From Legacy To Leading: Paving The Way Forward For Legacy Modernization In Insurance

The insurance industry is at a pivotal moment. As technological advancements drive digital transformation across various sectors, insurance is no exception. Yet, many insurers remain dependent on outdated legacy systems, creating significant barriers to adopting modern digital tools. These barriers lead to a host of challenges, including limited flexibility, scalability issues, high maintenance costs, and security vulnerabilities. The urgency for modernization has never been greater.

Why legacy modernization is crucial

Customer dissatisfaction and the growing demand for innovative solutions make legacy modernization an imperative for today’s insurance landscape. Insurers need a comprehensive transformation strategy supported by advanced technologies to stay relevant in the fast-paced digital era. This roadmap will help insurers enhance operational efficiency, provide seamless customer experiences, and drive data-driven decision-making.

Decoding the keys to successful legacy modernization

When insurers adopt the right strategies for transforming legacy systems, they can achieve systematic efficiency improvements. Here are the key approaches to successful legacy modernization:

Cloud migration

Cloud technology is revolutionizing the insurance industry. The global cloud migration services market is touted to grow up to USD 29.2 billion by 2028. A cloud-first insurance enterprise can eliminate up to 40% of fixed-run costs. Moreover, it can fuel omnichannel experience, integrated services, and robust disaster recovery capabilities. In addition to streamlining operations, carriers can reduce manual errors and augment and accelerate business decisions.

According to a McKinsey report, insurers are expected to significantly ramp up cloud adoption, with many migrating their systems to the public cloud within the next few years. The pressing question for insurers is not whether to migrate to the cloud but how to do so effectively.

Microservices architecture

Most legacy insurance systems are monolithic, making it difficult for them to keep pace with technological advancements. Transitioning to a modular microservices architecture can ensure a smooth digital transformation. Research shows that 92% of companies adopting microservices are experiencing successful outcomes. This architecture allows insurers to break down complex systems into smaller, manageable components, enhancing agility, scalability, and adaptability.

For example, insurers can decompose monolithic policy administration systems into microservices, each handling specific aspects such as quoting, underwriting, and issuance. This modular approach enables greater flexibility and responsiveness to changing business needs.

Data transformation with Informatica

Insurance companies handle vast amounts of data that can be immensely valuable if utilized effectively. Advanced data analytics empowers insurers with better decision-making capabilities by offering insights into past and present operations. Leveraging solutions like Informatica’s enterprise cloud data management, insurers can gain trusted customer data analytics and enterprise GenAI applications, driving improved marketing strategies, accurate forecasting, and deeper customer insights.

An industrial survey report cites increased retention in profitable segments by 5-10%, a target improvement in loss ratios by 5-7% over 3 years, and elevated new business premiums by 10-15% as a direct result of data and analytics-led insurance processes.

DevOps practices

Legacy modernization often creates gaps in traditional software development approaches. DevOps bridges these gaps by enabling seamless collaboration, integration, and synchronization between development, QA, and IT operations. It offers the speed and agility needed to build lightweight solutions while reducing risks through continuous development, testing, integration, deployment, and monitoring.

Adopting DevOps practices allows insurers to break down legacy modernization efforts into manageable components, such as data, process, logic, and user interface. By modernizing these elements incrementally, insurers can achieve immediate value and maintain continuous improvement.

Real-world instances of digitalization

Legacy modernization is transformative. Forward-thinking organizations embrace it to drive operational excellence and become future-ready. Here are some real-world examples:

Informatica and Tableau integration

Data is crucial for problem-solving and innovation. Integrating data-driven solutions like Tableau for powerful data visualization and Informatica for secure and accessible data management can accelerate digitalization. For instance, implementing the Informatica Enterprise Data Catalog alongside a Tableau dashboard can help a life insurance company minimize future losses by detecting high claims expenses and policy volume losses.

AI chatbots with PowerBI/Tableau

The synergy between AI chatbots and data analytics tools fosters innovation in the insurance industry. Integrating chatbots with analytics tools transforms data interaction, offering a more interactive and user-friendly experience. For example, insurance agents can use AI chatbots to query Tableau dashboards for real-time policy performance metrics and customer demographics, while claim adjusters can analyze claims data, identify fraud patterns, and optimize workflows.

Case study: HTC as a strategic transformation partner

HTC helped a large insurance company modernize its claims management system using microservices architecture and deployment on Azure. This collaboration led to:

• A 30% reduction in support calls related to claims.
• $0.4 million in yearly savings due to fewer support calls and a smaller customer care team.
• A 12% reduction in customer care call wait times.
• 15,200 saved man-hours for the customer support team.
• Enhanced customer satisfaction due to a competitive support system.
• The foundation for building an online portal for injured workers, integrating with existing claims system modules.

Other cases in point,

AI-powered claims processing

A large Insurance company implemented an AI-powered claims processing system to modernize its legacy infrastructure. By integrating AI and machine learning algorithms, our client automated the claims assessment process, reducing the time required for claims approval from days to minutes. This innovation not only improved efficiency but also enhanced the accuracy of claims assessments, leading to higher customer trust and satisfaction.

Digital customer engagement

A global provider of insurance, annuities, and employee benefit programs, transformed its customer engagement strategy through digital modernization. By adopting a cloud-based CRM platform and integrating AI chatbots, our client enhanced its customer service capabilities. The AI chatbots provided real-time assistance to customers, answering queries, and processing simple claims. This digital engagement strategy resulted in a 15% increase in customer retention and a 25% reduction in customer service costs.

The future of insurance transformation

Embracing emerging trends like cloud-native architectures, AI-driven analytics, blockchain, and IoT integration is crucial for insurance companies to transform their operations. These technologies offer customer-centric solutions and drive legacy modernization across functions. In a recent report, 85% of insurance CEOs stress the significance of digital transformation for their organization’s future success, and 71% of insurance companies consider legacy technology a barrier to digital transformation. Blockchain deployment for secure and transparent transactions and IoT for real-time risk assessment, claims processing, and customer interactions is expected to revolutionize the industry.

Insurers need a dependable partner to navigate this transformation journey. HTC provides innovative, cost-effective, and end-to-end legacy modernization services for the insurance sector. With HTC, insurers can choose the best modernization approach and solutions tailored to their business needs, ensuring they stay competitive and future-ready.