Celent Says

Skinning the Life Legacy Cat

Catherine Stagg-Macey
Insurance Experts' Forum, September 8, 2010

The financial crisis gave pause to many technology investment plans, but 2010 has seen vigorous interest in core system replacement in the general insurance industry. But a perennial problem of poor back office systems remains. As the saying goes, there are many ways to skin the legacy modernization program. These include: outsourcing, upgrading to a current version, replatforming, wrapping /extending, or the ever popular approach of rip-and-replace.

In conversations, many folk appear puzzled as to why insurers, particularly large insurers choose the rip-and-replace approach. Our view is that this appears, at least on the surface, to be conceptually an easier approach than, say, wrapping/extending. This latter approach also requires the insurer to have a skill set in architecture and design.

We’ve seen little in the way of system replacement among life insurers, and this is due to the thorny problem of data migration. CIOs quake at the idea of migrating 30 years of data—and who wouldn’t. The complexity of this task is far greater than that faced by P&C insurers, who at worst, can ignore data migration and move data across at renewal by hand. Failure for a life insurer doesn’t just mean some annoyed customers. It can bring down the wrath of the regulator.

The success or failure of these projects have seen the abrupt halt to the career of more than a few CIOs.

An alternative for the life insurer is to put an aggregation layer on top of the existing legacy whilst turning down the functionality of the old systems to that which they are best—core system of record. This aggregation layer affords the front office customer service functionality more suited to 2010. I expect we will see more of this approach in the future.

We wrote on this topic in 2008, and will be updating this research in the coming months. We’ll focus on where people are on their journey, and how attitudes to approaches have changed, if at all. Watch out for more on this topic. And if you have any interesting stories, please reach out to us.

This blog has been reprinted with permission from Celent.

Catherine Stagg-Macey is a senior analyst in Celent's insurance practice, and can be reached at cstagg-macey@celent.com.

Readers are encouraged to respond to Catherine using the “Add Your Comments” box below.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments...

Already Registered?

If you have already registered to Insurance Networking News, please use the form below to login. When completed you will immeditely be directed to post a comment.

Forgot your password?

Not Registered?

You must be registered to post a comment. Click here to register.

Blog Archive

The Good, The Bad and The Ugly Of Enterprise BI

When IT can't deliver, business users build their own applications focusing on agility, flexibility and reaction times.

The IT-Savvy 10%

IBM survey reveals best practices of IT leaders.

The Software-Defined Health Insurer: Radical But Realistic?

Can a tech startup digitally assemble the pieces of a comprehensive, employer-provided health plan?

Data Governance in Insurance Carriers

As the insurance industry moves into a more data-centric world, data governance becomes more critical for ensuring the data is consistent, reliable and usable for analysis.

Fear This

Just days before this Issue, which contains our security cover story, went to press, we got some interesting news: 1.2 billion unique usernames and passwords and 542 million email addresses were reportedly stolen from 420,000 websites, according to The New York Times. The websites ranged from Fortune 500 companies down to small online retailers.

Should You Back Up Enterprise Data to the Cloud?

Six questions that need to be asked before signing on with an outside service.

Advertisement

Advertisement