Insurance companies have been using legacy systems for their core applications for a long time, but they are now facing limitations that prevent them from functioning efficiently. Modern policy administration systems (PAS) offer numerous benefits, such as increased availability, reliability, and security, making them a viable solution for the industry’s problems. However, some insurers are reluctant to make the switch because they don’t fully understand the value of a modern PAS with its different modules.

Insurers who stick with their legacy system are likely to face various challenges:

1. Inefficiency: Legacy systems hinder the industry’s progress due to the limitations they impose. Insurers who rely on legacy systems are still processing piles of papers manually, generating inaccuracies that cause bottlenecks and result in delays in their performance. In contrast, modern PAS solutions provide insurers with agility and are easier to modify and offer new products. By not adopting modern PAS, half the industry is pushing ahead, leaving the other half behind in terms of efficiency and competitiveness.

2. Limiting Digital Transformation: Legacy systems are outdated, making them unsuitable for supporting digital transformation. In contrast, modern PAS provides insurers with digital agility, enabling them to prepare for the future by porting data to the cloud and employing big data applications.

3. Technical Incompetence: Insurers without modern PAS offerings have limited service enablement, technological relevance, and speed-to-market compared to those who have adopted them. This can make them lose focus and market share, as they risk lagging behind their competitors who are improving their systems with new technology.

4. Risk Aversion: Insurance companies are naturally risk-averse but avoiding new technology can also lead to missed opportunities and stagnation. While implementing new systems does involve some risk, not adopting new technology can be even riskier in the long run and prevent insurers from achieving their vision for digital transformation.

5. Implementation Concerns: Replacing outdated technologies and development methodologies is crucial, but some insurers are hesitant to undergo such a process, fearing implementation failure. However, not embracing new technology can result in missed opportunities for gaining a competitive edge.

Insurers that embrace modern PAS offerings enjoy increased responsiveness, improve their product and distribution strategies, and offer superior customer service. This strengthens the insurance industry as a whole and makes it more attractive to customers.