Electronic Data Interchange

What Does Electronic Data Interchange Mean?

Electronic Data Interchange (EDI) is a system that enables companies to exchange data between their internal systems without manual intervention. Data is automatically transferred from one storage system to another.

Insurance companies can use EDI to exchange data with independent agents, hospitals, or other entities that may need access to the company’s information. Insurance technology vendors that build and maintain these EDI pipelines for carriers usually carry their own technology business insurance to cover programming errors and contract disputes with the insurers they serve.

Insuranceopedia Explains Electronic Data Interchange

Not all data can be exchanged via Electronic Data Interchange (EDI). Some data is highly sensitive and must be handled with the utmost care. Because a breach of that sensitive layer can expose thousands of policyholder records at once, both carriers and the vendors connecting to them typically buy cyber liability insurance to handle the legal and notification costs after an incident. However, for non-sensitive data, insurance companies can save substantial time and money by using EDI. These savings primarily result from not needing to pay someone to manually fax or email the data to the requesting party.