Hand holding smartphone for select insurance technology (Insurtech). Insurance concept.
Here is a statement you might not expect to hear from two insurtech founders: legacy systems are full of untapped value.
While that may sound provocative, it underlies a profound market shift we have seen over the past decade. Gone are the days of insurtechs making bold claims about disruption while pushing insurers into costly teardowns of their older platforms. Here to stay are insurtechs that have built a track record of helping carriers, MGAs and brokers to adapt by mining data from their older systems and making it more valuable.
With a collaborative approach, insurers can modernize in place and bring new products to market faster, all without the cost and hassle of a rip-and-replace. Here, we will examine why disruption has fallen out of favor and explore five ways insurers can partner to turn their older technology into a new competitive advantage.
System teardowns are not always worth the disruption
Top insurtechs recognize that a complete overhaul can be impractical for some carriers and MGAs. At the same time, they understand the multiple challenges legacy systems create.
Insurers today face constant pressure to develop new products, expand into growing markets, establish new distribution channels, and comply with ongoing regulatory changes. Older systems are not built for this level of agility, impeding each of these growth opportunities and even forcing some companies to abandon promising projects midstream.
An overreliance on IT teams adds further strain. When even the slightest changes to product design, rating formularies, or forms require IT intervention, the result is a backlog of tickets in the queue. Business leaders can wait weeks or even months for their IT or supplier teams to complete updates, causing frustrating delays.
The most significant hurdle, however, lies in unifying and accessing data. For P&C insurers, data drives everything from pricing accuracy and portfolio steering to risk modeling and claims triage. Yet too often, much of a company’s most valuable business intelligence still lives in spreadsheets. As these spreadsheets evolve into mission-critical tools that power pricing models, CAT exposure tracking, and reinsurance calculations, their risks grow exponentially.
Because most spreadsheets sit outside IT governance, they lack automation capabilities and block executives from obtaining the real-time view needed to make high-stakes decisions quickly. In addition, spreadsheet data lives in disconnected systems, creating time-consuming manual work and limiting the ability to train AI models.
How to mine data from legacy systems
Insurers do not need to decommission their legacy systems to solve their data dilemmas. They can instead partner with insurtechs who can help them evolve their existing systems and processes without disruption to:
1. Decouple product innovation from legacy constraints. Modern platforms allow insurers to build and launch new products outside of their core system, then integrate them back into legacy platforms as needed. Furthermore, with no-code development tools, team members can design new offerings without specialized IT support, thereby accelerating product development.
2. Connect legacy data to digital experiences. Application programming interfaces (APIs) make it easier for insurers to surface policy and customer data from legacy systems and use it in modern portals, agent tools, and customer-facing applications. Some platforms can even turn spreadsheet-driven policies into APIs that connect to core systems in minutes.
3. Drive continuous improvement through analytics. Advanced software can extract all the formulas and links buried inside spreadsheets and map them visually. This capability provides complete visibility into key analytics. Exporting higher-quality data into product creation platforms can then enable insurers to run A/B tests, monitor adoption and improve products more quickly.
4. Use AI and machine learning to optimize existing data. AI relies on unified data to feed the large language models that power it. Mining data from legacy systems enables insurers to create and optimize AI-driven tools such as chatbots and underwriting support, helping business teams do their jobs better while delivering more personalized experiences to customers.
5. Govern, automate and modernize incrementally. Platforms with enterprise-grade governance help ease regulatory burdens and ensure compliance. Features such as version control, user tracking and audit readiness provide extra layers of data security and visibility, improving trust in data while supporting a phased approach to modernization.
Building a more responsive insurance ecosystem
The adapt-not-disrupt approach embraced by modern insurtechs delivers tangible benefits that ripple throughout the entire insurance value chain.
Carriers and MGAs can achieve meaningful ROI on digital transformation projects faster, strengthen regulatory compliance and scale their businesses to new heights. Agents and brokers can serve clients better by delivering faster quotes, reducing tedious form fill-outs and offering next-generation products. Customers gain the most, with more personalized digital experiences and quicker service.
Now, we’re seeing insurtechs partner up to deliver even greater value like the relationship our two companies, INSTANDA and Coherent, just launched. This collaboration enables carriers and MGAs to extract spreadsheet-based rating models, expose them as APIs and integrate them into policy administration platforms. As a result, insurers no longer need to rebuild pricing and regulatory logic each time they calculate a premium, vastly improving speed and accuracy.
Developing a future-ready mindset
As our industry enters a new era of AI-powered enablement, the next wave of innovation will focus on giving business teams the tools to harness their own data and logic without having to rely solely on IT. Insurtechs are leading the charge by discarding the old disrupt-or-bust mindset and embracing collaboration, giving carriers and MGAs the agility to modernize incrementally and use data-driven insights to drive every decision.
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