The Insurance industry existed for centuries even before the world was introduced to a standard currency primarily as a risk management system and as a hedge against uncertain loss. Globalization has given the industry structure and sophistication to make it one of the most influential industries of the 21st century.
The role of technology has been the driving force behind for the better part of this century. Every technology advancement threatens to disrupt the industry landscape. The insurance industry itself has witnessed many transformations that continuously put the existing business models at risk. Moreover, with these transformations, follow the challenges of managing legacy systems.
No matter what it cost, legacy systems become rigid and unmanageable with time. For insurance companies, these systems could be homegrown or commercially off-the-shelf solutions that were customized to fit their business needs eons ago. Over a period, flexibility, security, and complexity have become a significant concern. These systems hemorrhage money to maintain, creating a dependency on the use of outdated technologies and the cost of IT. At any given point, legacy systems may become a liability to the organization.
Today, the pace of technology innovation in Insurance is at an all-time high. The industry continues to buzz with activity as it started to set a precedent for change that shifts the tide for innovation. It continues to remain profitable year-on-year and is always on an upward trend even during fiscal downturns. Players who fail to evolve with demanding customer expectations, marketplaces, and channels will be woefully left behind, and so will their legacy systems.
Many of these systems also tend to create friction in the processes and hamper the decision-making abilities of a carrier’s business. They degrade their business agility and make them lose out on innovation, efficiency, customer focus, and even market share.
Should a carrier prefer to enhance a legacy system by finding manual processes, short-term fixes or workaround solutions to create an assorted hotchpotch of old and new technologies? Alternatively, invest the time and millions to replace it with a new one?
Challenges with Replacing Legacy Systems
A CIO must decide after evaluating and balancing a combination of issues and factors and prepare to face the challenges, which attend either of the choices. Let’s take a look at what they are.
By going for a replacement, the CIO will have to ensure business continuity without blowing up the IT budget, negatively affecting the maintenance plans of a score or more of other supporting systems used by the business.
Only cost-benefit analyses and ROI estimates can't influence the actual outcome. Many carriers, who replaced their systems in the last ten years, were unable to realize ROI within an estimated period, in spite of shelling out big bucks on expensive systems.
Some of them have had to shut shop in some regions to keep the business running in others, in other words, to stop the ship from sinking.
Carriers do not prefer to run their business as solely IT-driven organizations to avoid possible risks from replacing a system or even an IT vendor, in the future. The CIO also has to factor in the lack of resources in the market for outdated technology and that adopting a new technology could change the organizational structure, thereby replacing a few teams.
In some cases, they may also need to find a suitable IT partner that can offer robust and configurable systems as fixed pricing projects to keep both product costs as well as implementation costs low.
Writing on the Wall that Insurance Technology Solution Providers cannot ignore
As Insurers are striving to align their business models with growth opportunities arising from the latest technological advancements, they are focused on improving their current systems to support future innovation while capitalizing on emerging opportunities as well.
A sensible insurance software technology provider must be aware of the factors that influence a CIO’s decision-making process. They must be capable of leading their clients towards excellence by supporting them and offer tailored services and help Insurers accomplish their goals.
Prise is a new-age policy administration system that helps carriers smoothly transition from a product-centric approach to adopting a customer-centric one. Prise focuses on meeting the business challenges by developing software and turnkey solutions that can be integrated with the existing business processes. Carriers can get ahead of the technology curve and break free from the legacy technology constraints that are unavoidably poor engines for growth.
Prise's flexible web-based insurance platform built on modern technology supports end-to-end policy processing across multiple P&C product lines. It allows insurers to take more control of their product, processes, and functions while reducing the dependency on obsolete technology.
Insurers can reduce the cost of implementation and increase operational efficiency to meet the changing market and customer needs. Cost, Technology, Ease-of-Use, Configurable, Flexible and Customizable UI are the USPs of Prise.