How to Make Legacy Insurance Systems More Efficient with Automation

An estimated two-thirds of global insurers still rely heavily on legacy systems to manage core processes.

Yet as the potential benefits of modernization have become undeniable, more insurers have invested in transformation projects like updating their core systems. Life insurers have increased IT spending from 2% to 3% of gross premiums in the last four years—a 50% jump. Personal P&C carriers saw a 5% improvement in operating expenses in recent years, but it was offset by a 7% increase in IT spending.

Still, many organizations are struggling to realize the expected value. According to Deloitte, this is because they continue to use legacy technology and non-native cloud applications, creating a hybrid operating system with poor interoperability.

In other words, you may have updated your core systems, but if your processes still rely on data from legacy systems, then you’re dealing with a complex, hybrid operating environment that requires manual work from IT staff, so you’re likely not seeing the desired benefits. And you’re not alone—around 80% of insurance CIOs haven’t achieved the agility or business benefits they expected from modernization, despite migrating a portion of workloads to the cloud.

For most insurance companies, eliminating the use of legacy systems entirely simply isn’t possible—at least not immediately. But that doesn’t mean they have to settle for inefficient processes and poor ROI from modernization.

We’ll explore how insurance companies can leverage automation to make their legacy systems more efficient now, ensuring they stay competitive as they progress in their transformation journeys.

Automate self-service use of legacy systems for business users

Many claims, actuarial, policy, billing, and customer service teams need to access legacy systems daily—or even multiple times a day—to complete business-critical processes, but this often requires creating an IT ticket, and then waiting for support. In the meantime, workflows hang in limbo, unable to progress.

With an advanced workload automation and orchestration (WLA&O) solution, IT staff can empower business users to kick off processes relevant to their departments with the click of a button—even those that involve legacy systems. For example, the claims department may need to access policy information stored in a legacy system. With WLA&O, they can initiate that process from a self-service interface using custom parameters established by the IT team. So, despite the complexity of the operating environment, the claims team can extract the information they need without IT intervention, and IT can rest assured that the process will run smoothly.

This automation not only improves the business’ processing efficiency but also cuts down on urgent support tickets IT staff must address, freeing bandwidth to focus on transformation and other strategic initiatives.

Schedule workflows that span modern, legacy, and third-party technology

Although insurance companies notoriously operate in silos, many processes are cross-functional, requiring input from various teams—and disparate systems.

Whether for compliance reporting, underwriting, or as part of reserving processes, workflows that span hybrid systems can be automated to run in complex, event-driven sequences that rely on dependencies rather than time-based triggers alone.

Even if legacy systems require custom scripts, these can be stored in a built-in repository within a WLA&O platform and deployed at the proper time in the workflow, ensuring that every system plays its part in harmony, despite “speaking different languages.”

Minimize manual work for human operators

The core problem with the insurance industry’s continued reliance on legacy systems comes down to the fact that they cannot seamlessly interact with modern systems, and in turn, require support from human operators. But this isn’t just inefficient, it’s also unsustainable.

Nearly 80% of millennials say they have limited knowledge of the insurance industry; in the next 15 years, 50% of the current insurance workforce will retire. With a talent shortage looming and the next generation of employees not only unfamiliar with the industry but also unwilling to engage with outdated tech, insurers must take steps now to minimize human operators’ touchpoints with legacy systems.

By leveraging solutions like WLA&O and robotic process automation (RPA), insurance companies can significantly cut down the manual work associated with legacy systems, thereby ensuring the processes that rely on them will continue running even if skilled IT staff retire.

While automating processes related to legacy systems quells long-term talent shortage anxieties, there are more immediate benefits of minimizing these manual touchpoints, too. When human operators carry out complex processes, they’re inevitably less efficient and more error-prone than machines; at scale, this problem compounds. Errors further drag down efficiency and send costs soaring.

Rather than relying on IT staff to carry out daily tasks in legacy systems, insurers can dependably offload them to an automation platform. For example, Noridian Mutual Insurance Company automated 800+ complex daily processes previously handled by IT staff. As a result, errors dropped, efficiency rose, and the IT department found bandwidth to take on new business objectives.

Leveraging automation to stay competitive

In a rapidly evolving industry, traditional players are feeling the pressure. But with the right automation solution, insurers who still rely on legacy technology can keep up with the new pace of business set by insurtechs.

What’s more, automation can unlock the full value of modernization investments by harmonizing disparate systems within hybrid operating environments, enabling insurance companies to (finally) capture the expected ROI of updated technology.

While the industry’s reliance on legacy systems likely can’t last forever, it doesn’t have to spell immediate doom. By leveraging strategies like these with the help of automation, insurance companies can stay competitive while taking an intentional approach to transformation.

To uncover automation opportunities beyond those related to legacy systems, fill out the Automation Readiness Checklist.