Recently, a hardware glitch in the Power Control Unit of the 30-year-old Hubble Space Telescope caused it to go dark for over a month. NASA was able to identify, test, and implement a workaround that involved switching over to backup hardware located in another module of the Hubble. Undoubtedly, this fix involved third-generation scientists consulting with members of the original development and maintenance team who have long since retired. They were able to apply another patch to a system that has gone way beyond its expected useful life.
The Hubble is scheduled to be replaced by the James Webb Space Telescope, based on current and evolving technology that has been under development for over 25 years with an original launch date of 2007. The launch date has been revised more than ten times and is now scheduled for November 2021.
Insurance Imitating Space
As a child of the space race, I love these kinds of stories. However, I can’t help but draw parallels to the state of the insurance technology industry. Our “Hubbles” are the policy administration systems (PAS) that were implemented in the 1970s. They were expected to be in place for ten years or so and then replaced by new systems that would exploit emerging technology and provide processing improvements.
In the 1980s, replacements for the top PAS platforms were under development by four vendors. There was much hype and optimism associated with their arrival. Unfortunately, only one of those systems saw the light of day, and it was primarily the distribution component of a larger solution that was implemented.
Generational Transfer (and Loss)
There have been relatively few “new” PAS solutions developed and implemented over the 40 years since then; some companies still run a significant portion of their business on first-generation mainframe technology. The knowledge of how to run and modify these systems has been handed down to four or five generations of developers.
The loss of knowledge through degradation over time is like another outdated technology, VCR tapes. When the information about how a system is designed and works is transferred to another person, it is like making a copy of a VCR tape. Each successive copy loses quality, so after the fourth or fifth copy, the video tape is unwatchable. Many insurers have fifth-generation developers supporting their most critical core systems. They know how to do basic functions; however, there are dark corners of these systems that no developer understands or has ever seen.
Between Retirement and Remote Work
Which brings me back to the Hubble connection. What happens if a hardware or software glitch happens in one of these critical systems? The number of people who have a deep understanding of the inner workings of these systems is dwindling. The retirement cliff that many have been predicting is here. The pandemic has hastened the plans of many Baby Boomers as they adopt a “life is too short” mentality.
Additionally, the relaxing of work from home restrictions has made remote development more palatable for both employers and employees. As the demand for technology experts and the opportunity for working from anywhere both increase, companies may find their ability to attract and maintain the resources they need to keep these systems running is compromised.
This competition, in addition to a desire to digitally transform their core business, will lead many of the legacy-run holdouts to accelerate their plans to migrate to a modern system. As they do so, it is recommended that they take stock of their current technology ecosystem and platforms.
Preservation Before Transformation
Two actions insurers can perform to improve their chances of success are to develop a map of their core systems across core business functions and to perform a block analysis of their current in-force policies. These activities should be performed prior to a transformation program—and while the knowledgeable resources are still retained.
For related research on this topic, read the Reference Report Novarica Core Systems Map and the Executive Brief Block Analysis and Life Systems Transformation.
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