A great STRIDE towards seamless insurance data integration

The latest World Economic Forum Global Competitiveness Report ranks South Africa 4th among 142 countries in the financial markets category. Companies in the broad financial services sector can go about their business secure in the knowledge that our financial markets are both efficient and appropriately regulated. And – for the most part – bank and insurer clients can partake of products and services that are affordable, transparent and secure.

South Africa’s world class payments infrastructure coupled with the internet and advances in mobile telecommunications make it possible for financial institutions to process complex financial transactions in real time – any time – totally electronic.

Insurance companies process thousands of financial transactions each day. Both life and short-term insurers make use of the available technologies to ensure that critical payment processes (such as premium collection and claims payouts) run without a hitch. But there are areas where business processes lag technology by some way.

For example: The transfer of client and policy data between insurance brokers and the insurer leaves a great deal to be desired. Why? Over time, each sub-sector of the insurance landscape has created its own systems, processes and data standards…

The industry has evolved into one where hundreds of companies all speak their own language – a modern day equivalent of the Biblical Tower of Babel! Systems used by an insurance broker or binder holder cannot integrate with the systems operated by the insurer without translation.

Insurers have to integrate data from multiple platforms and in different formats – an extremely costly exercise. Brokers – instead of submitting user data once and receiving multiple real time quotations – have to submit the same set of data to multiple insurers. Either way there is no guarantee that manual intervention will not be required to ensure that the data received at the insurer is in an acceptable format.

The local insurance community has finally cottoned on to the benefits of seamless data integration between systems. It seems the Insurance Laws Amendment Bill has forced the industry to consider and address the historical inefficiencies in communication between insurers and their binder holders and brokers.

One of the consequences of the bill – in force from 1 January 2013 – is that insurers must have access to the client and policy data held by brokers and binder holders. To facilitate compliance, brokers will have to update insurers with their underwriting, policyholder and claims data.

The Short Term Insurance Data Exchange (STRIDE) project was initiated in 2009 as a joint venture between the Financial Intermediaries Association (FIA) and the South African Insurance Association (SAIA) – see box for a complete list of shareholders – undertaken to solve the current communications impasse.

STRIDE will deliver a solution for real time, efficient and cost effective communication across the short-term insurance sector, thereby satisfying the venture’s "we simplify insurance” purpose statement. It provides a single language, format and platform to enable both insurer and broker to only develop once and be able to integrate with anybody!

In layman’s terms the joint venture will create an easy way of delivering data between insurers and their binder holders and brokers. STRIDE will make its money by levying a small fee each time this data crosses its data "switch” (more on that in a moment). But it is not all about the money!

The company does not expect super profits and has budgeted for initial revenue streams to cover operating expenses and service shareholder loans. "Shareholders will not benefit in any way through preferential pricing or any other mechanism, except through the repayment of their investments,” notes Jenny Theunissen, Marketing and Operations Manager at STRIDE.

STRIDE is built around two components: A data standard and a data "switch”. STRIDE contracted technology partners to assist with each of these aspects. ACORD, an internationally recognised data standards organisation specialising in insurance data, was tasked with developing a data standard for use throughout the domestic short-term landscape.

ASTUTE, which already manages a data "switch” on behalf of the life insurance industry, was chosen to design and implement a similar solution in the short-term space. Various software solution providers will assist insurers and brokers to map their data to the ACORD standard and integrate it with STRIDE.

Chief executive, Deon Olckers, says that the STRIDE integration will follow a simple two-step process. The first, called technology integration, ensures that the insurer IT systems can "speak” to the broker system. The second – process mapping – will create a complete data translation for the insurance products offered by the binder holder in question. During the initial phases personal lines and general commercial lines covers will be mapped.

A major concern among brokers is that STRIDE – and various third parties – will gain access to confidential client information. The reality is that STRIDE is merely a data "switch” – it receives data, beats it into shape – and spits it out to the intended recipient. "This is a switch only – no data is stored – nor will any database be developed and populated with policyholder data,” says Olckers.

As with most modern IT systems there is plenty of security built in too. Data is encoded and directory services will ensure that only valid senders and receivers are party to each transaction. Insurance consultancy Sensepost is currently conducting a security audit to ensure that the data is not vulnerable at any point of the process.

In a nutshell, STRIDE offers a secure and easy way of delivering data between insurers and binder holders. Brokers will benefit from single capture, seamless integration into the insurers’ system and two-way communication between broker and insurer among others.

The joint venture partners believe STRIDE will become the preferred medium for transferring insurance data thanks to its wide acceptance as well as the direct involvement of a number of product providers in the project.

"STRIDE is to the South African short term insurance industry what English is to the world,” says Jan de Klerk, executive head of information technology at Santam. "It creates a universal language – called SA ACORD AML – and a platform that can be used by all stakeholders in the insurance value chain to securely share data and real time messages.

Standardised interfaces between insurer, system provider and intermediary systems contribute to efficiencies at each stage in the distribution process. Once a partner is connected to the STRIDE "switch” it will be much easier to establish data sharing with another, thereby reducing the cost of integration and complying with legislation, such as the new Binder Regulations.

"At present Santam’s business partners have to develop and maintain multiple data sharing and quoting solutions that are slow and difficult to maintain,” he says. "With STRIDE it will be less onerous and quicker to apply product and rating changes.”

The STRIDE solution is extremely secure and its users will not have to worry about the confidentiality of client information during data transmission. Brokers will also be able to request quotes from multiple insurers through the STRIDE "switch” in real time.

The STRIDE initiative is supported by a diverse group of insurance industry stakeholders including industry representative bodies, insurers and intermediary companies. A full list of shareholders includes the South African Insurance Association, the Financial Intermediaries Association, Santam, Mutual & Federal, Hollard, Zurich, ABSA Insurance, Guardrisk and Etana.

Advisory companies are represented through STRIDE Intermediary Holdings, which houses ABSA Insurance & Financial Advisors, FirstEquity Risk Management Services, FirstRand Bank, Indwe Broker Holdings, Integrisure Brokers, Nedbank, Van Flymen & Associates and PSG Konsult Financial Planning.