Andy Hardy explains EDI - the process of parcelling up risk details and sending them electronically to an insurer

Electronic Data Interchange (EDI) is just a fancy way of describing how risk details are parcelled up and sent electronically, in a precise order and, where possible, in code.

Imagine all the answers on a comp-leted motor proposal form (for example, name and car details), being laid out in the same order, every time - that's an EDI message.

At the end of each day the intermediary's computer system sends via a telephone line all the details making up a new risk, in this agreed order, along with all the other policies sold that day, to the relevant insurer's mailbox, which sits on the network.

Just think of the mailbox as being a letterbox and the network as the Post Office. The insurers will go to their mailbox (say at 3am every morning) and collect all the mail sent by all of their intermediaries the previous day, open it and feed it directly into their own computer systems. Simple. The new policy set up yesterday for Mr Bloggs is now on the insurer's system today, while the annual certificate, schedule and policy will be printed and in the post to the broker that same evening.

This process is known as new business EDI and most insurers have been handling their private car products in this way for several years.

The fun really begins when you move on to adjustments.

If Mr Bloggs' surname is misspelled (Bolggs, for example) the network and the insurer's system would have no idea and the annual documents would be issued incorrectly. This means returning the documents when they arrive and waiting for the correct ones to come back - eventually.

But what if the broker could make the correction (as well as any other changes made during the year), get the insurer's system changed automatically and print the correct documents? Not only that - what about also printing the new business documents in the first place before the insurer even knows they are on cover?

And then, to complete the business cycle, when the case is due for renewal, what if the system could receive the invitation electronically, print the new annual documents and just tell the insurer via other automatic messages, whether the case has been renewed or has lapsed? This would then allow the intermediary to hold the "master record" and have complete control over the administration of the client's details held in both the broker and the insurer's systems.

This whole process is now a reality and is what is affectionately known as full-cycle EDI.

To be honest, describing this process as full-cycle is probably not strictly correct. Not all broker software systems can process temporary adjustments or claims messages (the latter sent from insurers to intermediaries) and Groupama and other like-minded insurers are still striving to include them as soon as possible.

Only then can we use the phrase full-cycle EDI in its truest sense.

And then, hopefully, everyone will understand exactly what it means.

Andy Hardy
Electronic trading manager (systems), Groupama Insurances