Market Reform Group Electronic processing The role of standards and how it all fits together Beginners session - 23 rd January 2008 Rob Campbell, MRO
Market Reform Group
Electronic processingThe role of standards and how it all fits together
Beginners session - 23rd January 2008
Rob Campbell, MRO
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Agenda
• What is electronic processing and why do it ?
• What forms can it take?
• Electronic processing discussion topics
• Some examples
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The paper world
Transacting business involves the exchange of information
Information printed by the originator’s computer systems …
… is re-captured by the receiver into their computer systems
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The electronic world
• Information is shared:– Data captured once
– Fast, efficient turnaround
– Reduced errors
– Fair
• It is:
– the transfer of information
• It is not:
– the automation of trading
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What forms can electronic processing take
• Online
• Electronic messages
• Media (CD, DVD etc.)
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Electronic processing – Discussion topics
• Internal reform determines benefits of electronic processing
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Internal reform determines benefits
Broker Insurer
The degree to which a firm benefits from electronic processing reform will depend on the degree to which they address change and reform in their own organisation.
People
Processes
Culture
Contract creation
Document repository
Workflow
Infrastructure
Core systems
Desk top services
Controls
Quality assurance
People
Processes
Culture
Risk management
Document repository
Workflow
Infrastructure
Core systems
Desk top services
Control
Quality assurance
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Electronic processing – Discussion topics
• Internal reform determines benefits of electronic processing
• Technology architecture jungle
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Multiple technologies for exchanging data electronically
Brokers Insurers
A number of different routes are possible for an electronic transaction
Direct messaging
Trading platform
Messaging hub
Electronic Form
Electronic Form
Communication directly between trading partnersCommunication directly between trading partnersCommunication between partners managed by external provider
Communication between partners managed by external provider
Transaction processing or workflow provided by external provider
Transaction processing or workflow provided by external provider
Data package creation from screen entry or integration
Data package creation from screen entry or integration
Email between trading partners with or without external provider support
Email between trading partners with or without external provider support
Direct messaging
Trading platform
Messaging hub
Electronic Form
Electronic Form
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Multiple trading partner connections
Brokers Insurers
ACORD message
Trading platform
Insurers may be faced with different forms of input from different brokers (or even the same broker … and vice versa).
Supporting face to face interaction as required
Electronic Forms
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Multiple messaging architectures can co-exist
Brokers Insurers
Trading platforms
Supporting face to face interaction as required
Electronic Forms
Messaging hubs
Document Repositories
Portals
The market is likely to evolve into an environment of mixed peer-to-peer and multi-hub messaging rather than a single central infrastructure.
direct messaging
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Electronic processing – Discussion topics
• Internal reform determines benefits of electronic processing
• Technology architecture jungle
• Single data standard
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SLIDE 13
Standards valuable
Standards essential
Standards: the foundation of electronic processing
Paper document exchange
Electronic message exchange
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What is ACORD?
• Who are ACORD?
– A global, non-profit insurance association established in 1970
– Offices in London and New York
• What do ACORD do?
– “… facilitate the development and use of standards for the insurance, reinsurance and related financial services industries.”
– The standards define transaction flows and associated data
– Promoting the standards via market support, training and other events and facilities
• ACORD membership
– 480 members comprising: Brokers & Carriers (44%), Solution Providers (46%) and Market associations and other
– USA, UK, EU, South Africa, Canada, Australia, China, India, South Korea, Japan, Bermuda and other Asia Pacific
• Boards, Committees and Working Groups
– ACORD working activities based around membership participation in committees and groups
– Standards work divided into 3 domains:– Reinsurance & Large Commercial ( based on early message standards involving the UK market )– Property & Casualty / Surety– Life and Annuity
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Message specification independent of route
Brokers Insurers
Messaging hub
Because a standard message is used, the same message can be used by all parties regardless of the route the message takes.
MessageGateway
MessageGateway
MessageGateway
MessageGateway
MessageGateway
Electronic Forms
Trading platform
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Electronic processing – Discussion topics
• Internal reform determines benefits of electronic processing
• Technology architecture jungle
• Single data standard
• Legal and contractual requirements
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For electronic processing how do I know …
… if anyone else has read
my information?
… who has agreed the
transaction?
… that the document has
not been tampered
with?
… that the document I sent
has been received by the intended
recipient?
security
signature
delivery receipt
tamper proof
… that there a verifiable record
of the transaction?
audit
… that the
address is
correct?
directory
… where the document came
from?
authentication
… the information is
understood correctly or not
corrupted?(who is liable?)
interchange agreement
… if anyone else has read
my information?
… who has agreed the
transaction?
… that the document has
not been tampered
with?
… that the document I sent
has been received by the intended
recipient?
security
signature
delivery receipt
tamper proof
… that there a verifiable record
of the transaction?
audit
… that the
address is
correct?
directory
… where the document came
from?
authentication
… the information is
understood correctly or not
corrupted?(who is liable?)
interchange agreement
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Electronic processing – Discussion topics
• Internal reform determines benefits of electronic processing
• Technology architecture jungle
• Single data standard
• Legal and contractual requirements
• Lessons from other markets
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Some examples
• Endorsements via email
• ACORD placing message
• Using a trading platform
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BrokerBroker
Remote endorsements via email – Broker(concept diagram)
Email System
Email body…………..…………..…………..…………..
MRCE…………..…………..…………..…………..
Attachments(optional)…………..…………..…………..
(a)Email with attached documents (may include scanned signatures)
Email body…………..…………..…………..…………..
MRCE…………..…………..…………..…………..
Attachments(optional)…………..…………..…………..
(b)Email with electronically signed attachments
Email body…………..…………..…………..…………..
(c)Email body only
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InsurerInsurer
Remote endorsements via email – Insurer(concept diagram)
Email System
Email body…………..…………..…………..…………..
MRCE…………..…………..…………..…………..
Attachments(optional)…………..…………..…………..
(a)Email with attached documents (may include scanned signatures)
Email body…………..…………..…………..…………..
MRCE…………..…………..…………..…………..
Attachments(optional)…………..…………..…………..
(b)Email with electronically signed attachments
Security optionsUnsecured email
Encrypted email
Secure connections
Email body…………..…………..…………..…………..
(c)Email body only
Agree
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Broker / InsurerBroker / Insurer
Electronic Placing via ACORD message(concept diagram)
ACORD compliant gateway
Messaging system
<XML>…………..…………..…………..…………..
Attachments(optional)…………..…………..…………..
ACORD messages with attached docs
SecuritySecure connection
Encrypted documents
Direct between trading parties or via a “Messaging Hub”
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Broker / InsurerBroker / Insurer
Using a Trading Platform(concept diagram)
Trading platform
Trading platforms include application functionality.
They may be owned and operated by a third party or by one of the trading parties.
3(c)Online access
ACORD Gateway
Messaging system
<XML>…………..…………..…………..…………..
Attachments(optional)…………..…………..…………..
(a)ACORD messages with attached documents
Internal systems
Data…………..…………..…………..…………..
Attachments(optional)…………..…………..…………..
(b)Direct integration or proprietary message with attached documents
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Standardised validation
• Reduces unpredictable differences in message processing
• Reduces initial and ongoing costs incurred by each party
• Makes ongoing enhancements easier and less costly
• Runtime validation is consistent with certification test validation
Broker
Insurer1
Insurer2
Insurer3
Message NOT ok
Message ok
Message ok
Message ok
Non-standardised: each party provides own validation code.
Non-standardised: each party provides own validation code.
Standardised: all parties use validation code provided by standards authority.