Over the course of the Covid-19 pandemic, beyond having the opportunity to work with the terrific Aite-Novarica Group Insurance Practice team as we navigated uncharted waters, I had a chance to explore one of my passions: collecting and preserving vintage BMW motorcycles.
A particularly interesting motorcycle I have been working on dates to 1982. Recently, I encountered a serious electrical problem with this vehicle. Thanks to the efforts of a network of master mechanic friends in North Carolina, Pennsylvania, and Australia, we were eventually able to identify the obscure problem.
The fix itself was easy, but 40 years into the service life of this motorcycle, there are surprisingly few people who know how to find and fix this specific issue. It took five months of effort to solve the problem. I later found a reference manual that described the fix, but it had probably been 30 years since anyone else had opened that book! If we’d had that manual at the start if would have taken ten minutes, tops, to get things right.
This situation stuck out to me as a corollary to the core systems issues many life insurance carriers are facing. A surprising number of insurers are running environments that originated much earlier than ’82.
Some of this “classic” technology works reasonably well if nobody touches it. Do something that breaks it, however, and the path to redemption can be long and painful. With carriers facing significant losses of both institutional memory and critical skills due to early retirements and other changes from the Great Resignation, relatively simple problems have the potential to become major production outages. And these outages can be hard to explain to regulators and customers alike.
A variety of alternatives exist when contemplating legacy core systems, of course, including:
- Building a network of expertise that can be tapped as needed to deal with emerging issues.
- Developing a program that allows more long-tenured employees with key skills to gradually wind down their careers, rather than facing a cliff of sudden retirement. Part-time programs can keep people engaged, even if the idea of a 40-hour work week is no longer of interest.
- Creating forums where companies with similar issues and challenges can work together to share insights and expertise.
Classic German motorcycles are terrific. Classic platforms built on technology dating back to the middle of the last century? Not so much. Legacy systems may be great for legacy customers, but they won’t offer much solace to carriers hoping to grow in coming years. Game on.
To learn more about how to deal with the challenges of legacy systems in a changing environment, reach out to me at [email protected].