Ask a reinsurer or broker whether they are trading electronically and they'll probably tell you “yes”. Ask them whether they are using Joint Venture (JV) EDIFACT standards, and they'll probably still tell you “yes”. Then ask whether they have implemented the JV standards application-to-application and don't be surprised if they try to change the subject.

In a marketplace like reinsurance, which has many buyers, sellers and intermediaries, industry standards can play a pivotal and practical role in making e-business work. But when it comes right down to it, developing standards is the easy part. It's the implementation that's really the trick.

The promise of EDI was that your applications would communicate directly with your trading partner's applications, speeding processes and reducing costs. However, every sender had trading partners who were unable to receive EDI, forcing them to continue producing paper reports - maintaining dual systems, and increasing their costs rather than decreasing them. As a result, many people feel that, with a few exceptions, reinsurance EDI still hasn't delivered on its promise. While there are, and will continue to be, a good number of companies benefiting from JV EDIVACT EDI, usage still hasn't achieved critical mass - and at this point it isn't likely that there will be many new implementers.

In an effort to break down the “language” barrier, the Joint Venture last December set out to create XML tags and Data Type Definitions from the JV EDIFACT messages. IVANS and ACORD were subcontractors for the project, with full support from the other JV partners: BRMA, RAA and WISe.

With the aid of a working group of members, JV partner staff, expert consultants and other interested parties, we have created XML versions of the Joint Venture EDIFACT messages, including technical account, settlement, supporting claim information, supporting bordereau, placing slip, acknowledgements, indicators and reference updates. There is nothing that has been implemented in the EDIFACT reinsurance standards that shouldn't be possible in the new XML standards. And with XML, there's the potential of doing so much more.

IVANS has initiated a pilot project that will allow our members to exchange JV XML using IVANS Business Tracker, an electronic reports distribution tool. The pilot will also utilise IVANS DigitalPrints Public Key Infrastructure for security, and IVANS translation software (used almost universally in the United States for agency interface EDI) for XML translation.

With Business Tracker, there is virtually no implementation work required by the sender. Since anyone with a browser can view or print exactly what they previously received on paper, the sender will be able to trade electronically with all their trading partners. Receivers will be able to download XML versions of sender reports that are posted to a Web site, but there will be no need to expend any special resource to view, print or convert data to a spreadsheet, since that functionality is built into Business Tracker. Receivers will be able to concentrate their efforts on the integration of received data into their systems. Receivers will also be able to get supporting information that doesn't need to go via EDI, since senders will be able to use Business Tracker to publish any kind of reports on the Internet cheaply and easily.

In developing this pilot, IVANS considered the lessons we have learned from implementing reinsurance EDI over the past six or seven years. We have taken a long hard look at what slowed acceptance of the EDIFACT standards in the past, and tried to learn from old mistakes.

  • We have learned how important it is to actually link messages into user applications. Otherwise, EDI, whether EDIFACT or XML, is just a big fax machine, except a lot more expensive and a lot less efficient. The effort that companies have put into EDIFACT implementation won't be wasted - the hardest part is still making the move from paper to electronics, and once that's done, the specific format used for the transfer doesn't make much of a difference. If reinsurers are already using EDIFACT application-to-application, it will be easy to migrate to new technologies like XML as they emerge. If they aren't already using EDIFACT, some work will still have to be done - but XML may make it easier.

  • We have learned we had to work faster. Development of the original JV EDIFACT messages took more than six years. Development of the XML standards took less than six months.

  • The value of organisations working cooperatively has also been realised. The reinsurance industry doesn't exist in a vacuum. It took coordination with various groups inside and outside the reinsurance industry to achieve these new standards.

  • And we've learned how important it is to have an infrastructure in place for maintenance of the standards, to assure that they are being implemented consistently. Even in today's ultra-competitive reinsurance market, rivals recognise that proprietary interfaces and proprietary standards make e-business harder, not easier, for their trading partners. Competitors need to differentiate themselves, but infrastructure is not the place to do it.

    I believe these new XML standards will illustrate how emerging Internet technologies can make for faster and more complete exchange of information between buyer and seller. XML, the next generation of EDI, will make all the promises of the past a reality at last.

  • Charles Venezia is the director of reinsurance services offerings for IVANS, an e-business solutions provider for the insurance industry based in Greenwich, Conn.