Many insurance companies still depend on so-called “legacy systems”—mainframes or large servers that store and pump out quotes, policyholder specifications, policy data and claims information. They may have been originally brought in decades ago, and have been tweaked, updated and reconfigured along the way to keep them running smoothly.
In many cases, they run so smoothly, and have so much business logic embedded within them, that it's a costly and disruptive exercise to attempt to replace them—at least all at once. So they keep running.
There's still a catch, however. In a few years, insurers may begin to run out of people who know how to run these big systems. And, with many programs written in Cobol, there may not be enough developers adept in this classic language.
The challenge was well-framed a couple of months back in an article by Robert L. Mitchell in ComputerWorld. He cites an IT director at Bank of New York Mellon, for example, who worries about his Cobol talent retiring over the next few years—talent that is not available in the next generation of IT professionals. "We have people we will be losing who have a lot of business knowledge. That scares me," the IT manager says. Mitchell adds that what really keeps the bank's IT manager up at night “is the thought that he may not be able to transfer the deep understanding of the business logic embedded within the bank's programs before it walks out the door with employees who retire.”
Many of the world's critical systems—including a huge portion of the insurance industry—still runs on Cobol, a cross-platform language first created more than half a century ago. However, Cobol is not the first thing students in IT college programs think of when they consider their future prospects. Java, .NET, mobile, cloud and Web coding are seen as hot areas for career growth.
For help with Cobol applications, insurers may need to increasingly rely on outside expertise, such as outsourcers or systems integrators. Or, they can turn to industry-education consortia for their Cobol resources, as did Guardian Life Insurance, as cited in Mitchell's article. The insurer reportedly recruits Cobol programmers from Workforce Opportunity Services, a nonprofit that collaborates with business clients and local colleges to train economically disadvantaged students.
The bottom line is that many legacy systems are highly cost-effective to run, are rock-solid secure, and are still powerful enough to support a company's vast stores of business logic and data. And IBM continues to update and improve the mainframe, System z, to meet new technology needs, from cloud to back-end support for mobile. Plus, there are tools and resources to ease gradual migrations off Cobol systems to other platforms. But insurance CIOs and IT managers will need to adopt some creative and innovative strategies to maintain these systems.
Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.
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