Many players in the insurance industry are still relying on decades-old technology, with legacy systems impacting both an organization’s productivity and profitability. According to PricewaterhouseCoopers, on average about 70% of an insurer’s IT budget is spent on maintaining its legacy system. It costs even more the older the system gets. Yet the most significant expense to both insurers and MGAs is lost opportunities in the marketplace in that they have a system that impedes the ability to move at the rate needed to compete today.
Some of the costs of a legacy system include having to hire an individual who has the programming knowledge to maintain it, which may be increasingly more difficult and costly today. You may have to pay higher wages. You also have the costs of designing and implementing add-ons, which can be very expensive with systems that are hard-coded and don’t enable agility and flexibility.
It’s challenging to support a system that has been added to many times as new products and functionality are bolted on. This impacts employee experience and satisfaction. Employees have to deal with outdated systems to get their work done. Different products and functionalities are often siloed and don’t interact and share data, making it frustrating for employees – let alone the diminished productivity caused by having to rekey data over and over again.
In addition, training employees on legacy software is tedious and time consuming and reflects a company’s unwillingness to embrace change, which can be a deal breaker when looking for new hires and younger talent.
Of course, there is an impact on the customer’s experience, as well. Customers (your agents, insureds) expect seamless digital experiences that allow them to move through the process with ease. In order to do this well, insurers and MGAs must do more than simply include a front-end user interface. Because data is typically stored and updated in multiple databases across multiple systems, legacy infrastructure lacks the architecture to synchronize data in real time. If a system isn’t responsive and easy to use, your customers will look to competitors for other options and ease of doing business.
A legacy system could be costing you money in lost sales. With a lack of data and insights, it’s tough to make informed decisions on getting the right products to the marketplace. Additionally, the ability to get to market quickly is stymied if an MGA, for example, is unable to easily add a new product along with its rating and underwriting criteria. A flexible system enables insurers and MGAs to revamp their product-innovation process, delivering a faster time to market for rate changes and new products.
Monolithic and legacy systems also have an impact on an organization’s scalability. If the software is not dynamic and cannot keep up with your company’s growth plans, you will suffer significant setbacks.
Legacy systems can be vulnerable to security breaches if vendors no longer offer support and software updates. Also, certain vulnerabilities may be difficult to fix. Legacy systems may be unable to accommodate today’s security best practices, such as multi-factor authentication, single sign-on and role-based access, or they may lack sufficient audit trails or encryption methods.
Say goodbye to outdated systems and begin looking at a solution that will provide what you need to increase productivity, decrease costs in the long run, deliver frictionless transactions, and remain competitive in today’s environment. For more information about VRC’s Verity software and to book a demo, click here or contact us at (818) 707-4295.
