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WORKS
[ ANALYSIS ]
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[ Last updated: March 16, 2010 ]
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Rough Draft Analysis
of the Insurance Exchange:
The (Lexis Nexis and CIAB) Insurance
Exchange
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First, it's important to read about the Insurance Exchange itself here:
(1) LexisNexis website page about the exchange:
http://www.lexisnexis.com/risk/insuranceexchange/
(2) CIAB magazine article about the exchange:
http://www.leadersedgemagazine.com/Digital-Magazine/Supplement/
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My initial rough draft outline analyzing the Insurance Exchange is as follows.
Title: Sustaining the Contradiction:
The Insurance Exchange
Subtitle: Why sustaining the contradiction
is a Good thing for brokers
What is the Insurance Exchange?
- a single vendor-centric (LexisNexis) resolution of the insurance industry
inefficiency paradox.
Inefficiency Paradox: what’s a paradox got
to do with this?
- it’s very simple, there’s a basic contradiction governing the insurance industry:
effectiveness requires redundancy
- everybody who works in the industry knows this contradiction of dealing with one
and many
What’s the context of my analysis of the Exchange
in terms of the contradiction?
- the (LexisNexis) Exchange is indeed ‘one’ resolution to the inefficiency paradox,
not ‘the’ resolution as there are in fact many
- toward that end, the Exchange is a political resolution between a major software
vendor (LexisNexis) and a major broker association (CIAB)
- the point for LexisNexis is over control of industry resources (data) and for
CIAB relevance going forward
Architecture: what’s the architecture of the
insurance industry got to do with this?
- architecture determines who has to go to whom for what (data), who is relevant
- the traditional insurance industry architecture is called the insurance ‘value
chain’.
- the Exchange simply rationalizes many aspects of the current value chain architecture
under one vendor (LexisNexis)
- the Exchange does not change or transform the current industry architecture
Is the Exchange ‘disruptive’?
- no, it’s measurable change, therefore not disruptive.
- however, it will change, to a small degree, the nature of some types of current
businesses in the value chain.
- LexisNexis is using ‘sustaining’ (not disruptive) technology
Value Networks: what does value networks have
to do with the (LexisNexis) Exchange and insurance brokers?
- value networks are the future architecture of 21st century business and industry.
- eventually, the insurance industry architecture will have to switch from a value
chain architecture to value networks.
- value network architectures are more compatible with the traditional values of
the independent insurance distribution system than the current value chain architecture
is.
- switch to value networks would be quite disruptive to the current nature of many,
if not all, of the businesses in the insurance industry value chain.
- this disruption extends to the software vendors, including LexisNexis.
- the situation gets intense because any disruption avoidance is actually moot.
- the insurance industry value chain has already collapsed as a result of the global
economic crisis.
- question about the Exchange is if it readies insurance brokers toward a value
network architecture or not.
Identity: what’s identity got to do with the
(LexisNexis) Exchange and CIAB:
- de-coupling business logic from authentication provides brokers with flexibility
and agility for dealing with the future unknown business needs.
- Exchange does not de-couple business logic from authentication at the infrastructure
layer
- there is a separation of concerns of sorts at the interface layer
- so the brokers own maintaining the participant registry of the Exchange
- but the registry itself will be operated by LexisNexis identity software and according
to LexisNexis security standards
- in other words, no real separation of concerns
- yes, there is a broker-controlled entity called the ‘Insurance Exchange Trust’
(IET).
- IET handles determining the ‘who’ of industry participants ‘gets to go to whom
for what (data)’ via management of the operations of the LexisNexis controlled registry.
- so ultimately ownership of data is a matter of trusting LexisNexis
- brokers have an alternative to relying on trusting a single software vendor and
using its application silo for exchange functionality
- the alternative is called the claims-based identity metasystem, it's a real
seperation of concerns if the IET is a real identity provider
- the dilemma is the alternative approach is, ironically, disruptive, the Exchange is not disruptive
Ecosystem of Exchanges: - multiple exchanges
would be the goal for brokers, specifically interconnecting exchanges
- brokers need an ecosystem of multiple, interconnected exchanges to do their work
effectively for their clients in the future
- for instance, brokers may want to be able to move their data from exchange (a)
to exchange (b), or even be able to ask two or more exchanges to interact with each
other
Conclusion:
- the (LexisNexis) Exchange will usefully resolve a bit of the inefficiency inherent
in the current insurance industry value chain architecture.
- supporting the Exchange does not preclude also supporting other resolutions of
the insurance industry inefficiency paradox
- to get to multiple exchanges, brokers have to start with one, the key is for the
first one to be designed with enough plasticity
- the (LexisNexis) Exchange may just be the right first one, but their identity
solution with CIAB is problematic
- it’s not difficult to imagine brokers requiring any given exchange to adhere to
specific interexchange standards and protocols
- interconnecting exchanges would be a broker-centric resolution of the insurance
industry inefficiency paradox
_____ Additional questions about the (LexisNexis) Exchange _____
Trust:
- what privacy mechanisms are in place for the insured’s information submitted by
users of the Exchange to be protected by LexisNexis?
- what assurances can a broker using the exchange provide the insured about their
information (insured’s) being submitted to LexisNexis?
- can any information submitted to the exchange be resold or in any way cross referenced
by any other corporate or government entities?
Covenants:
- are all the covenants and agreement between LexisNexis and CAIB available to read?
- do the covenants provide the ability for the brokers to review and comment on
the actual software code running the Exchange?
Scenarios:
- what are the exchange business rules if more than one broker submits an application
to the Exchange for the same risk?
MetaData:
- does LexisNexis have the right to provide the Exchange system generated metadata
to third parties or other companies within LexisNexis itself? - does the IET has
the right to examine the Exchange schemas that generate the metadata?
Audits:
- is a sample audit available?
Participants:
- will microinsurance brokers (working poor in developing nations) be priced out
of participating in the Exchange?
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Published:
26 Feb 2010
Format: Word, PDF
Length: -- Pages
Type: Analytical Research
Language: English
Price: To be determined
Copyright Vinsurance.com, 2010 All Rights Reserved.
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