The insurance industry has been around for many years, within which time insurance companies have amassed mountains of data that have been stored on rapidly aging Information Technology (IT) applications. Insurance companies are extremely reliant on these dated systems with limited functionality, usability, and deeply fragmented connectivity.
Now more than ever, it is vital to establish a proactive legacy system transformation and management strategy that minimizes transformational costs, leads to a competitive advantage, and simultaneously limits business disruption and risk.
Multiple modernization strategies
When it comes to legacy system modernization, sometimes you are changing the entire system or a portion of the system. Where to begin, what components of the system to modernize, and how to modernize those components are just a few of fundamental questions that must be in direct alignment with the company’s goals. The two most common approaches to legacy system modernization are:
- Forklift method
The forklift approach involves replacing dated applications with more modern ones that handle claims management, policy administration, and other core insurance processes. In essence, this method involves doing away with old applications and creating new, modern applications from the ground up.
- Uplift method
Where completely forklifting a company's legacy systems is not a viable option, insurance companies can modernize to meet their business needs by adding or integrating cloud-based or on-premise software solutions on top of legacy applications. This method lets companies modernize different components of their systems cautiously and gradually as the need arises.
What are the advantages of modernization?
Modernized systems are better suited for the needs of today’s software environments. With modernization, insurance companies can become more scalable, flexible, and their solutions easier to maintain. By using modern applications insurance companies can:
- Improve their service delivery speed, making for a more fluid and responsive customer experience.
- Leverage analytics performed by modern applications to assist in creating customised insurance products tailored to each customer’s unique needs
- Utilise new technologies that enable insurers to better engage with and retain customers
- Fulfil customers’ needs in a faster, reliable, and more secure manner.
Understandably, insurance companies have made huge investments in their legacy systems and rely heavily on them to support their core business functions. Insurance companies can modernize incrementally to take advantage of their investment in their legacy systems while replacing or improving key pieces of their IT systems.
Improved customer experience through API compatibility
Most of the time when a customer connects their insurance systems to any other solution, these systems are typically talking to each other via APIs. APIs allow software solutions to talk to each other and leverage their capabilities in such a way that it creates a better customer journey, and also allow insurance companies to engage with customers in new and innovative ways.
Legacy systems and most outdated core applications don’t support such APIs. Insurance companies hold valuable data and information assets, which could be used to provide digital services cable of enhancing their customers' experience. But these data assets cannot be accessed via APIs because of their legacy system challenges. Through data automation, developers can set up API-accessible layers on top of their legacy systems. This allows organisations with older systems to adapt to modern business needs and, more importantly, quickly adopt new technologies and applications.
Countless businesses are starting to realise that ignoring API integration, or to self-code integration, will reduce the speed of scaling and execution of vital policy management functions. By modernizing legacy systems to be more compatible with APIs, insurance companies can better tailor their systems to interact with their customers how they want, when they want, and with the kind of messaging they’re likely to engage with.
Opening new doors to opportunity
Modernization allows insurance companies to leverage new technologies like APIs, machine learning, Artificial Intelligence (AI), Business Intelligence (BI) and cloud services to improve how insurance companies operate. Modernization helps insurers to automate processes between systems reducing inaccuracies, limit bottlenecks in data sharing, turn paper dominated internal processes into a thing of the past, and create new opportunities for more fluid and transparent distribution channels. In this context, modernization can leverage the sharing of data between different insurers, start-ups, banks, and other financial institutions.
More insurance companies are turning to technology to innovate and improve their operations. This shift is ushering a new breed of insurance company known as InsurTech. InsurTech refers to the use of technology innovations designed to gain additional savings and efficiency from the current insurance industry model, and innovate around new solutions the industry needs.
InsurTech companies are shaping a new world of superior insurance offerings through modernization by delivering ultra-customized policies, social insurance, and using new streams of data from open APIs to revolutionize the insurance space.
How Synatic is helping insurance companies modernize their legacy systems
Synatic allows insurance companies to modernize legacy systems through its range of data automation features, API management tools and buffers that rapidly transfer data to our cloud, your cloud, or on-prem. Through Synatic, insurers can nimbly leverage heavily invested and critical on-premise legacy systems with more flexible, user-friendly, and multi-tenanted cloud applications to meet the needs of their company.
Investing in an integration and automation platform like Synatic to modernize legacy systems will allow insurers to future-proof their companies. Technology will only continue to evolve over time, and to keep up with the demands of the new digital transformation economy insurance companies must rely less on legacy systems and outdated software. Synatic encourages insurers to shape change instead of being constrained by it.