Insurance Networking News

Insurers Leave Legacy Behind New Celent report says insurers are making slow, but steady progress remaking their core systems.

What percentage of your
core systems is running on
hardware that is:

WHILE THE MAINFRAME ERA MAY SEEM REMOTE TO the public at large, things are different in the insurance industry. Mainframes and other legacy hardware and software continue to persist at insurance companies.

A new report, “Reality-Checking the Evolution in Core Systems: Responding to the Real-World Technology Environment of Insurers,” from Boston-based Celent, assesses the industry’s progress in transitioning to modern systems.

“This early investment left the industry with a massive
amount of valuable intellectual capital codified in legacy sys-
tems,” the report, authored Celent Senior Analyst Mike Fitzger-
ald, states. “Few have the luxury of starting over, and there are
very few greenfield opportunities that allow a “start from
scratch” approach.”
Yet, carriers realize that this abundance of legacy code is
inflexible, costly to maintain and has large implications for
their business. Thus, companies have begun gradually convert-
ing to modern systems.

For example, five years ago, the split between legacy and modern systems was 73% to 27% in favor of legacy. Currently, the balance is 52% legacy and 48% modern. Looking forward, the report estimates that five years from now the split will be 61% to 39% in favor of modern systems.

Another interesting was the split between the age of the software and the age of the hardware. While legacy languages still dominate, (53% of core systems were written in legacy languages such as COBOL) legacy hardware is being retired. Only 7% of respondents said they were running core applications on hardware more than