Statista claims that specialized digital systems will have replaced over 45% of existing insurance jobs all over the USA by 2030. This agenda is brought on most rapidly by the intensive growth of digital technologies and numerous companies moving their subordinates outside physical offices after the pandemic hit in 2019. As a result, about 23% of employees in the sector today handle work either full-on remotely or partly in the office, partly at home.
But one major challenge has arisen in light of the remote work trends — insurance companies must modernize core systems to stick to the market’s common pace of performance. And this is where enterprises need professional guidance in selecting platform upgrade scenarios and picking reliable vendors. So, we outline basic directions and pro tips coming from our own experience to help you see the big picture of the whole process.
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According to Verified Market Research, the world’s insurtech niche was valued at about $9.15 billion in 2020, and analysts expect the market to rise to $16.36 billion by 2028. This trend indicates fast development and widespread adoption of digital solutions across insurance niches. And business owners who lag behind risk losing a competitive edge.
Legacy insurance core systems require more maintenance, work focus, and costs, taking all the unnecessary time and effort that could otherwise be dedicated to competitive performance.
As a result:
Overhauling the existing system to fix all the above can be technically challenging and time-consuming, but the resulting advantages are more than worth the effort.
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According to Zippia, business owners worldwide spent more than $1.5 trillion on digital transformation and improvement in 2021 (and the tendency is expected to hit $6.8 tln by 2023). In addition, 56% of business holders stated that their income increased after implementing digital enhancements.
Ultimately, timely system upgrade is beneficial beyond figures and stats, advancing client satisfaction rates, smoothing out in-house specialists’ workflows, and boosting business operations all around. Namely, insurance providers get to improve customer experiences, streamline processes, and cut costs.
An up-to-date core system enables insurance clients to get more service options at once and browse the needed information in real-time. In addition, the modern user knows a well-running, reliable system when they see one, so timely upgraded tech can help reduce churn rates dramatically.
Other significant advantages include the following:
Everybody is attracted by innovation, so timely digital transformation can help organically stimulate more positive client experiences.
Modernized insurance core systems allow issuing policies quicker so companies can make up to 40% more daily profit. This is due to an intuitive segmentation of tasks and processes, routine-eliminating automation, and highly-available, intuitive interfaces for insurance specialists.
Particular benefits of an overhauled system include:
An upgraded core system is the primary tool for smooth business scaling. Thus, today’s insurers tend to move data and digital operations to cloud platforms, which allow them to scale the most flexibility in line with their budget and capacities.
With maintenance expenses cut and essential service processes smoothed out and accelerated, it all comes down to ultimate overall cost savings. According to the stats, renewed platforms may save as much as 41% of corporate expenses compared with legacy ones.
That is due to several system modernization benefits:
Consequently, insurers spend fewer funds on maintaining their enterprises and can eliminate many significant business expenses.
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Insurance software may be renewed with the help of two primary methods. You can either build a custom solution from scratch or modernize an existing legacy platform. Both are working options, but there are specifics to each that you should consider before making the final decision. So, let’s take a look.
A custom core system may improve insurance servicing workflows precisely how you see fit. You get complete control and the freedom to shape a solution that perfectly matches your needs. That is if you have the time and budget because here’s what you will have to do in a nutshell to achieve a custom solution built from scratch.
To get into more tech details, commonly, the following functionalities must be put into the foundation of a robust insurance core system:
While custom-tailored interfaces and functionality are the ultimate benefits of this approach, the only drawback of going custom is the need to cover essential costs. Depending on the target system’s complexity (mind that insurance systems are usually quite complex at the core), a custom project may cost you a pretty penny, so you need to be prepared in terms of time and budget to invest in both qualified talents and their work expenses.
The main problem with outdated insurance systems is that they commonly run on local servers, significantly restricting software capabilities. That’s because local IT specialists should install all the needed programs. Moreover, servers and other equipment should be maintained regularly, which takes time, effort, and cost.
So, the second essential modernization option is moving a legacy system to a cloud-based platform, optimizing it, redoing certain things here and here, and equipping it with new features and integrations. As a result, the migrated system’s functionality, performance, and security rest on the cloud provider’s shoulders, enabling only some minor inputs and changes on your side.
This option may fit you better than custom development if you want to save costs and speed up modernization. You also get higher security rates when all cybersecurity is managed and updated according to the latest industry standards. On the flip side, however, you may only decide and control so much, commanding only minor changes to the system.
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Firstly, an insurance company should strictly determine its business goals when picking the proper way to improve a core system. The following factors should be considered:
Secondly, business owners need to consider that an existing platform modernization allows only adding some helpful options and implementing several new technologies. But on the other hand, developing software from scratch is a magnificent chance to improve the cores of their companies’ working approaches.
Most businesses worldwide consider digital transformation a vital thing. This is especially relevant for insurance companies. So, they either modernize existing platforms or create new ones. The latter is more complex and expensive but offers positive core changes in companies’ workflow. And modernizing an existing system takes less time and funds yet restricts customizability.
Whatever approach you pick, remember that companies with modern software gain more profit, cut corporate spending, speed up time-to-market, and offer their clients better services. This significantly sharpens a competitive edge in the current insurance market.
Contact us to book a call and discuss your needs related to insurance core systems.
DICEUS has been serving ambitious insurers for over ten years, offering end-to-end software development services for projects of any scope and complexity. We do everything from business analysis, software architecture, design, and development to testing, deployment, and tech support.
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