You’ve heard the phrase, “you can’t teach an old dog new tricks.” Can the same be said for “new dogs?” Insurers are finding that in the context of IT staff, those “new dogs” coming out of academia want less to do with the old tricks of programming legacy systems—yet the holes they are trying to fill as these “legacy workers” retire require just that.

Like most vertical markets, the insurance industry’s IT attrition issues are commonplace. According to the U.S. Department of Labor, one million IT jobs will be unfilled by 2012, chiefly because there is not enough qualified, trained human capital to fill them. In the United States, enrollment in undergraduate computer programming disciplines has declined 70% in the last five years, says Robert Horton, coordinator of the management computer systems program for the University of Wisconsin at Whitewater.

“We are calling it a general IT workforce development crisis,” he says. “Largely a reaction to the setbacks associated with careers that crashed during the bust, the myths that IT careers are not ‘creative,’ and the fear that jobs are vulnerable to outsourcing, parents and counselors are advising kids not to choose computer science.”

Yet insurance companies face a unique dilemma—one that lends itself to the falling off of a specific breed of IT—those versed in legacy systems. As business demands escalate and IT teams are charged with doing more with less, decisions must be made when these knowledge workers retire. Whether a carrier decides to rip and replace its legacy systems, or find a creative way to meet those needs with existing systems, challenges ensue.

Some argue that to be progressive, IT departments need to move away from older legacy systems, and train their developers and programmers in the newer languages such as SQL, Java or C# (pronounced C-sharp). Still others are adopting an “if it ain’t broke” philosophy, choosing to hold on to systems that continue to successfully manage large volumes of data and reliably churn out complex transaction sets.

One thing is a constant: change. As IT workers trained in legacy languages, such as COBOL, depart for their second careers (away from IT) and the vendors supporting those systems create new offerings that offer less on the mainframe and more integration with newer systems, carriers are finding themselves at a crossroads.


More than 45% of survey respondents answering a recent poll cited heavy reliance on IT developers who manage and maintain COBOL-based legacy applications, while 36% reported marginal reliance. Only 18% of poll respondents reported having no reliance on IT personnel with COBOL knowledge.

Reliance on languages such as COBOL is understandable—the second-oldest high-level programming language (FORTRAN is the oldest), COBOL is still the most widely used programming language in the world. Its weakness is seen by many as its strength: The language is wordy, and programs written in COBOL tend to be much longer than the same programs written in other languages. But its wordiness makes it easy to understand programs because everything is spelled out, experts say.

Craig Lowenthal, CIO of NYMAGIC INC. and the MMO Group of Companies, a provider of ocean marine, energy and commercial property and casualty lines coverage, says COBOL has been a successful strategy—to date. As evidence, he points to carriers that choose to extend their legacy systems by creating a presentation layer that can function over the older system.

“During the last five-plus years, companies have been building new interfaces that can handle XML transactions so they can keep their COBOL at the back end,” he says. “So the attitude is: ‘don’t throw the baby out with the bathwater.’ The screens may not look great, but why build a new system? So if the system works, and you have folks to write to it, great. Conversely, now you have the continuing evolution of the Web and an aging workforce. Over the next five years, many people who hung on to those beliefs will be forced to move and change because they can’t sustain it and function as effectively.”

One of the problems faced by carriers that choose to hang on to legacy systems is rooted within the IT department culture itself: staff that may not be primed or encouraged to learn new technologies.

“We are facing people in the insurance industry who started their business in the old technology and still think in those kinds of terms,” says Petra Wildemann, director of insurance for the EMEA financial services industry of the Palo Alto, Calif.-based technology solutions provider Hewlett-Packard Co. “We also are facing people who are not really being trained on new systems and on new technology.”


And in spite of inroads made by initiatives such as the COBOL 2002 standard, which includes support for object-oriented programming and other modern language features, technology department staffers are also sometimes unable or unwilling to master the new technologies, or worry that such systems will make them expendable.

There is “strong opposition in the workforce because major changes in IT induce redundancies [i.e., layoffs], especially because the cost/benefit analysis for these changes are based on personnel cost (head count) reduction,” says Klaus Hackbarth, CIO, Deputy CEO and board member of WGV (W

rttembergische Gemeinde-Versicherungsverein AG), Stuttgart, Germany.

The 350-member IT department at Cary, N.C.-based SAS avoids problems associated with programming languages by keeping the focus forward. “I don’t have a lot of sympathy for people who are still using COBOL because in the 1970s they said it would die,” says SAS VP and CIO Suzanne Gordon. “We have moved on to sophisticated technologies that perform as reliably and more efficiently, so our focus is on being able to integrate with any platform.”

Skywire Software, a Frisco, Texas, provider of integrated solutions, found that one small carrier’s IT management was keen on using the provider’s XML Web service interfaces, but the rank-and-file staffers struggled with it because they lacked the right skill sets and wanted to stick to languages they were more comfortable with, according to Neil Betteridge, Skywire’s VP of product management in the company’s Moncton, New Brunswick, Canada office.

The fact that this occurred with a small carrier may not be a coincidence. In terms of finding staffers schooled in new technologies, regional carriers in smaller towns often face the most problems, whereas big insurers in metropolises face fewer concerns.

Regardless of company locale, insurance carriers that move away from the challenges associated with IT legacy system staffing and toward the future of open systems find similar challenges—there’s no guarantee that sufficient IT staff will be available.

With a four-year computing program ranked No. 1 by the Chicago-based Association of Information Technology Professionals for the fourth year in a row, even the University of Wisconsin in Whitewater is nevertheless seeing diminished returns.

“We may get 15 people in the COBOL course, but that’s half of the people that will graduate,” reports Horton. “In perspective, not that long ago, the number of computer science degrees granted was in the high 80s and low 90s.”

Recently, the college’s 35-member board of advisors, comprising the business community at large, voted COBOL off the required list for graduation and on to a list of electives. “COBOL is there, but less and less a priority,” says Horton.


With support waning for legacy languages, NYMAGIC’s Lowenthal is taking a proactive approach. Joining NYMAGIC less than one year ago, he is managing the company’s migration to a Web-based platform. Of his 30-member IT team, two or three program in the language.

“We want COBOL—it helps, but our new platform after 2009 doesn’t require it,” he says.

Lowenthal believes that the availability of new platforms, and the solutions that run on them, also will play a role in a company’s decision to keep or replace its legacy systems. “We looked for an end-to-end core systems solution and, surprisingly, we could only find one vendor that offered it. For example, we found some with good billing, but not necessarily policy administration. The vendors continued to pitch ‘best of breed,’ but it was slapping together multiple technologies, and we’re not interested in a patchwork solution.”

SAS’s Gordon agrees that the vendor has a responsibility to support legacy systems, but reinforces the company’s goal—to bring carriers up to speed with newer technologies. “There have been complaints that vendors purposefully create software and systems that ultimately become obsolete,” she says, “and there are some vendors who force you to move too soon, but SAS doesn’t do that.”

In fact, the provider of business intelligence (BI) solutions finds that some of its insurance customers want to do a lot of their BI work on the mainframe because it handles large volumes of data so well, adds Gordon. The secret, she says, is to find a middle ground.

“The mainframe is not going away,” Gordon says. “Because there are so many different platforms and different ways of computing, we’ll continue to have more options, including providing access to any other vendor’s data and information. But we want our customers to use the newer technologies because it’s to their benefit with new features and functionality. We’ll all be forced to figure something out.”

Daniel Joelson contributed to this story.

The Rising Tide...

In an effort to stem the tide of legacy IT attrition, a number of industry organizations have implemented action plans that focus on boosting recruitment, education and career development.Bruce Skaistis, founder of Skaistis Consulting, Kingston, Pa., suggests companies start by addressing the real problem—that regardless of platform, people do not want to work in IT. “Their perception of enterprise IT is long hours, repetitive work, little recognition - and no fun,” he says. “It’s hard to counter their perception, because, in many organizations, the reality of life in IT is long hours, repetitive work, little recognition and no fun.” Skaistis holds workshops that focus on developing technical skills, creating a better work/life balance, unshackling creativity, and promoting an atmosphere that does not take things too seriously.

Not surprisingly, many other plans involve working with colleges and universities to garner support.

The Industry Relations Committee of the Durham, N.C.-based Insurance Accounting & Systems Association (IASA) has the goal of bringing new college graduates into the insurance industry — from both the business and IT areas. In order to accomplish this, the group researched universities with insurance degrees (both undergraduate and graduate programs) with an outreach program. The group’s objective is to educate the academic deans and department heads about IASA, offer them assistance through its text books and other educational programs, and brainstorm with them on what can the two entities can do together to ensure that students begin their careers in the insurance industry.

IBM, Armonk, N.Y., has a vested interest in recruiting for the mainframe. The company has a specific Web site, with universities listed that offer programs and support,

SAS has made great inroads to acquiring and retaining IT talent. The Cary, N.C., company works with North Carolina State, Duke and University of North Carolina to recruit IT talent, offers a full-time internship program, and prides itself on making SAS a place where people want to work. Recognized for his success, SAS co-founder Jim Goodnight provides his employees with onsite daycare, flex time, dry cleaning, onsite healthcare, and more. The company currently has a 4% turnover rate.

The University of Wisconsin-Whitewater, reeling from the drop in computer science enrollment, holds several IT fairs per year, usually in the Midwest. Student candidates are often bussed in to meet, in a hall set up exposition-style, with companies from all vertical markets eager to convince them that IT is a valuable career choice. This year, more than 1,600 candidates participated, notes Robert Horton, coordinator of the management computer systems program for the university, and insurance was one of the largest draws.

“American Family, [Madison, Wis.], has a booth, and they take a very creative approach,” he says. American Family representatives ask teams of candidates to study two piles of socks on the booth table. They have them sort the socks into piles and then they ask them to justify why they sorted the way they did. The piles are labeled, and they keep track of each team’s results.

“It’s always the case that one group wants it categorized one way and one group wants to categorize it another way,” says Horton. “It really catches their interest, and then the American Family representative explains the similarities in computing as it applies to the insurance industry. This is a great way to get kids to think about these careers by getting them excited and creating some sort of emotional attachment to the field.”

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