Legacy Applications

Many (most?) financial services companies operating in the insurance sector are bound by legacy applications. These are characterised by old technology, poor database design, and (usually) poor documentation. Resulting in expensive maintenance and support services.

As such, modernising legacy systems is usually on the agenda for CIOs. An article on eWeek.com reports on a survey conducted on this topic.

However, financial services organisations face special challenges when looking at modernisation. Insurance is a complex domain, and while it is easy to identify the key objects in a data model (client, policy, transaction, etc.), there is scope for immense variation at detail levels. And since insurance companies delight in making products complex and opaque, the complexity within the system grows over time. Poor documentation only exacerbates the problem.

Many companies come to a choice. They can replace the system with a package with all of the inherent risks around vendors, system suitability, and migration. Or they can take a lipstick-on-the-pig approach, layering a web front-end (or whatever else is the current flavour) over the top of the existing back-end database and code. Each has it's advantages, although you could argue that the package solution is probably a better way to go, as it allows the insurance company to focus more on the business and less on being an IT development shop.