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IVC Solution for Homeowner Policy Renewal

IVC Solution for Homeowner Policy Renewal


Dan Woodman
Microsoft Corporation

May 2007

Applies to:
   Financial-Services Architecture
   Web Services

Summary: The Insurance Value Chain (IVC) Solution for Homeowner Policy Renewal enables straight-through processing between three disparate systems by using Web services. The main goal of this IVC project is to establish a standard proof-of-concept for information exchange. (6 printed pages)


Use-Case Descriptions
Web Service Messages Overview
Security Overview
Web Service Function Points and Message Formats


The homeowner policy-renewal process requires the agent to establish not only the customer and dwelling information, but also the replacement cost for the dwelling. To establish the replacement cost, the agency system interrogates the Web service provided by Bluebook International, Inc. The main goal of this Insurance Value Chain (IVC) project is to establish a standard proof-of-concept for that information exchange.

Who Should Read This Paper

This paper provides information about the options for developmental implementation of an IVC solution for homeowner policy renewal.

The information is relevant to a range of management and technical staff within a company, including:

  • Business-decision makers.
  • Technical operation and service managers.
  • Solution architects.
  • Developers.


In January 2006, Microsoft invited AMS Services to participate in an IVC laboratory. The purpose of this lab was to produce a mechanism to help an agent to renew homeowner insurance policies. The goal of the lab was to enable the agent to provide straight-through processing for the replacement cost of the property and the provision of a range of policy quotation options. The process uses Web services to gather information from the disparate systems and services that are offered by AMS Services, Bluebook, Inc., and Penn National.


The scenario is based on the use cases that take the agent through the information-gathering, replacement-cost evaluation, and comparative rating-assessment components of the renewal process.

  1. An agent, using AMS 360, opens a customer's homeowner policy and transmits relevant policy data to AMS SETWrite.
  2. AMS SETWrite leads the agent through the rating process and asks for the replacement cost.
  3. Bluebook, Inc. provides the new replacement cost, which is obtained by calling a Web service at Bluebook and passing property and location information to AMS SETWrite. The agent updates the replacement cost, if necessary, and passes the information to a carrier to request a new insurance quotation.
  4. The quotation is submitted to AMS SETWrite.

Business-Solution Description

Click here for larger image

Figure 1. Solution overview (Click on the picture for a larger image)

The elements from each vendor can be summarized as follows:

  • AMS 360
    • Provides the user interface for initial capture of policy data
    • Transmits information to AMS SETWrite
  • AMS SETWrite (rating system)
    • Collects additional information from the agent
    • Queries Bluebook Web service for replacement costs
    • Submits policy information and the replacement costs to the carrier systems, and requests a new insurance quotation
  • Bluebook International, Inc.
    • Exposes a Web service for replacement-cost information
  • Penn National Insurance (carrier system)
    • Exposes a Web service that provides insurance-quotation information

In this IVC business solution, AMS provides the agency-management system with AMS 360 and AMS SETWrite; Bluebook International, Inc. provides essential renewal-cost information; and Penn National Insurance provides the carrier system.

Use-Case Descriptions

The project team identified the key use cases for the solution, and included all the steps of the process that are required to identify replacement costs and issue a renewal policy:

  1. Gather policy-renewal information. This requires standard data entry of a policy renewal.
  2. Establish home replacement cost. This requires current information about the cost of replacing the dwelling that is to be insured.
  3. Request policy-renewal quotation. This submits the request for a renewal quotation to the carrier system, and provides the updated homeowner and replacement-cost information.
  4. Provide policy-renewal quotation. This returns quotations from the carrier systems to the agent.

Web Service Messages Overview

Project partners provided Web services to process the request, with individual Web methods corresponding to the XML transactions. The transaction Web methods consume data classes that are based on the XML structure for the request, which serialize to and from XML.

In the IVC lab, some of the data classes and Web services were created for proof-of-concept. Each partner created and implemented Web services that could request and respond to the defined XML message transactions.

During the initial sessions and subsequent conference calls, the project team defined the Web service messages that are shown in Table 1.

Web serviceDescription
InsureBaseXMLEnables developers and data providers to integrate Bluebook InsureBase Estimated Replacement-Cost (ERC) reports into their own applications by use of industry-standard Web service calls. Many of these Web service calls take an XML document as an input parameter and return the report in the form of an XML document.
PNIHandlerProvides quote information, on Penn National system, which is based on the submission from AMS SETWrite.

Table 1. Web service message descriptions

Security Overview

To ensure process integrity, this solution uses transport-based security, such as a virtual private network (VPN).

Encryption and Signing with SSL

All Hypertext Transfer Protocol–based SOAP messages run over Secure Sockets Layer (SSL). This keeps the data in the Web service hidden from any entity that looks at data transmission over the communications infrastructure.

All Web services use 128-bit encryption, because they require the secure channel communications that are provided by SSL. SSL uses X.509 certificates that contain a public key and can also contain a private key. If the private key becomes known to any outside party, communications that are encrypted by using the public key are no longer secure from inspection by that outside party.

Secure messages that are sent between the sender and receiver are encrypted and signed by using 128-bit encryption. This means that outside parties cannot read the contents of the messages. If an outside party alters the bytes in the message, the message receiver detects the change.

Web Service Function Points and Message Formats

This section describes the Web services that are used within the IVC solution.

InsureBaseXML Web Service

GetReplacementCost()is the primary method call for the InsureBaseXML Web service; both its input and output are XML documents. The input document can contain several layers of data, depending on how much data is available to the application developer.

  • The minimum data that is required is the name and address for the property. When the minimum data is supplied, the usepublicdata flag must be set to 1.
  • The second tier of data is the property attributes for the subject property, such as bedrooms, bathrooms, and living area. If the usepublicdata flag is set to 0, the property attributes must be supplied.
  • The final tier of data is the structure attributes. A developer can provide data, such as roof type, exterior siding, and other common structure attributes, based on the mapping structure that is shown in the sample.

If these attributes are supplied, InsureBase replaces its default value for that attribute with the new one that is provided. The InsureBase default structure attributes are based on common characteristics of similar structures in the neighborhood of the property.

Web Service Input Messages

Variable name: pstrPropertyDoc

Data type: String

Description: XML document that conforms to the Bluebook published schema


<?xml version="1.0" encoding="UTF-8"?>
    <security userid="johns@company.net" password="password" />
      <propertyaddress firstname="John" lastname="Smith" address="23061 
Via San Gabriel" city="Mission Viejo" state="CA" zip="92691" />
    <report reportname="ERC" usepublicdata="true" includeattachment="false" />

Web Service Return Messages

Data type: String

Description: XML document that contains an InsureBase ERC report if the call was successful, or the error code and description if the call was not successful


   <property uid="76151">
      <response status="Success" errorcode="0" errordescription="Process 
completed sucessfully"/>
      <propertyaddress address="123 MAIN STREET" city="MISSION VIEJO" 
state="CA" zip="92692"/>
      <policyinformation ownername="John Smith" policyreference="BB258741" 
      <summary erc="522,112" score="93" profit="41,769" architect="0" 
includestax="True" itv="0" debris="20,884" acv="300,650" acvscore="93" 
      <propertycharacteristics residence="Single Family" bedroom="5" 
bathrooms="3.5" stories="2" livingarea="3075" fireplaces="2" pool="True" 
yearbuilt="2001" ac="True" quality="3"/>
         <detail structure="Primary Living Area" attributetype="Climate 
Control" description="Forced Air (Gas)" value="1" ercvalue="12,589"/>
         <detail structure="Primary Living Area" attributetype="Exterior 
Finish" description="Stucco (%)" value="70" ercvalue="13,672"/>
         <detail structure="Primary Living Area" attributetype="Exterior 
Finish" description="Veneer (Slate or Stone) (%)" value="30" 
         <detail structure="Primary Living Area" attributetype="Flooring" 
description="Marble (%)" value="40" ercvalue="21,719"/>
         <detail structure="Primary Living Area" 
attributetype="Foundation" description="Slab (%)" value="100" 
         <detail structure="Primary Living Area" attributetype="Roofing" 
description="Mission / Clay tile (%)" value="100" ercvalue="18,357"/>
         <detail structure="Primary Living Area" attributetype="Walls and 
Ceilings" description="Drywall and Paint (%)" value="100" ercvalue="0"/>
         <detail structure="Primary Living Area" 
attributetype="Appliances, Built-In" description="Allowance" value="1" 
         <detail structure="Primary Living Area" attributetype="Climate 
Control" description="Central Air Conditioning" value="1" 
         <detail structure="Primary Living Area" attributetype="Flooring" 
description="Carpet (%)" value="60" ercvalue="8,087"/>
         <detail structure="Primary Living Area" attributetype="Basement" 
description="Basement Area (SF)" value="750" ercvalue="16,324"/>
         <detail structure="Primary Living Area" attributetype="Basement" 
description="Add for Finished Area (SF)" value="750" ercvalue="13,042"/>
         <detail structure="Primary Living Area" attributetype="Parking" 
description="Enclosed - 3 Car (#)" value="1" ercvalue="9,389"/>
         <detail structure="Primary Living Area" attributetype="Kitchen" 
description="Kitchen (#)" value="1" ercvalue="21,356"/>
         <detail structure="Primary Living Area" attributetype="Fireplace" 
description="Fireplace (#)" value="2" ercvalue="13,632"/>
         <detail structure="Primary Living Area" attributetype="Base Cost" 
description="Base Cost" value="1" ercvalue="181,412"/>
         <detail structure="Primary Living Area" attributetype="Bathroom" 
description="Bathroom (#)" value="4" ercvalue="20,342"/>
         <detail structure="Primary Living Area" attributetype="Plumbing" 
description="Plumbing" value="0" ercvalue="13,654"/>


PerformRating() is the primary method call for PNIHandler; both its input and output are XML documents. The data that is transmitted within the IVC was based on the AMS proprietary XML format; however, the ACORD-standard XML format can be used for most carriers.


The IVC Solution for Homeowner Policy Renewal enables straight-through processing among three disparate systems by using Web services. For the customer and agent, this provides a service that is faster and more flexible. The AMS SETWrite system can obtain quotes from a range of carriers, as required by the agent and customer, if the carriers provide the appropriate Web service.



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 Dan.Woodman@Microsoft.com.

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