Many insurance companies operate nowadays with legacy software tools. They are typically bulky and non-scalable, and it's challenging to adapt them to the new requirements for operative activities. In this blog post, we will make arguments in favor of the necessity of switching to the new software solutions from the old ones in the insurance companies.
The modern world is changing extremely quickly. What was relevant yesterday may be outdated today. Almost all sectors of the economy are characterized by a high level of competition, the insurance market is no exception.
However, many insurance companies still use legacy software systems, thereby losing their positions to more modern competitors. There is a common situation in companies where a number of departments are partially automated, but use different software and databases are not interconnected. This leads to errors and makes the simplest operations time-consuming.
It is also often the case that the software used is outdated and the employees who participated in its implementation no longer work for the company.
Legacy systems tend to be quite large due to the old programming languages and codebase, as well as a huge amount of documentation and many undocumented features. Such systems are monolithic, so it isn’t possible to replace one system module. Also, even with the smallest update, there is a risk of conflicts in the system. In fact, any modification or update takes much time and effort, and, accordingly, money.
Generally, old software consists of numerous components across many databases and storage points. It's hard to scale and reorganize them in order to enhance storage space and optimize its functioning. Manual collection and legacy data systematization is a time-consuming and costly task.
Languages used in obsolete programming systems are no longer taught or actively used. Thus, there are not so many specialists working with the old technologies and, as a result, it’s more expensive. It takes a long time to find such professionals and bring them up to date on the company specifics.
Integrating third-party tools (such as geolocation, payment and accounting tools, user authentication, data sharing, etc.) into legacy software often requires considerable amounts of custom code. There is always a risk that the final integration will malfunction or will not work at all.
The global insurance technology market is expected to grow significantly over the next 5 years due to factors such as simplification of the claims process, improved communication with the client, and the possibility of implementing automation.
In order to automate and simplify the ongoing processes, insurers are beginning to actively use innovative technologies. These include chatbots, data processing in the cloud, technologies with elements of artificial intelligence, insurance self-service portals, etc.
According to the Deloitte research, among the top incentives of insurance companies to modernize are the following:
You should analyze your current software setup and prioritize the list of systems that need to be modernized. Decide in favor of a modern software solution that will help you take your business to the next level.
There is a wide range of digital innovations different in functionality and costs. The right choice depends on the specifics of your work and your priority needs. When choosing, pay attention to the potential ROI of the modernization process.
We advise you to consult with your internal IT staff or attract professional tech consultants to identify the main software “gaps” to be modernized.
A company with legacy software can choose 2 options for modernization: implement a ready-to-use solution or develop software customized to the company’s needs and requirements.
The ready-to-use product is standard software that is used to support the business processes of many companies. Such software solutions can be adapted to the company, but there will still be functional limitations.
The main benefit of such a solution is that it already exists on the market and you can compare various proposals. Also, in the short-term perspective, it may seem to be cheaper than custom development.
However, in the long run, it is more expensive and may not always meet the individual needs of operating activities in the company. Therefore, your company will either have to put up with such a software solution and adapt business processes to it or look for alternative software.
Custom software is the development of a unique software solution for the processes of each company. It is completely created for the needs of a particular company, and solves specific problems and pains that employees face on a daily basis.
Due to the customized development, you get a software solution without unnecessary features and the ability to work more efficiently. You can add or remove certain features of the software at any moment. Thus, companies have full control over various changes and data protection from third parties.
Unlike the ready-to-use product, custom software, with well-implemented business analysis and in-depth infrastructure will scale according to the company's demands and growth.
Custom product is more expensive in the short term than the ready-to-use product, but in the long run, the company will benefit from this because it will have only the cost of development and in the future - a small cost of software maintenance.
The main challenge for insurance companies launching modernization processes is the lack of expertise.
The optimal solution is to find the vendor, a software development company, with competence and experience in the insurance field. The vendor will help you understand the intricacies of your company and select the most necessary functions for your business processes and needs. Therefore, the new software will not only be easy to implement but also easy to use by company employees.
Experienced experts will study the current situation together with a company stakeholder, and develop necessary requirements for a future launch of the modernized software.
Insurance companies have to quickly adjust to new business environments and be open to new products, enhance market share through new channels, meet changing regulatory requirements, and reduce expenses in funding new technologies.
If your existing software is difficult to maintain, support, or integrate with other systems, such legacy software needs to be updated. Be ready to allow your company to reach its best potential!