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Integrating Legacy Systems with Modern IT Solutions

Apr 11, 2024

Brief summary: It is imperative for insurance companies to modernize their legacy systems to stay competitive in the ever-evolving digital landscape. This blog outlines the challenges associated with legacy systems, hindering effective data utilization & customer satisfaction and suggests best practices for a successful modernization process.

Introduction

In the insurance sector, legacy systems are often identified with limited capabilities, slow processes, and higher customer attrition rates. In the present ever-evolving insurance landscape, where the digital realm reigns supreme, legacy systems stand as a challenge to progress.

However, as P&C insurance digital transformation continues to reshape the industry, insurers are increasingly recognizing the need to evolve from outdated insurance core systems to modern digital solutions.

This blog will explore the challenges related to leveraging legacy systems and how modernization approaches can help insurance companies drive growth.

The Need for Modernizing Legacy Systems

It is imperative for insurance carriers to modernize legacy systems and embrace new technologies in order to streamline operations, meet dynamic client expectations, and utilize appropriate data for better decision-making.

Challenges Associated with Legacy Systems

Despite the widespread introduction of modernization initiatives, insurers still rely on legacy systems that come with myriad challenges, including:

  • IT systems’ inflexibility
  • Non-standardized interfaces
  • Complexities of products
  • Lack of centralized customer view

A few common bottlenecks that these challenges bring about include insufficient business coordination, core concentration on front-end solutions without resolving the underlying operating issues, and reduced utilization of digital solutions due to limited capabilities and increased complexities. Moreover, the absence of a centralized client view due to complex legacy IT systems impedes the proper usage of big data, preventing carriers from obtaining actionable insights.

Furthermore, as per a study by Forbes, 86% are willing to switch their current company because another company will provide better service. Modernization efforts and digital transformation can enhance product development and offer 24/7 support and digital-first experiences, which serve customer expectations and improve client retention.

A Shift from Legacy to Modern Systems

5 Best Practices to Consider for a Successful Modernization Process

Assessing your present system:

At the initial stage, conducting a detailed analysis of the current legacy insurance core system is crucial. Comprehending the drawbacks, data structures, potential integration challenges, etc., enables us to strategize an effective modernization roadmap.

Understanding business objectives:

Understanding the purpose of the business that your system has to serve is important. Why are you opting to modernize legacy systems at all? Start by pointing out the KPIs your system impacts and think about how integration with modern solutions can serve them better. This comprehension helps to design a more efficient modernization strategy, which will meet your present requirements and support future growth.

Implementing modernization with a phased approach:

Planning the modernization process in a phased manner decreases the risks and helps carriers keep track of the outcomes incrementally. The process should begin with low-risk integrations and gradually execute complex ones, ensuring reduced disruptions and increased opportunity for corrections at each stage.

Seamlessly transferring & mapping data:

Outdated systems often include various data structures and formats. Careful planning for transferring data from legacy systems to modern systems is essential for seamless integration and smooth data flow.

Constantly monitoring and optimizing:

Once the integration is done, continuous monitoring and optimization are critical for proper maintenance of system performance, detecting malfunctions, and promptly resolving any issues. Daily assessments and updates help businesses maximize the benefits of modernized IT solutions.

Embracing cloud-native solutions:

Adopting cloud-based solutions decreases infrastructure complications and allows businesses to focus on their focus areas. Organizations should opt for cloud-native technologies that support hybrid integration models, ensuring seamless connectivity between on-premises legacy systems and cloud-based solutions. There are various strategies to accomplish this, including:

  • Rehosting – Shifting applications/software to the modern system as they are.
  • Replatforming – Modifying applications/software for the modern system.
  • Refactoring – Rewriting applications/software for a modern, cloud-native environment.

To Wrap Up

By overcoming the challenges of legacy systems, carriers can achieve enhanced client satisfaction and retention rates, increased efficiency, and, overall, a more robust bottom line. Modernization is the pathway to a future-proof insurance sector, and with a strategic approach, the journey can be quite beneficial.

For insurance businesses ready to overhaul outdated systems, reach out to KMG. We offer solutions that can help insurers streamline their modernization and migration processes.

Let’s discuss your project. Connect with us.

sales@kmgus.com

+1 631 777 2424

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