Modernization in Insurance – Reinventing Legacy Systems

Presently, digital transformation is at the forefront of every sector, and the insurance industry is no exception. But why are insurers struggling to integrate this digital disruption into their overall business processes? Why are they still facing challenges in their modernization journey?

The problem entails complex, rigid, and aging legacy systems that impede digital transformation in the insurance domain. Apart from being expensive to maintain, these legacy systems have been adversely impacting the insurance business as they are not designed to keep up with the pace of technology change. Moreover, legacy systems often fail to integrate with present-day insurtechs and third-party systems.

This blog will take you through why insurers still use legacy systems and how they can benefit by embarking on a modernization journey.

Why are Insurers still Maintaining Legacy Systems?

• Despite innumerable advantages for an insurance carrier to implement modernization to their existing legacy systems, there are also a few reasons why many insurers are moving slower in adopting those changes. In most cases, legacy systems handle crucial day-to-day operations and cannot be easily shut down or updated gradually. As such, legacy system updates involve detailed thoughts and comprehensive planning.

• When the viability and the need to implement modernization are evaluated, a carrier needs to assess the time and cost required for implementation against the probable gains. It is undeniable that modernizing legacy systems will elicit enhanced productivity, functionality, and security. However, the actual implementation procedure can take considerable time and resources. A fundamental difficulty is developing a new system all the way through deploying it while still maintaining the legacy system appropriately.

• When legacy systems are adequate to keep day-to-day operations flowing, employees may view modernization as expensive, unnecessary, and time-consuming. Moreover, fostering the acceptance of change and a new way of doing things will require coaching, training, and, most of all, patience. This is an additional soft cost that must be taken into consideration while decision-making.

Why do you Need to Consider Modernization?

In this modern era, insurance businesses leverage advanced technologies in building their applications to stay ahead of the competitive curve. Therefore, modernizing legacy applications is the need of the hour that ensures better client engagement, consumer experience, and increased sales. Insurance organizations across the globe are modernizing legacy systems and core processes that enable them to develop new capabilities and smoothen business operations. In a report, Deloitte highlights, ‘71% of insurers are in the process of performing modernization.’

Let’s quickly go through the top reasons for enacting modernization in the insurance sector. 

Improved Productivity.

Your entire idea behind modernizing legacy systems is to see an improvement in your organization’s workflow. So what should you do to achieve this? You can explore disruptive technologies and modernize & introduce new core systems for better productivity. 

Better Decision-Making.

Legacy systems can cause delays in decision-making which can lead to decreased business agility. You know what it can lead to. Right? — Lack of business agility can directly impact your client experiences. So, to resolve this, it is imperative for you to modernize your legacy systems, thereby enhancing decision-making and improving the entire workflow & client-centricity that will help you avert business loss.

Increased Revenue Generation.

Modernizing legacy systems enables insurers to adopt agile business models, generating more revenue than businesses that run on traditional methods. For instance, if you are in a P&C insurance business and have an insurance app, it helps establish communication with the right consumers, increase market reach, retain leads, and improve sales. 

Wrapping Up

It’s time for you to embrace core insurance systems modernization blended with the industry best practices. The ramp-up will enable you to have a digitally thriving business, steering you ahead in the insurance landscape. 

Contact us if you are looking at partnering with professionals who can help achieve modernization in your business and meet your requirements.

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