Mainframe-Based Core Insurance Systems: On the Road to Oblivion?

by James O'Neill,  Tom Scales, September 9, 2015
Product Trends/ Reviews
Global, North America

Abstract

Celent analysts discuss the future of the mainframe in insurance.

In the report Mainframe-Based Core Insurance Systems: On the Road to Oblivion?, Celent analysts discuss the history of technology in the insurance industry and the changes needed for the future. Using a creative metaphor, the authors note the parallels to the changes in the design and construction of automobiles.

The report focuses on both the power provided by the mainframe and how these environments are not well positioned for the future. The report discusses the stages of evolution and how the industry must change its direction in technology to continue to both compete and serve the needs of their customers.

“Our industry’s reliance on the mainframe is inhibiting our ability to provide sales and services in the method required by our customers,” says Tom Scales, a research director with Celent’s Insurance practice and coauthor of the report. “We are well behind other financial services industries.”

“The opportunity is there for our industry, and entrants are challenging the entrenched competitors,” says James O’Neill, a senior analyst with Celent’s Banking practice and coauthor of the report. “The parallels to banking are huge, and it is clear that insurance is behind.”

This 34-page report contains 9 figures.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

2

Automobile 1.0: Body-on-Frame Architecture

4

Automobile 2.0: Unibody Design

6

 

Badge Engineering

7

Automobile 3.0: Platform Engineering

8

Insurance 1.0: COBOL-Powered Automation

10

 

Insurance 0.1: Origins in Manual Processing

10

 

Consolidated Functions Ordinary (62 CFO): The Prototype of Modern Life Insurance Systems

10

 

Rear Admiral Hopper and COBOL

11

 

The Essence of COBOL

11

 

The Data Valet

13

 

Spaghetti Code?

13

 

The C Stands for Chatty

14

 

Initial Use in Insurance

15

 

COBOL Today

15

 

COBOL’s Contributions

16

Insurance 2.0: Service-Oriented Architecture

17

 

Growing Challenges in Systems Integration

18

 

SOA to the Rescue

19

 

A Double-Edged Sword

20

 

SOA: Badge Engineering in Insurance?

20

Insurance 3.0: A View to the Future

22

 

Emergence of Object-Oriented Systems

22

 

A Fly in the Ointment

23

 

Breaking the Performance Stalemate

24

 

Cloud-Based Core Insurance Models

25

The Path Forward

26

Wrapping Up

27

Leveraging Celent’s Expertise

28

 

Support for Financial Institutions

28

 

Support for Vendors

28

Related Celent Research

29

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