Microsoft’s Insurance Value Chain has evolved since it was launched almost seven years ago as an integration concept and prescriptive guidance for integration techniques and product usage using Microsoft technology. It has assembled a vast network of Microsoft partners and has been leveraging new technology to simplify integration between partner and in-house solutions.

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Taking into account the challenges specific to the insurance industry – fragmented partners, consolidated standards, and the siloed nature of insurers’ business processes and technologies – Microsoft has recently shifted its focus to application integration. Its set of solutions combines the Microsoft .NET platform and Microsoft Visual Studio developer tools, ISV partner line-of-business applications, and standards-based Web services and XML data specifications to ensure all technologies work as they should. This is critical to insurers as their revenue is increasingly in the hands of millennial customers who don’t have much patience for the old way of doing things. They want one-click service for all their insurance needs with aesthetic appeal besides. Microsoft’s Financial Services senior architect Colin Cole talks to Windows in Financial Services about the industry’s future.

Where is the Insurance Value Chain today?

We have recently created what is called a service factory for the ACORD Property and Casualty and Life and Annuity specifications. This service factory helps our ISV partners expose their core logic over ACORD and actually gives a blueprint and a pipeline to enable and show how these partners are going to be able to plug into the value chain. It is a real lab that allows us to sit down and put that integration logic together and use that service factory as a 40 percent jumpstart, if you will, of actually building the necessary integratable pieces and wrapping that functionality for partners. It will help make our Insurance Value Chain more powerful. We also want to put this service factory out into the public domain so that anyone can download, use it, and contribute to it.

What is the next biggest and best thing for insurers?

The pressure on prices and premiums makes it more imperative for the larger players in the insurance industry to be able to actually sell something on their Internet site. That is where their buyers are and that is what their competition is pushing them toward. It is not enough simply having a Web site. Now you have to do business on the Internet and it needs to be growing. I have been spending time with our largest customers, and their CEOs have one clear demand: “Sell more on the Internet.”

From Microsoft’s perspective we feel like we can actually help these large players accomplish this. To be serious about selling on the Web, especially upselling past just auto, it is imperative now to have a really slick, compelling online presence that keeps customers engaged and keeps them on their site. There are a whole bunch of studies and research going into this right now, and this is where we can help our customers.

Microsoft Silverlight allows customers to log in and have a rich experience, to see what kind of business they are doing with the company. It can enable the type of interactive Web presence that can actually help a customer see what’s possible with the insurance company. This is important because customers don’t typically use their carrier’s Web site, however, the younger generation wants to purchase in this manner, so it’s important to get ahead. Also, an insurance agent can use the same technology to show a customer all the options during a home visit to walk through retirement products. This I think is huge, and every single company will be facing these same requirements, which is upgrade its experience on its Internet.

Where are companies now on this?

Most insurers have many of these capabilities but they are not integrated yet. They may have a new Web experience for selling life insurance, annuities, auto, or a home policy but they are not tied together and are not very rich. They need to take it to the next level from an integration perspective, in the way it is presented to the user, and in the way they are using that information.

On the claims side of things, it is going much better. This is where we see the main usage of mobile technologies. Along these lines, however, it is not just about having a mobile application involved to improve the claims process. A constant communication channel makes the process much more efficient, for example, online chat, VOID phones, the ability to share a desktop experience with other parties, the ability to find coworkers quickly if they’re remote or in the office. It is not as simple as filling out forms and submitting data through a mobile application tied to a workflow process. There is a lot of back-and-forth communication required among the parties working the claim. We see a great fit for improving processes by having a better communications collaboration stack.

Any big mistakes that you see?

Insurers, in some cases, have gotten carried away with middleware. My personal view is that the middleware issue could be a lot easier for doing integration. Don’t get me wrong, middleware is super important to hooking together enterprise assets. An enterprise service bus is great for this.

However, I think that there are two general categories of Web services that insurance companies should design around. The reusable enterprise ones belong in middleware like an ESB, but Web services technology is also great for plugging together LOB apps and providing front-end data to a mobile device or a Web front-end. When developing an application, the company should put less time designing the Web services that provide data to the user interface and business logic, as these services usually need to be very specific and are not reusable. Just get them done quickly and don’t overthink them. The backend of these LOB applications can then use the middleware ESB to connect to enterprise data, but the front-end side services should be point-to-point and much more agile. Front-side services don’t typically need an ESB. This is where I see middleware and ESB slowing down the usage of Web services as it’s often applied to all Web services.

What are your thoughts on virtualization for insurers?

Of any of the types of companies that can benefit from this, insurance companies are on the top of the list. They have a set of servers all over the place and their servers are 15 percent utilized. The problem isn’t really one of just cutting down the operations aspect of it, it is simply the fact that they are not really even beginning to use the capability they have. So, a virtualization strategy is absolutely needed for any large insurance company. We feel like our Windows 2008 platform is going to be absolutely huge here as we have a very advanced virtualization strategy that will help make this easier and scale across multiple CPU servers.

By Nadine Kjellberg