Aging legacy systems continue to be a top-of-mind concern forthe insurance industry, according to a survey conducted by SAP atthe IASA conference earlier this month.

SAP spoke with over 200 insurance executives and found 54percent of insurers believe the best practice for managing coresystems modernization is to find a trusted partner with anintegrated solution platform. This was in contrast to 23 percent ofthe respondents who would consider preserving as much of theirlegacy systems as possible and another 23 percent who would preferreplacing the legacy systems with an in-house build.

Sixty-seven percent of respondents report aging legacy systemsare a prevailing hindrance for insurers. Even though insurers areunsure of how to approach a core systems upgrade, they generallyrecognize the major challenges that need to be addressed toeffectively tackle the core system modernization.

Thirty-eight percent of respondents felt that their systems arecompletely outdated, poorly integrated and cannot be modernizedincrementally, while 29 percent indicated an inability to bring theIT and business teams together to fully understand the problem andthe opportunity.

“As the insurance industry becomes increasingly commoditized,speed and agility serve as a key competitive advantage for insurersas they look to differentiate themselves and capture more marketshare,” says Robert Cummings, global head of insurance businessunit, SAP AG. “Collaboration between IT and business teams alongwith a trusted enterprise partner that can seamlessly upgrade andmodernize core systems is crucial to reach new markets and managethe entire customer life cycle.”

Insurers recognize the challenges and what is needed to addressthe issues. Among their upgrade considerations, they believe thatanalytics is the No. 1 key to gaining competitive advantage.Forty-three percent of the respondents believed that advancedanalytics for greater insight into the business, includingpredictive and fraud management, are essential for them todifferentiate themselves.

Mobile workflows and apps for employees, agents and customerscame in second (22 percent), followed by a third consideration (19percent) for delivering a single view of the customer and creatinga great customer experience at every touch point across the policy,billing, and claims cycle.