From Outdated to Innovated: Transforming Legacy Systems in the Insurance Sector
In today’s digital-first environment, insurance companies are under increasing pressure to modernize their outdated systems. Legacy systems, originally developed in the 1990s or earlier, are not just technologically obsolete - they represent a strategic handicap in terms of efficiency, flexibility, and customer service. This article explores how embracing digital transformation can propel insurance companies into a future brimming with opportunities.
Understanding the legacy challenge
Historically slow to adapt, the insurance sector finds itself hindered by legacy systems that are robust yet inflexible, expensive to maintain, and incompatible with modern digital demands. These systems operate in silos, impeding data flow and integration, which elevates operational costs and compromises customer service quality in an era where immediacy and accessibility are paramount.
They also increase security risks because of their vulnerability and are often a barrier to innovation – they can make it difficult for insurers to develop new products and services. The urgency for modernization is further fueled by consumer expectations for seamless online services and the competitive pressure from InsurTech startups.
Modernization strategies: How to choose the right one?
Successfully transforming legacy systems involves a careful strategy selection tailored to the company’s specific needs. Here are the most commonly employed strategies:
- Rehosting: Moving systems to a cloud-based environment to gain immediate cost benefits without altering the underlying architecture.
- Refactoring: Modifying the existing codebase to improve performance and scalability without changing its external behavior and functionality.
- Reengineering: Completely rewriting the application from scratch with modern technologies, which, while costly, offers significant long-term benefits.
- Replacement: Substituting the old systems with entirely new technologies to dramatically improve performance and integration capabilities.
Factors to consider during the decision-making process include the age and condition of the legacy system, and the business requirements of the insurance company that determine the features and functions the new system must have. Last but not least, the available budget and timeframe will also affect the upgrade options.
Case study: Agile integration of digital assets
A leading Austrian insurance group faced multiple challenges with their legacy systems, including inefficient backend interconnectivity and an architecture unsupportive of agile delivery methods.
By partnering with Trask, an IT solutions provider, they implemented a new integration platform utilizing API management and microservices, which facilitated the creation of a real-time, self-service customer portal. This omnichannel architecture ensures a seamless and consistent user experience across all touchpoints, enhancing customer satisfaction and engagement.
Benefits realized from this modernization included:
- Faster time-to-market for new features, thanks to quicker backend system integrations.
- Unified interface with unified rules across systems, allowing for scalability.
- Enhanced security and visibility over all integration APIs, promoting a secure and agile digital transformation.
- Increased client engagement with the introduction of the online portal.
[.infobox]This project illustrates the transformative potential of modernizing legacy systems through strategic integration and the adoption of modern technology platforms. It highlights the importance of agility, security, and customer-centricity in today’s digital landscape.[.infobox]
Conclusion: Evolving beyond legacy constraints
Legacy modernization is not just a necessity but a strategic advantage for insurance companies aiming to stay competitive in the digital age. By strategically choosing the right approach and overcoming inherent challenges, insurers can reap substantial benefits, including improved efficiency, flexibility, and innovation.
At Trask, we understand the complexities involved in transforming legacy systems. We offer end-to-end solutions tailored to your unique business needs, leveraging our expertise in API management, microservices, and cloud technologies to ensure a seamless transition. Our successful track record includes a partnership with a leading insurance group in Central and Eastern Europe, showing our ability to exceed client expectations.
Ready to modernize your legacy systems? Contact our experts today to discover how Trask can help your company achieve its digital transformation goals and propel you into a future of endless opportunities.
