The Impending Insurance Architect Crisis

Mar 21st, 2012 | Posted by

I was recently talking to a past colleague over lunch and he reminded me of a concern I had a couple of years ago that seems to be descending on insurers in the next 2-5 years. Architects are usually considered valuable internal resources within carriers (for good reason if they are good) along with PMs and BAs. Carriers have been outsourcing more and more development work over the last decade and reducing their internal developer footprint. For many insurers, this has proven a cost effective endeavor, albeit not without its bumps.

In addition, more modern vendor insurance solutions, namely core systems, data mastery (BI, analytics, DW/DM, ETL), case management, BPM, Rules, Portal, etc., have become much more configurable and have enabled business users to take on more of the development and maintenance of these systems. While this has again been viewed as forward progress by analysts and insurers, it again has reduced the IT developer footprint.

The typical career path for most architects in insurance has been developer, senior developer, technical lead, architect, solutions architect, enterprise architect. While different companies may have slightly different names for the stages in the architect career path, and while there have been some exceptions, for the most part, the pipeline for architects has traditionally been from their (or other insurance companies’) development teams. As a developer, one would become very knowledgeable of the carriers systems, especially with respect to legacy systems. While some insurers may have training programs, most of the learning and knowledge was acquired through project experience and shadowing architects on projects if they were tapped as future architects for the company. Architects for many insurers continue to be the first group assembled to resolve major crises and failures for insurers due to their deep knowledge of the systems and ability to diagnose problems.

Obviously, as the architect pipeline dwindles due to a much reduced insurance developer pool, the number of available architects will likewise dwindle, but the need will not. Top level architects will be even more necessary going forward as insurers take advantage of Cloud and SaaS solutions as they mature. Knowledge of the impact of using a Cloud/SaaS solution on existing systems and analyzing the risks and benefits will fall squarely on the shoulders of the architects. While this development may make IBM, Oracle, Accenture, TCS, Cognizant and others smile since they have architects, the internal knowledge and insurance industry knowledge will be lacking (maybe not missing, but definitely lacking) and the cost will be high. This will create an opportunity for some one/group, I’m just not sure who at this time.

  1. insurancearch
    Mar 23rd, 2012 at 19:04
    Reply | Quote | #1

    Could not agree more. There is a significant difference between business-focused and strategic-thinking Enterprise/Solution Architects and technology-focused tactical-thinking Application/Integration/Data/Security Architects.
    It is very easy for organisations to have a singular definition of “Architect” wherein all flavours of Architects (as mentioned above) are assigned the same job duties and even HR pay-grade levels.
    Organisations must pay more attention to the needs and aspirations of various types of Architects if they really want to leverage & groom them properly. Otherwise don’t employ Architects at all – instead have tactical delivery roles such as IT Manager, BAs, Technical Leads/Developers, etc.

  2. James
    Mar 27th, 2012 at 16:48
    Reply | Quote | #2

    Ben, it is important to note that carriers may benefit in working with firms such as HP which not only have talented architects from a technical perspective, but have the means to teach from both an operational perspective (think BPO) to actually developing and deploying HP Policy Administration, Rating and other insurance products. I would argue that the diversity and focus of HP is something that has the potential to make an Architect even stronger especially when the same provider is also best in breed when it comes to cloud and SaaS solutions…

  3. Prasad Jakhadi
    Jun 24th, 2012 at 09:52
    Reply | Quote | #3

    I agree with Ben, as there has to be clear cut classification between Solution Architect (pure technical person) and a Business Architect (business person having exposure & familiarity of technology).
    It is very hard for the person to work as business guy, technology guy and now a days IT companies expect a person to take up managerial role along with the above mentioned roles.