Reality-Checking the Evolution in Core Insurance Systems

by Michael Fitzgerald, April 15, 2010
Industry Trends
North America

Abstract

Insurance companies have a long history of leading edge innovation in information technology. Unfortunately, that history was long ago. Early investment in computing power has left the industry with a massive amount of valuable intellectual capital codified in legacy systems. Few have the luxury of starting over, so most companies must deal with the yoke of legacy infrastructure.

A new report, Reality-Checking the Evolution in Core Insurance Systems, examines how can insurers and vendors can best partner to effectively deal with these real-world constraints. A research panel of over 30 insurers and a facilitated workshop-style discussion with CIOs identified practical steps that can be taken to increase the value realized throughout the supply chain. A continuum is presented that outlines how the relationship between a provider and a client can vary between strategic and tactical, reactive and proactive. There was a consistent message from the panel that more value can be gained through activities which move the partnership toward strategic issues in a proactive manner.

“There is a massive amount of valuable intellectual capital codified in the legacy systems that are in operation at insurance companies,” says Mike Fitzgerald, Senior Analyst with Celent’s Insurance Group and author of the report. “However, legacy environments have proven to be inflexible and unresponsive to a quickening business pace and increasing distribution complexity. In the day-to-day world of the insurer, this must be addressed, and vendors who assist with the transition will be highly valued.”

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 a wholly-owned operating unit 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

3

Introduction

4

 

About the Panel

5

Current Environment

8

 

Business and System Priorities

8

 

System Environment

10

The Future

14

Conclusion

18

Leveraging Celent’s Expertise

19

 

Support for Financial Institutions

19

 

Support for Vendors

19

Related Celent Research

20

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