Postulates For This Journal

The following postulates form the basic ideas this journal is intended to examine and discuss:

1) Most medium to large size property & casualty insurance companies recognized the value of computer systems very early. Consequently they installed mainframe computer systems back in the early 1960's (some as far back as the 1950's.)

2) These companies are among the first victims of vendor "lock-in". Carl Shapiro and Hal Varian devote two chapters to recognizing and managing "lock-in" in their book Information Rules
.

3) Most of these companies have a system architecture which has been described as a Ball of Mud by Brian Foote and Joseph Yoder. While companies have upgraded to bigger and better mainframes, and added more programs, some of the programs that were written back in the 1960's are still in use today.

4) Most of these companies have a strong desire to modernize and improve their computer systems.

5) Most of these companies have experienced one or more failures in their attempts to modernize.

6) Software vendors who have not had experience with this industry almost invariably underestimate the complexity of the property & casualty insurance business.

7) Some excellent software components are available for purchase from vendors who do understand the property & casualty insurance industry (e.g. for rating, accounting, etc.) Integrating these into a company's overall system, however, is usually costly, time consuming and difficult.

8) Roughly half of all property & casualty insurance in the United States is sold through independent agents, each of whom represent several insurance companies. The other half is sold through insurance companies who either employ their own direct sales force, or use "exclusive" agents who represent only the one company. This journal is intended to focus on issues related to those companies who sell through the independent agency system, where each agent represents multiple companies.

9) Insurance companies, and their independent agents, need a better way to conduct business together electronically.

10) The best hope for such companies to modernize and improve their systems is to re-design their enterprise application architecture.

11) Current technology offers numerous protocols, tools and ideas on how to improve such companies' integration architecture. Insurance companies need to examine their alternatives and engage in some serious thought about which alternatives offer the best solution. For example, consider this thought experiment that Sean McGrath wrote about a year and a half ago.