Immediate Need for Modernization of Legacy Insurance Process

Did you know that Zurich Insurance Group (ZIG) became one of the early adopters of digital transformation?  Encumbered by the challenges of enhancing customer experience (CX) and meeting client expectations, ZIG became the first company to automate its customer service with AI. It created the virtual assistant Zuri to address client inquiries. Today, Zuri automates 85% of customer requests without any human assistance. To top it off, it is also one of the few European insurance companies with an omnichannel agency model. ZIG has successfully set the pace of innovation in insurance management. Other insurance giants like Lemonade, Aviva and MetLife have also forayed into digital transformation. However, these companies are just exceptions and not the norm. There is still a large part of the industry that is lagging behind in terms of technological innovations.

Many insurers are grappling with the concept of digital transformation. According to a report by PricewaterhouseCoopers, insurance agencies spend 70% of their IT budgets on buying, maintaining and restoring legacy systems. Even today, insurance companies bank on these age-old monolithic systems to facilitate major business operations. Most of them are reluctant to modernize their applications and processes. This is because insurers have become used to the comfort and familiarity of legacy technology. However, the complexities of the insurance environment demand businesses to become future-ready. Insurance agencies can no longer be stuck in a rut. They need to embrace full-scale modernization of their legacy processes to create real business value.

Persisting Challenges in the Insurance Legacy Infrastructure

Insurers rely on legacy systems to carry out major business functions 

  1.  High maintenance costs

    Embedding new features into a legacy system is expensive. On an average, this process costs between $4,00,000 and $9,00,000. Maintaining legacy systems also comes with its own set of challenges. These systems are based on outdated coding languages like COBOL, Visual Basic and RPG/400.  As a result, they fail to evolve with changes in the insurance landscape.

  2. Manual resourcing

    While processing insurance claims, missing out on one aspect of information can be detrimental to the business. Legacy systems require insurers to enter data manually. Insurance companies must also bear the additional costs of hiring extra professionals and developing quality control standards for data entry. Such a time-consuming process leads to errors and inaccuracies.

  3. Reduced sales and profits

    Making strategic decisions requires accurate data. Legacy systems fail to offer reliable real-time data and insights to target the right services to the right customers. Investing in the wrong areas can amount to unnecessary revenue leakages.

  4. Poor customer experience

    According to a report by Ernst and Young (EY), 87% of policyholders choose insurance companies with a seamless claim processing system. Legacy systems still use manual workflows and paper-based forms that impedes claim processing. Their inability to share data across different departments cause massive delays in claim approvals. What’s more, these archaic technologies contribute to high customer attrition rates as they do not offer omnichannel functionality and 24/7 responsiveness.

  5. Lack of transparency

    Fraud detection is a crucial component of the policy underwriting process. Claim adjusters are hired to inspect any suspicious activity in insurance claims. Legacy infrastructure is built with siloed systems that limit data sharing, making it difficult for the claims adjuster to spot fraud patterns.

Reinventing Insurance Legacy Systems

Legacy systems don’t allow businesses to scale and innovate 

Modernization is the trump card for insurance businesses. However, most of them don’t seem to realize it. Insurers who don’t take advantage of this tech innovation allow untapped opportunities to slip through their fingers. Leveraging an effective insurance management software with out-of-the-box technologies is crucial. This software can identify new trends, enrich customer experience and boost business efficiency.

  • Cloud-native architecture: The radical shift

    Cloud migration improves operational efficiency of insurance businesses Insurance agencies need to get rid of undifferentiated heavy lifting. Adopting cloud-based DevOps models can help them to enable services like:

    1. Natural language processing for chatbots.
    2. Claim management and call routing to establish contact centers for scalability.
    3. Self-service interactions through Artificial Intelligence (AI) and machine learning (ML) technologies.

    The primary benefit of migrating towards the cloud is its high return on investment. You do not have to deal with expensive servers, data centers and their associated maintenance expenses. Your business becomes more customer-oriented as you can efficiently create tailor-made products and services based on users’ interests. The database can reduce errors in policy updates and other redundancies. This is because cloud technologies come with enterprise-grade security, eliminating data breaches. Depending on the scale and nature of your business, you can either choose a private, hybrid or multi-cloud-based system to store large volumes of data.

  • Modular Replacement

    Modular replacement is a suitable alternative to legacy systems with efficient back-end processing. However, it cannot perform in a self-service environment. Also known as modular refactoring, it is a low-risk yet effective way of revamping legacy systems. This is ideal for insurance companies who are not willing to opt for a total digital transformation. Modular refactoring separates the existing sub-systems into modular components and rebuilds those sub-systems. Meanwhile, your core components can perform important day-to-day functions seamlessly.

Benefits of Modernizing Legacy Systems

    1. Driving premium growth

      The core systems represent the complete insurance lifecycle. They include critical processes like claim management, policy administration, underwriting, billing and payments, data management and customer service. Modernizing the core systems can simplify workflows and increase operational efficiency.

    2. Improving digital experiences

      Revamping the legacy process can offer great visibility into the overall functioning of the policy lifecycle. Handling accounts becomes faster and more convenient for the end users. Along with self-services, the entire process starting from policy application to claim disbursement is offered as a holistic digital experience. An advanced legacy system also improves the employee experience. Employees can use faster and more dynamic multi-channel options for connecting and communicating with customers.

Reboot your insurance legacy process with Exdion

Modernizing legacy systems can help you grow your business 

When it comes to restructuring legacy processes, insurers are stuck between a rock and a hard place. Upgrading a system is time-consuming. At the same time, you cannot deny the benefits it offers. One thing is for sure. The insurance industry cannot be stuck in the past.  It needs to implement a well-built modernized strategy to leverage digital transformation.

Automate your insurance legacy process with Exdion. As a comprehensive insurance management software, we enable technologies like AI, ML and NLP to

      1. Meet changing business demands.
      2. Minimize backlogs with instant policy reviews that save 90% of your time and ensure 95% accuracy.
      3. Generate a summary list at the click of a button.
      4. Harness insights through powerful dashboards with real-time monitoring.
      5. Identify policy variances and work with carriers to resolve them.

Modernize your legacy insurance process and enhance business efficiency. Get in touch with us today!

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