connect to a variety of distribution channels and work towards a seamless customer experience.
Both the life and non-life sectors in Europe are currently finding themselves at cross-roads. Life players are being faced by an upturn in market conditions yet having to address an intensifying battle for distribution shelf space. Non-life players are having to improve cost-efficiency as premium income is set to slow down. In both cases, biting the back-office transformation bullet is becoming inevitable.
The concept of SOA promotes a more componentized view of technology across the enterprise. In an ideal SOA scenario, individual sets of functionality or processes would be established as universally accessible ‘services’ that could be accessed by any other application or business process in the organization.
SOA has received much attention recently. This is due to the rise of Web services and the emergence of more open systems development environments such as J2EE and .net, which have made the prospect of componentizing individual pieces of software and establishing them as universally accessible services more realistic and practical.
Considering the traditionally slow pace of the insurance sector in terms of technological advancements, one might be surprised to see insurers positioned at the forefront of adopting SOA.
This unusual development is due to the insurance value chain itself becoming an increasingly SOA-like business model. The value-chain fragmentation witnessed by the sector causes various process segments to be established as independent ‘service components’ that need to be orchestrated to build an end-to-end product.
The insurance sector seems to turn on its head the usual struggle of IT professionals having to ‘sell’ SOA to the business side as a technological concept. Much to the contrary, SOA-like thinking is being driven from the business side in insurance, and IT functions are forced to follow suit as part of the constant effort of aligning IT with the business.
