Legacy Modernization in Japan’s Insurance Industry, Part 1: Survey Analysis and Status Update

by Eiichiro Yanagawa, June 10, 2016
Other
Asia-Pacific

Abstract

This report draws on a 2015 Celent survey on legacy modernization. More than 60 firms including banks, insurers, brokers, and asset management firms participated. This two-part report is an extension of this work that narrows the focus to the insurance sector.

This report sheds light on the state of core business systems and core system modernization, the outlook for the future, and industry challenges.

The report examines the following areas:

  • State of legacy system modernization and replacement strategies
  • Industry consideration of new solutions to modernization (SaaS and BPO).
  • The most significant challenges.
  • The role of business cases.
  • Modernization-driven changes in the roles of business and IT units.

“Belief is weak that legacy modernization — that is to say, the modernization of core systems — can lead to a more robust industry,” says Eiichiro Yanagawa, a senior analyst with Celent’s Asian Financial Services practice and author of the report. “Rather, insurers fear altering existing processes designed to engender innovation in past products and services and also the costs and risks of changes to department units and their functions.”

This report provides an overview and summary of the survey results.

Part 2 offers policy prescriptions and proposals for industry players.

This report contains 28 figures.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

 

Definitions

1

Introduction

2

 

Global Trends

2

 

Japan’s Insurance Industry

3

Legacy Modernization Survey 2015 Overview

9

 

Survey Items

9

 

Overview of Survey Participants

9

The State of Modernization

11

 

System Replacement Goals and Strategies

11

 

Replacement Project Consideration

12

 

Challenges and Vendor Expectations

15

Business Case Perspectives

18

 

Legacy Systems Impacts and Merits of Modernization

18

 

Role of Business Cases

19

 

Changes in Cost Allocation

20

New Technology Adoption and Its Impact on Modernization

23

 

Challenges in the IT Arena

23

 

IT Unit Assessment

24

 

Changes of Division of Labor Between Business and IT Units

25

State of the Industry According to the Survey Results

27

 

State of Legacy System Modernization at Japan’s Insurers

27

Toward Part 2

29

Appendix

30

 

Respondent Profile

30

Leveraging Celent’s Expertise

32

 

Support for Financial Institutions

32

 

Support for Vendors

32

Related Celent Research

33

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