Web Services Explained

By Anthony Kumnick, OARBIC Software Inc.

What are Web Services?

Constant change, new buzzwords – do non-technical insurance professionals understand how Web Services can help enhance their ability to improve and increase business? This article can help you understand your way round Web Services and outlines some examples for P&C Insurers.

So firstly what are Web Services? The term Web Services is still somewhat generalized in it’s use and understanding. The best way to describe it is as a mechanism in which information is requested and received between two or more computer systems electronically over the internet. Web Services do not require the computer systems to know or understand anything about each other, but pass information backwards and forwards via standard communications that both computer systems understand.

What this really means is that Web Services allows companies (insurers or otherwise) to offer their real-time information and services to their customers over the internet, without a need for their customers to have detailed knowledge of their computer system. In addition, Web Services also allows companies to take advantage of other companies’ offerings and easily integrate third party data and processing into their own systems.

Although an emerging technology, innovative companies in various markets have taken up the challenge in the last two years to open up their applications to external companies. Standards have been established, and large and small vendors are beginning to provide Web Service support within their IT development environments. Microsoft’s .NET framework and IBM’s Java WebSphere Development Studio are currently the main development environments.

The insurance industry and its systems are full of duplicated efforts that have no proprietary relevance to individual insurance companies. Insurers can instantly see areas where duplications exist. Functions such as VIN validation, driver license number validation, postal code / address validation, and retrieval of financial institution details – all can be removed from an insurers system with the existence of a Web Services strategy. The data required for these functions is maintained by the organization that owns it e.g. the IBC, Ministry of Transportation or Canada Post, and correct and accurate data is immediately available to the insurer by using the Web Services offerings of these companies. These types of Web Services exist right now, with many organizations making their information available to Insurers technically able to accommodate the communication.

The use of these Web Services offers obvious advantages to an insurer. They remove the need to store the data belonging to the third party; remove the need to reproduce validation of this data by their computer systems, and most importantly, ensure that the insurers’ computer systems have the most timely and accurate data at their disposal. Having said this, the real power of Web Services lies in the ability to combine multiple Web Services together to undertake complex functions. Web Services can be used for something as simple as a postal code lookup to processing a complete insurance policy.

What are Web Services practical applications for P&C Insurers?

Most insurers have already established internal links between their own systems and applications. Web Services are an extension of these links operating both internally and directly with and between partner companies across the internet.

There are numerous possibilities as to how Web Services may be applied to the Insurance model.

A typical auto policy transaction requires a VIN validation for which it needs IBC’s VIN information. The policy may also require additional information such as a postal code validation with information provided by Canada Post. The most up-to-date data and rules information could be accessed as a Web Service.

A broker with access to both an industry portal (such as CSIO for quoting) may also be using an insurer’s internet portal for policy entry. Using Web Services, the quote originally requested on the industry portal could be uploaded to the insurer’s portal and subsequently converted to a new business transaction. In processing the new business transaction the system may also use Web Services to validate the claims history through a separate third party offering.
Web Services can also play a vital part in the detection of fraudulent claims, by allowing claims handlers to inquire and compare information on national claims databases as part of their claims management processes.

How do Web Services work?

An explanation of how Web Services works is hard to do without slipping into buzzwords and acronyms. This section attempts to more simply explain the technical area. Within any Web Service transaction there are up to three main participants.

The Service Provider – a company with a service to provide; The Service Requestor – a company wishing to use a service; and finally the Service Broker – an entity with an understanding of who offers the Web Service and how Requestors needs to communicate.
The best way to describe the relationships between the three participants is diagrammatically. Here we can see how a Service Provider, a Service Requestor and a Service Broker work together to facilitate the passage of information. The numbers in the diagram represent the sequence of events once a Service Provider creates a service.

  1. The Service Provider creates a service for which it believes there will be a requirement.
  2. The Service Requestor (a company or an individual) can then contact one or more Service Brokers to assist in obtaining a service.
  3. If found, the Service Broker then provides the Service Requestor with information regarding the service and connection information and methods
  4. The Service Requestor formats a request for information and issues it to the Service Provider
  5. The Service Provider formats a response and issues it to the Service Requestor.

The requirement for a Service Broker is optional. For example if you know your best friend’s phone number you don’t have to use a directory to look it up – you can just dial it.

This article aims to only explain at a high-level what Web Services are so we don’t get too involved in the technical “hows”. That being said all the technical standards used to allow the communication between diverse applications and systems have been developed and published by various international bodies to ensure the smooth and consistent flow of information.

Where will Web Services lead us � to a perfect world?

The adoption of Web Services will benefit insurers by improving the quality of information and services available to them. It also allows insurers to implement new initiatives much more rapidly allowing for improvements in the utilization of their own technical resources, thereby improving cost ratios and performance efficiency. The knock-on effect is that programs that previously carried out these activities locally can now be retired, lowering maintenance costs.
Components of Web Services are already working their way into the mainframe environment, making Web Services an attractive option for companies wishing to offer or receive services using legacy technology as the behind-the-scenes transactional engine. This is in line with the basic philosophy of Web Services – it makes no difference what or how the data is processed, the important point is everyone knows how to communicate.

Within the insurance industry Canadian service providers are beginning by offering limited Web Services to the Canadian market. As the adoption rate of Web Services functionality increases so will the number of providers. Technology also allows Canadian insurance companies to use Web Services from providers globally which may provide an even more economic avenue.

Web Services provides a truly cost effective way to carry out Business to Business transactions and is a means for insurers to harness the power of the internet.

The real question is industry adoption. Will the insurance industry play a wait and see game or will they grasp the competitive advantage?

About OARBIC Software Inc.

OARBIC Software Inc. is a provider of J2EE insurance portal software offering full transactional capabilities to enable insurance companies to enhance and extend existing legacy applications. OARBIC resources have been successful in implementing, developing and maintaining policy management systems for insurance companies around the world. In addition, OARBIC has assisted companies such as Royal and SunAlliance Canada and AXA Insurance Canada to successfully design and deploy internet portals allowing brokers to access real-time transactions connecting to backend policy management systems.
To contact the author, By Anthony Kumnick, Product Manager, you can email [email protected] or call (416) 362-4743