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Could Web Services Be The 'Next Big Thing'? 
IT departments will be able to snap together modular components or services like Lego blocks
by Randy Wheeler
COULD WEB SERVICES BE THE "Next Big Thing" for insurers? Theoretically, Web services will make software
programs easier to write. They will simplify the connections between programs and more easily connect internal and
external entities and applications.
As a result, many experts seem to think Web services will provide solutions to some of the insurance industry's biggest
challenges, including the need to facilitate constant IT changes and the demand for increased connectivity, efficiency
and interoperability.
The term "Web services," however, is a little misleading, as it refers to both the development tools used to build
easily integrated Web-based applications and the underlying technology protocols and standards required to run and
support these applications over the Internet.
"Web services" also refers to the resulting component applications that run on the Web. These self-contained modules can
describe themselves (their functions and services) to one another and automatically link together without the
traditional challenges involved in system integration.
However, running and connecting applications over the Internet is obviously not new, so how are Web services built to be
a "better" mouse trap? And how can organizations avoid being financial casualties of misguided Web services projects?
Web services have already begun to creep into many organizations. IT departments have already begun working on Web
services projects or have plans to begin. These organizations recognize the benefits of jumping on the Web services
bandwagon.
What should excite insurance organizations is how easy new applications will be to build, modify and integrate using Web
services. IT departments will be able to snap together modular components or services like Lego blocks, allowing
developers to build complex applications on the fly.
At one time, it would have taken a large number of IT professionals working a number of years to build an enterprise
application. Today, Web services can conceivably cut this work down to weeks. The modular and shareable nature of Web
services enables organizations to easily enhance the functionality of applications, leverage investments in legacy
systems, and make additional system improvements.
Web services will also do away with the whole compatibility problem, as these services are interoperable, meaning they
will work with other programs without special integration efforts. Interoperability is critical, especially as the
"browser revolution" and "Internet as computer" concepts become realities. By adhering to established protocols and
standards, Web services by their very design improve interoperability between diverse development platforms.
The fundamental goal of interoperability is to eliminate the boundaries between various platforms and development
environments. Developers won't have to worry about what language or operating system Web services are hosted on.
Instead, interoperability allows them to all work together.
In addition, Web services provide several layers of cost efficiency. First, IT development and improvement initiatives
will be more cost-effective. The addition of Web services allows for increased efficiency and streamlined workflow,
significantly reducing administrative costs. With increased connectivity, insurance professionals have access to the
information they need to improve decision-making at vital points of the insurance process, including underwriting,
claims management, investigation, litigation and settlement. All these factors allow organizations to control their
costs at multiple junctures.
Web services provide a means for disparate systems to talk to each other, facilitating seamless transfer of information.
Traditional methods of connecting point solutions via an interface can be cumbersome and time-consuming. Web services
simplify these connections, acting as an inherent collaboration tool that vastly improves communication and
compatibility of applications, while also enhancing cooperation between various entities.
To avoid squandering resources on misguided projects, insurance organizations should focus on designing a low-risk
implementation plan by applying Web services to core business processes and objectives.
For instance, many carriers process a high volume of claims. Insurers are struggling to cut claims costs and improve
processing efficiency. The claims process has traditionally been very disjointed, requiring input from various
stakeholders. As such, any efficiency and connectivity gains achieved via Web services would greatly improve costs,
collaboration and outcomes.
Web services allow organizations to integrate additional claims functions and capabilities into their current claims
systems. For instance, an organization might utilize Web services to integrate applications that automatically validate
claimant employment, connect to outside databases that check for potential fraud, estimate property damage, or set
appropriate loss reserves.
Rather than relying on disparate systems, Web services bring together many applications in an interoperable environment.
This allows organizations to more easily implement claims best-practices. For instance, they may easily incorporate an
online injury-reporting module to enable prompt reporting of claims.
Going back to the initial question of whether or not Web Services is a better mouse trap, operating behind the scenes,
Web services will be the "unseen" cheese in a new and more effective trap.
Traditionally, the insurance industry has had to share information by exchanging mountains of paper, performing
labor-intensive data entry at multiple points of the insurance process, and relying on outdated legacy systems. With Web
services, organizations will be able to update these systems to exchange data and services in ways that were previously
not possible.
Web services will revolutionize traditional labor-intensive, manual processes, and enhance communication and the
exchange of information, as well as speed up transaction processing. It is still relatively new, however, and its
benefits and business uses are just beginning to be realized.
Posted with permission from National Underwriter, Property & Casualty/Risk & Benefits Management Edition. Copyrighted ©
2004 by The National Underwriter Company. All Rights Reserved.
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Kevin Confetti