Maryland Automobile Insurance Fund Begins Major Migration from COBOL to JBoss Enterprise Middleware

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July 25, 2011

Customer: Maryland Automobile Insurance Fund (MAIF)

“With the help of JBoss Enterprise Middleware and Red Hat Consulting, we met the project’s deadline and ended up with such a rich system that has set the stage for further successes." - Diane Williams, IT Director, Maryland Automobile Insurance Fund

Industry: Insurance
Geography: North America
Country: United States


Business Challenge:

To streamline and simplify the processes, which were only partially automated, for performing subrogation using a variety of legacy and proprietary systems

Migration Path:

COBOL to JBoss Enterprise Middleware

Solution:

To completely re-engineer the existing subrogation system by consolidating data in a central repository and automating the entire subrogation process end-to-end using JBoss® Enterprise Middleware

Hardware:

Application Server - HP ProLiant BL495c G5 Server; Database Server (Oracle 10.2) - HP DL380 G5

Benefits:

Increased revenues from subrogation recoveries, achieved higher performance, lowered system maintenance efforts, increased worker productivity

More
Background:

Founded in 1972 by the Maryland State Legislature, the Maryland Automobile Insurance Fund (MAIF) provides automobile liability insurance to Maryland residents who cannot qualify for insurance coverage in the private insurance market. Today, MAIF is required to take on any Maryland resident whose car insurance has been canceled or who has been turned down by other insurers. As an independent agency of the State of Maryland, the MAIF reports directly to the governor of the state and is governed by rules established by Title 20 of the Insurance Article of the Annotated Code of Maryland. However, MAIF receives no state funding and must sustain itself on the premiums it collects from customers.

Business Challenge:

For more than 15 years, MAIF ran its mission-critical systems in a Tru64 UNIX, COBOL, PRO COBOL, Javascript, HTML, UNIX shell script environment. These homegrown applications resided on aging HP AlphaServer ES40 midrange systems, which were reaching the end of their lifespan. “We knew it was time to begin migrating away from that infrastructure,” said Herb Jordan, senior IT architect at MAIF. “The claims system in particular really needed attention. Although extraordinarily rich and robust, the system was also overly complex, having grown up from a flat-file system that we then put a web front end on.” Claims processing is one of the most important functions of an insurance firm, and MAIF has nearly 200 employees involved in claims processing who use the system.

In addition to the typical kind of functionality that the claims system of any insurer would require, MAIF had some specific compliance and governance requirements because of its relationship with the State of Maryland. Although chartered by the state, MAIF is not taxpayer-supported; therefore, revenues are solely derived from sales of insurance policies. “Although we operate like any other property and casualty insurance company, our relationship with Maryland makes us into a quasi-state agency,” said Diane Williams, IT director at MAIF. “We have the usual insurance industry rules and regulations to comply with, but we must also follow the dictates of the state. The regulatory and legal requirements are quite complicated, and needed to be programmed into the system. “Given the mission-critical nature of the claims system, MAIF completed a proof of concept (POC) with a subset of functionality that pertained to subrogation. Subrogation is the process by which an insurance company tries to recoup expenses for a claim it paid out that should have been paid wholly or partially by another party (e.g., the insurance company of the other party in an auto accident). It is a critical part of the claims process, and without the subrogation system, the claims workers would be unable to perform their jobs. Yet the existing system at MAIF was highly inefficient.

“Although somewhat automated, most of our subrogation processes were performed outside the main claims system,” said Jordan. Since subrogation relied on getting information from a variety of different sources, including databases as well as flat files, there was no centralized coordination and the entire process was very inefficient. “There was a lot of duplicate work, and a lot of manual checking and tracking, including going through batch reports and extracting information to enter into spreadsheets.”

Solution:

MAIF had already made the decision in mid-2007 to migrate its mission-critical applications from HP Tru64 UNIX to Red Hat Enterprise Linux running on industry-standard x86 systems. By early 2009, it had narrowed its technology options for building a new web-based subrogation application down to two: Microsoft’s .NET or Java EE. With the help of an external consultant, MAIF made its decision to go with Java EE and, at that same time, shifted to the agile development methodology. Because of its positive experiences with Red Hat Enterprise Linux and with the help of Red Hat Consulting, MAIF selected JBoss Enterprise Middleware for its Java EE vendor. JBoss Enterprise Middleware allowed MAIF more flexibility and performance at a significantly lower cost. “And while the proprietary .NET environment’s lower learning curve was attractive, its cons outweighed its pros,” said Jordan. “We saw significantly higher costs and a smaller pool of available programming talent with the proprietary .NET environment. Most importantly, if we went in the .NET direction, we would have had to follow the direction that Microsoft took .NET in the future—no matter what direction that was.”

Because MAIF’s IT staff had no experience with JBoss Enterprise Middleware, Java, or object-oriented programming, Jordan reached out to Red Hat Consulting for support. Jordan especially liked Amentra’s “mentor” model for collaborative application development, which resulted in Amentra, a Red Hat company, training his development team at the same time that the application was being developed.

“It was really a co-development project,” said Jordan. “Our developers did most of the coding. Amentra provided mentoring to help our team transition from procedural to object-oriented programming, from COBOL to JBoss Enterprise Middleware, and from waterfall to agile.

Additionally, Amentra provided advanced programming, software architecture, requirements, and design assistance. “We wanted to be absolutely certain that when the Red Hat consultants left, our developers would be able to maintain and extend the subrogation application.”

With Amentra’s help, MAIF implemented JBoss Enterprise Middleware using JBoss Seam Framework for the web frontend and JBoss Hibernate Framework to connect to the backend databases. “We delivered a system that exceeded our users’ expectations and that met our aggressive deadline,” said Jordan. “We could not have done this without Amentra’s help.”

Because Jordan’s team was under a tight deadline to finish the system, he decided to use the agile software development methodology that calls for a highly iterative development process. “This significantly contributed to the success of the project,” said Jordan. “We were able to put new functionality in front of the users every 4-6 weeks. As a result, the implementation of the final system was anticlimactic because the users had prior hands-on experience with and input into every capability delivered. By doing things this way, we were able to implement the system with very few issues.”

Benefits:

The application was finished in May 2010, and before September of that year, the MAIF team had already put out two new releases, which included additional functionality requested by users. The biggest difference between the new and the old subrogation system is the ease of use and data integrity. “Users can call up a claim, investigate responsible parties, manage the payment process, and get the necessary approvals without searching through multiple systems, manually sifting through paper forms, or rekeying data,” said Jordan. “It is vastly more efficient.”

Jordan expects large increases in worker productivity, which will continue to grow as the learning curve becomes less steep and as his staff continues to add functionality to the system. Jordan also expects to increase revenues MAIF collects through subrogation. “With the new system, every month we expect to see subrogation recoveries increase,” he said. “This will directly impact MAIF’s bottom line.”

Not surprisingly, the subrogation project caught the attention of MAIF’s senior business executives. “Everyone from the CEO down was aware and involved in this project and knew this was a top priority for the company,” said Williams.

“With the help of JBoss Enterprise Middleware and Red Hat Consulting, we met the project’s deadline and ended up with such a rich system that has set the stage for further successes. And we are now constantly getting compliments and thank yous for the completed system.” Moving forward, Jordan intends to continue adding functionality to the subrogation system while continuing to wean MAIF off its aging Tru64-applications running on the HP ES40 systems.

Because of the success of the subrogation system, JBoss Enterprise Middleware is a prime candidate as MAIF continues its migration of the claims system over to Red Hat Enterprise Linux. “MAIF has laid the ground work and built a solid foundation that will be used as we progress through the development of the entire claims system,” said Jordan. “Adopting the agile development method was a significant paradigm shift, and we’ve definitely seen the benefits. Our success speaks for itself. Going with JBoss Enterprise Middleware was the right choice.”

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