Increasing numbers of insurance IT vendors are launching XML-based solutions.

Increasing numbers of insurance IT vendors are launching XML solutions, based on the industry’s ACORD standard. For example, eNable, part of insurance information consortium MIB, allows insurers real-time access to MIB reports and associated analytics. More will follow in the next several years.

Early adopters such as MetLife have already found efficiencies in using XML for internal interfaces. In the long term, XML could be the Rosetta stone of the insurance industry, providing carriers and vendors with a standard way to identify insurance-related data and transactions.

Platform independent, versatile, open, hierarchical, and compatible with numerous transfer protocols and processing models, XML will allow carriers to improve internal communication and set the stage for the efficient integration of outside solutions and services.

However, it will take some time before vendors and insurers achieve the full benefits. For now, vendors are only feeling limited pressure to XML-enable their solutions. Existing clients already have the necessary interface and few new clients have XML-enabled their own back-end systems. The biggest savings from XML don’t occur in the first integration, but in future integrations and updates.

Eventually, as insurers and solutions providers write XML interfaces to new and existing systems, the industry’s software market will become more fluid. Reduced integration costs will increase carriers’ willingness to adopt new, better solutions, increasing vendors’ ability to attract new business.

Most software and hardware firms will benefit from this liquidity, although some older providers that have difficulty attracting new business and rely on time-dependent licenses and the purchase of updates to drive revenues will suffer.

The biggest losers will be integrators, as the costs of systems integration fall. There is some upside – the number of total integrations will rise, as smaller carriers embrace automated systems. However, the overall effect on integrators is still likely to be negative.

Related research: Datamonitor, 2002: IT in US Insurance

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