Introduction to the Insurance Value Chain Integration Factory


Dan Woodman
Microsoft Corporation

May 2007

Applies to:
   Financial-Services Architecture
   Service-Oriented Applications

Summary: This paper describes the Microsoft Insurance Value Chain (IVC) Integration Factory, the partner line-of-business (LOB) applications that already participate in our Partner-to-Partner Integration Framework, and the Microsoft vision and road map for technology evolution and advancement in the insurance industry. (7 printed pages)


Introduction: Microsoft and the Insurance Value Chain
Insurance Value Chain Integration Factory
Creating Business Solutions by Integrating Applications
Standards-Based Computing for Maximum Integration and Minimum Expense
Supporting Multiple Integration-Architecture Models
Partner-to-Partner Integration
Enterprise Service Bus Integration
Additional Resources

Introduction: Microsoft and the Insurance Value Chain

The insurance industry today faces a collection of business-process execution challenges quite unlike what it has faced in the past. Traditional business challenges—such as customer retention, product profitability, new-product generation, and loss rates—have been exacerbated by explosive volatility, whether in the form of increased customer mobility, increased rates of change in business cycles, or just greater volatility of weather and climate change. The accelerating rate of change of and within the business cycle is the ultimate root of these challenges for all insurance agencies and carriers today.

Underlying the business operations of carriers and agencies alike are dual-siloed processes and resources. Dual-siloed is a simple reference to a two-pronged problem: Both business processes within an insurance company, and the applications and platform technologies that run those business processes, are siloed from one another. As rapid change in the business environment and acceleration of business cycles continues, responsiveness demands an integration of both business process and technology that insurance companies increasingly struggle to achieve with legacy applications and platform technologies.

Integration services are available from any of the traditional System Integrators. However, matters of cost, complexity, scope, scale, and success continue to plague an industry that is generally more focused on maximizing billable revenues instead of maximizing technology and business-process efficiency. Microsoft has always maintained that rote tasks are best suited to automation, in the spirit of industrialization. With advancements in the sophistication of both line-of-business (LOB) applications and platform technologies, application integration can be part of that industrialization—instead of remaining the craft-based industry that it has been for the past 30 years.

The Microsoft Connected Systems vision for service-oriented applications promotes the use of technology and software to integrate existing application assets—maximizing the utility of those assets to the business, while minimizing the expense required to realize such gains.

The Microsoft Insurance Value Chain (IVC) Integration Factory is the industry-specific implementation of the Connected Systems vision and combines the Microsoft .NET platform and Microsoft Visual Studio developer tools, Independent Software Vendor (ISV) partner line-of-business (LOB) applications, and standards-based Web Services and XML data specifications to realize new and untapped value in insurance-industry technology assets.

This paper will describe the Microsoft IVC Integration Factory, the partner LOB applications that already participate in our Partner-to-Partner Integration Framework, and the Microsoft vision and road map for technology evolution and advancement in the Insurance Industry.

Insurance Value Chain Integration Factory

The traditional Microsoft approach to delivering business value to enterprise computing has been the combination of its platform products and technologies with the vast and diverse ecosystem of ISV partners who build solutions on those platform products. The Microsoft product, technology, and architecture focus has always been on infrastructure—creating the foundation for industry-specific, business-specific, and domain-specific value to be enabled through specialized applications provided by ISVs.

The insurance segment of financial services has two unique characteristics. First, with the pervasiveness of ACORD standards, there is relatively little fragmentation and duplication in the standards development and maintenance process. Standards for the insurance industry are well-known, solidly governed, and sufficiently consolidated so as to avoid fragmentation, duplication, and competition in the definition and deployment of those industry standards.

Second, and conversely, there is considerable fragmentation of ISVs in the insurance sector. Over the past few years, the consolidation of ISVs has begun, but somewhat slowly and at a measured pace. Certainly, there is a short list of "market consolidators"—that is, companies whose strategies are to create portfolios of solutions that address the breadth of industry computing needs. Companies such as ChoicePoint/Insurity, FISERV, and others are beginning the process of consolidating a market of business that is still largely composed of either global-scale services companies or regional-scale application providers that focus on a point solution or single aspect of the business.

Combining the siloed nature of business processes and technologies within major insurance companies with the market characteristics of consolidated standards and fragmented partners, as illustrated in Figure 1, drives a specific set of solution criteria on which Microsoft has focused for approximately 18 months now. In this present environment, application integration becomes a critical issueboth technically and financially.


Figure 1. From isolated silos to integrated processes

The technology and architecture focus of the IVC industry program has been to blend together application providers and applications that naturally complement one another, to address the business-process integration needs of insurance companies.

Combining these partner solutions enables them to participate in straight-through-processing scenarios for the insurance industry—whether reducing time-to-market for new products, increasing profitability for existing products through improved pricing efficiency, shortening sales cycles, or reducing customer-service cycles.

Microsoft's people-ready businessand, specifically, its Connected Systems vision of services-oriented applications and application integrationisn't just about sharing data between two applications. It's about adapting to a more competitive business environment by breaking down the barriers that prevent people, business processes, systems, and tools from executing with the maximum efficiency and expediency possible.

The means to achieve this vision lie in the combination of the Microsoft Connected Systems platform technologies for computing in the enterprise, along with partner solutions and applications—all using standards-based communication protocols to achieve industry-leading interoperability between systems and between underlying platforms.

In conjunction with our partners, Microsoft has conducted several IVC Partner Integration Labs in its Developer & Platform Evangelism Platform Adoption Center. Throughout these lab engagements, as illustrated in Figure 2, we have used Web Services, ACORD-standard XML, and the platform technologies of Microsoft to create more efficient business-process scenarios, and to expose the functionality of the individual applications using standard protocols.

Interoperability is at the core of all of these labs. Interoperability between applications is only part of the solution; interoperability between applications that are running on diverse platforms is of equal priority. By using the platform-level Web Services interoperability features built-in to the .NET Framework, Microsoft is enabling industry-leading application interoperability for business solutions, regardless of the underlying technology stack that such applications might use.


Figure 2. Insurance Value Chain: Industry-specific workflows

Creating Business Solutions by Integrating Applications

The focus of Microsoft has been to create three new Industry Business Solutions for the insurance industry. The New Business Origination for Commercial Property & Casualty Insurance, New Business Origination for Annuities Insurance, and New Business Origination for Homeowner's Insurance all combine best-of-breed partner solutions, Microsoft platform technologies, and new Integration Web Services to enable seamless application-to-application data and context sharing. These are truly integrated solutions that are ready for deployment today.

Each of these business solutions incorporates several application partners addressing key segments of business functionality in the life cycle of an insurance policy.

For commercial auto insurance, the Nexsure system of XDimensional Technologies (XDTI) provides agency-management functionality and communication links to carrier systems. The QuickSolver rating and quoting system of INSTEC combines with the Diamond System policy-administration solution of Insuresoft to offer a complete, integrated solution that handles policy application through policy issuance and payment, including policy system updates and endorsements.

Figure 3 illustrates the specific logical architecture for this business solution.

Click here for larger image

Figure 3. Insurance Value Chain scenario: New Business Origination for commercial auto insurance (Click on the picture for a larger image)

Similarly, for annuities and personal coverage, the PlanLab system of Impact Technologies provides point-of-sale system functionality, relying on the ForeSight illustration system of Insurance Technologies and the policy-administration solution of AdminServer to provide an integrated solution for annuity business.

For the personal homeowner's insurance applications, AMS and Bluebook International envisioned needing only two or three pieces of customer-supplied data in order to complete an entire homeowner's policy application. They succeeded. The agency application of AMS, paired with the data services of Bluebook International and using Microsoft .NET Web Services technologies, now make minimal data entry and maximal data reuse possible for homeowner's insurance applicants.

Standards-Based Computing for Maximum Integration and Minimum Expense

All of the work coming from the IVC Integration Labs requires a focus on standards-based computing. All integration services are developed to rigid compliance with SOAP and WSDL standards for web services endpoints, ensuring maximum utility and interoperability with other services and platform technologies.

All messages either are in ACORD-standard format or, where ACORD-standard messages are not available, use a publicly disclosed schema and WSDL definition that are freely available as part of the LOB solution-vendor's integration feature set.

Supporting Multiple Integration-Architecture Models

With its reliance on standards-based transports, access points, and messages, the IVC Integration Factory can support both Partner-to-Partner direct integrations (as shown in Figure 4), such as those in the scenarios presented in the MSDN Financial Services Industry Center, as well as "Enterprise Service Bus"–oriented scenarios (as shown in Figure 5), in which a single hub inside one company, whether implemented as a single instance of services or, more practically, as a single reference of programming interfaces scaled out through the enterprise—or complementary hubs inside connecting trading partners—are both readily enabled.

Partner-to-Partner Integration

While the Partner-to-Partner Integration Framework is available for the solution areas noted in Figure 4, there is continued joint development by Microsoft and its partners of this integration framework to address claims processing, billing, compensation management and commissions, and business intelligence and analytics, as well as further integration of agency and carrier systems for sales and service.


Figure 4. IVC Integration factory, Partner-to-Partner integration

Enterprise Service Bus Integration

The Enterprise Service Bus (ESB), while not a "Microsoft product," represents the application of Microsoft BizTalk Server, Microsoft Windows Communication Foundation components, and Microsoft SQL Server into a standard ESB pattern. Microsoft has deployed such a pattern at several large insurance carriers, with great success. Our continued development of the IVC Integration Factory will develop and integrate these offerings into solution kits available through Microsoft Consulting Services.


Figure 5. IVC Integration factory, Enterprise Service Bus integration

Additional Resources

For more information about the Insurance Value Chain, our partner solutions, and the integration technology that Microsoft is enabling, you can go to the following sites for more information. Likewise, you can contact your Microsoft Account Executive, Architect Evangelist, or Developer Evangelist.


About the author

Dan Woodman is the Industry Technology Strategist for the Microsoft Financial Services Industry Team, focused on enterprise accounts in the U.S. In his role, he is both technical-sales professional and technology visionary for Microsoft in the Insurance sector—defining the Microsoft vision, strategy, and plans for advancing the use of key technologies to benefit insurance carriers, agencies, partners, and customers. Dan's background is in complex databases, both for high-volume transaction throughput and large-scale business analytics, with more recent experience in application-platform technologies and commercial software development. Dan can be reached at