Insurers face huge challenges with their installed base of legacy mainframe applications. Many systems are 15-20 years old and are impeding insurers’ ability to respond to the market demands for new products and to the increased rate of consumerization. Maintenance costs are high and staffing challenges continue to mount.
Insurers face huge challenges with their installed base of legacy mainframe applications. Many systems are 15-20 years old and are impeding insurers’ ability to respond to the market demands for new products and to the increased rate of consumerization. Maintenance costs are high and staffing challenges continue to mount.
Growing consumer buying power will force property and casualty insurers and life insurers to evolve, including adopting new technologies and creating new products that better match consumer needs. These will be critical success factors in staying competitive in the next five years.
Gartner’s Kimberly Harris-FerranteLoading...
Many insurers today are focusing their legacy modernization efforts on modernizing their legacy COBOL applications, but this largely consists of taking assembler or spaghetti COBOL and turning it into more efficient, better structured COBOL. Unfortunately, these applications will still be costly to maintain, edit, change and hard to staff, and these applications still won’t deliver the strategic agility that companies need.
With Decision Management you don’t need to modernize the whole application. Decision making components are often the most difficult to maintain pieces of an application and these can be extracted as Decision Services with the business logic managed using a business rules management system. This dramatically reduces maintenance costs while providing a platform for analytic deployment in the future. In the “old” days applications were monolithic. Companies now recognize the value of decomposing applications and storing the components in a more declarative, reusable form and deploying them as a suite of interoperable services that can be used within multiple separate systems from several business domains -service oriented architecture (SOA). Decision Management builds on SOA by externalizing decisions as Decision Services. Using either the mainframe’s ability to execute Java-based business rules or the generation of COBOL supported by a number of leading business rules vendors, you can use the same basic IT system infrastructure but replace hard to maintain COBOL with easier to maintain business rules. Furthermore you can bring the business users who know what changes are required into the process to make the changes themselves for dramatically increased agility.
When it comes to product development, many insurers envision a centralized common repository for all products, rates and eligibility rules to speed new product development, but find it challenging to make this happen. Decision Management streamlines this vision by starting with the decision instead of the data. With a clear focus on the decisions that must be made about a new product (who is eligible, who should be marketed to, which claims should be paid) it is easy what rules must be defined and changed to create a new product. And with decisions externalized from legacy systems these rule changes can be made quickly and effectively.
Next, how to handle a multi-channel world.