REDMOND, Wash. —
, June 3, 1996 — The property and casualty insurance industry has enthusiastically embraced the Automation Level 4 (AL4) specification championed by Microsoft Corp. as the best method for converting paper-based forms into reusable objects and streamlining the exchange of data between insurance agencies and companies.
Now, as the first batch of OLE-based, AL4-compliant forms becomes available, industry officials are praising the specifications design as one that responds quickly to regulatory changes, minimizes data re-entry, and exploits the distribution capabilities of the Internet.
“We are happy to see this widespread support and to have played a constructive role in creating a specification that will be fundamental to the growth of this industry,”
said Bill Hartnett, worldwide insurance-industry manager at Microsoft.
“Building applications around reusable objects is a smart, forward-looking strategy that will pay great dividends for many years to come. ACORD® should be complemented for its foresight and leadership.”
The industry standards group ACORD (Agency Company Organization for Research and Development) developed AL4 with technical support from Microsoft. AL4 consolidates criteria for printing and transmitting insurance-form-based information — as well as those for policy administration and issuance — into a database of reusable OLE objects.
The database, known as the ACORD KnowledgeBase, is an object framework for agency-company communication. When fully developed, it will contain more than 300 forms and hundreds of data object definitions.
AL4 alleviates the staggering programming demands created by regulatory changes to insurance forms. Such changes are often costly because companies and independent software vendors (ISVs) must redesign interfaces, remap data and retest applications across various platforms and systems. The industry made approximately 150 such changes last year alone, according to ACORD statistics.
“Every regulatory change ripples through the industry, both in terms of effort and cost,”
said Ralph Cote, senior vice president for Commercial Union, the U.S.-based operation of Commercial Union PLC, one of the largest multinational insurance carriers. Cote is also an ACORD board member.
“When any state insurance department mandates changes to an auto insurance form, for example, all insurance companies and ISVs that use the form must follow suit,”
“The programming necessary to create, test and implement that new form across multiple systems is labor-intensive and time-consuming and adds to the cost of insurance to the consumer.”
ACORD estimates that AL4 will save the insurance industry at least $20 million per year in form research, development and distribution costs, according to Joel Volker, senior director of products and services for ACORD.
AL4 encapsulates a forms print and data-transmission characteristics in a standard, portable object. Each object has an OLE interface for easy linking to existing applications and databases. When a state changes a form, ACORD simply updates and distributes its corresponding object. These objects can also be extended to contain company-specific administration and policy-issuance data, such as coverage options and detailed premium breakdowns, further streamlining policy processing.
“We can now get done in hours what used to take months,”
said Ron James, head of the ACORD standards committee.
The development has won praise from ISVs.
“We want to be the first company to implement AL4,”
said James Kellner, president of Applied Systems, which sells full-office automation software to independent insurance agents.
“Its abilities to eliminate data-conversion overhead and to pass objects between platforms transparently will create a groundswell of customer demand.”
Because AL4 uses standard OLE objects, it can also eliminate the data re-entry costs that occur when insurance companies receive policy requests from those using incompatible systems.
“Today we have as many different ways of getting data into our applications as we do customers,”
said Jeffrey Glazer, executive vice president of Programming Resources Co., a subsidiary of Equifax and a maker of policy-procurement systems for property and casualty insurance companies.
“The beauty of AL4 is that it allows for one consistent methodology to be used throughout our customer base.”
ACORD shipped approximately 65 million paper-based forms in 1995; it plans to create AL4 objects for its most commonly used forms first. A beta version of 51 AL4-compliant automobile insurance forms was scheduled to be available May 31, according to Kevin Schipani, group manager for research and development at ACORD. The organization will distribute the forms electronically.
We see the Internet as playing a big role in helping to reduce our distribution overhead,
“Schipani said. Kellner agreed, saying his company plans to use the Internet or some similar distribution method to provide program updates to its clients.”
Internet and intranet technologies will provide a critical communications link between insurance companies, agents and, ultimately, the consumer,
And as AL4 standardizes the flow of information across those links, the industry will be able to explore an exciting new realm of opportunities. Industry-standard objects such as AL4 are the key.
Industry officials lauded Microsofts dedication to developing the AL4 standard.
“Microsoft has really ‘set the table’ in terms of defining what is necessary to develop an object-oriented technology,”
“When we started this standards-definition process, we were looking at the problem from the 30,000-foot level,”
“We would not have gotten down to ground level as quickly as we did without Microsoft.”
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