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Linux Gains Ground

While still cautious on open source, insurers are seriously studying-and increasingly implementing-Linux-related solutions.

While still cautious on open source, insurers are seriously studying-and increasingly implementing-Linux-related solutions.

Arbella Insurance is like a lot of insurance companies, reckons Richard Leek, senior manager, information systems, of the Quincy, Mass.-based P&C carrier with $1.04 billion in assets. Estimating his company to be at about the 60th percentile in terms of the application of new technology, he says the attitude toward Linux is probably a common one: "We have a lot of our guys looking at the Linux option, but we haven't come across any viable uses yet.'

While interested in the versatility and flexibility Linux might be able to offer, Arbella lacks the resources to devote to a non-production use of the operating system, and has reservations about the system's viability for many production needs. The carrier is in the process of moving major applications away from an outsourced mainframe arrangement to a more flexible architecture, but Linux doesn't qualify. "Our enterprise claims application is an old client/server application which will be migrated to a Web architecture," Leek relates. "[The system] is not certified on Linux, and we're not willing to take the risk to bring something like that onto an uncertified platform. The same would be true for a lot of other applications we're looking at."

Arbella is not alone in its concerns. Lack of a complete and fully integrated software environment tops a list of concerns businesses have about Linux, according to a recent InformationWeek study, with the lack of management tools being another issue of concern. But even a limited opportunity is still an opportunity.

"I don't know if I'd do a lot of my core business on Linux, though not because of the stability of the product, but more because of the unavailability of resources associated with being open source," says Darren Joslin, assistant vice president, distributed systems, Zurich North America (Schaumburg, Ill., $13.6 billion in premiums written in 2002). But Linux's limitations haven't dampened Zurich's enthusiasm for using the operating system. "Linux is a strong play for us," he adds. "It's a matter of developing and embracing point opportunities to continue to demonstrate its viability."

Among those point opportunities are front-end e-business services. Zurich subsidiary Farmers Insurance (Los Angeles, $12 billion in assets) has already implemented a Linux-based Red Hat (Raleigh, N.C.) solution to run its independent distributor-facing new business Web application. That application is only the beginning of the Linux opportunity for Zurich, according to Joslin, who sees the chance to do high-end processing for a very low cost. "We see Linux replacing a lot what of what we've done in the (Sun Microsystems, Santa Clara, Calif.) Solaris world for e-business front-end projects," Joslin relates. "We feel Linux and Apache (Lincoln, Neb.) server combinations will really help to lower our costs and improve our performance and support capability to support our growth over the next year."

In the near future Joslin also will be pushing the use of parallel databases on a Linux platform to deliver enterprise-scale database services for some of Zurich North America's critical applications and business intelligence processes.

As Joslin's and other executives' concerns demonstrate, the Linux proposition is significantly limited by the maturity of Linux-based offerings and management tools for enterprise uses. Accommodation by industry vendors is another issue, and some of the biggest players are taking strong positions.

Vendor Investment

IBM is making a big bet on more widespread adoption, saying that Linux and the open-source movement are central to its e-business On Demand strategy, and to the future of the IT industry in general. The Armonk, N.Y.-based vendor operates a Linux Technology Center, staffed by more than 300 engineers worldwide who, according to IBM, work full-time on Linux as participants in the open-source community. IBM also claims to have more than 7,500 employees involved with Linux in porting centers, research, services, development labs and sales and marketing; and the vendor is currently shipping more than 65 software products that run on Linux across its IBM DB2, WebSphere, Lotus and Tivoli software families.

Although the insurance industry has been slower than other financial services segments to move on Linux, greater adoption of the open source technology by carriers is a matter of time, in the opinion of Bill Pieroni, general manager, IBM Global Insurance Industry. "Everyone is experimenting with it; of my top 10 customers, every single one has a pilot," he comments. Few major implementations have appeared so far, Pieroni acknowledges, but he insists that "it's slowly creeping into new development, and certainly into the long-term strategies of clients."

In addition to more a more obvious value proposition related to the lack of licensing fees, Pieroni pitches Linux as a bridge between last-generation legacy platforms and emerging technology that doesn't require exhaustive reconfiguration of the legacy portfolio. For example, "moving from a mainframe-centric environment that leverages MBS or other flavors of Unix in the server farm to Linux is not easy-nothing is-but it's certainly a lot easier than historically available options that insurers have had around emerging technologies," Pieroni argues.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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