Legacy Systems Migration

Breaking the Shackles

Externally, the insurance industry is being swept by the winds of change. Internally, change is a hard thing to do. And the reason for it is a paradox. Insurance companies were among the first businesses to adopt computing technology in a big way more than three decades ago, and because of that they are finding it difficult to adapt to the changing dynamics of the marketplace.

Most of the long-standing insurance companies around the world built their businesses around legacy systems like the mainframe. While mainframes are computing powerhouses, they don't make for particularly agile enterprises. Today's enterprises do not need brute processing power as much as speed (to launch new products, integrate new channels), manageability (administrative and operational ease), ability to share logic and data with other systems, and cost-effectiveness. Legacy systems fail on most counts.

	Legacy solutions gave insurance companies a technological edge when they were built 30 years ago. But the insurance market has changed considerably in the last few decades. Products that are distributed today are no longer just the traditional whole life and endowment policies. Consumers are demanding wealth management products rather than just life or risk cover, and they want products that are uniquely customized for their needs.
The distributions dynamics too have changed. Carriers can no longer rely only on captive agents. They need to incorporate newer channels such as brokers, bancassurance and franchisees, who have a dramatically different set of demands than captive agents.

To meet the growing and fast-changing demands of distribution partners as well as customers, carriers need agile systems. Existing systems of many insurers are inflexible, have high operational costs and low operational efficiency. Companies that have adopted newer and open platforms are more nimble. They are able to launch new products at a faster rate, expand their distribution channels quickly and manage them efficiently, understand their customers and channels better, consolidate faster, and respond to external changes, such as new regulations, more effectively.

This paper looks at the business needs of modern-day insurance companies, the challenges they face in fulfilling these business needs, and how technology can play a critical role in making them more competitive.

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