Enterprising Developments

How Much Do 'Legacy' Systems Hold Back Carriers' Business Opportunities?

Joe McKendrick
Insurance Experts' Forum, September 8, 2011

In recently viewing the results of INN's survey of 421 insurance executives, sponsored by Oracle Insurance, there were some surprises. Namely, that a lot of carriers seem to be spending a lot of time and mindshare dealing with their legacy systems, versus spending time on new technology initiatives and innovative products that could help advance the business.

I have heard cross-industry statistics claiming up to three-quarters of IT budgets are consumed in route maintenance and upkeep, as opposed to innovation. That thinking bears out in these findings as well. For example, the greatest challenge insurance IT executives face over the next year or two is not identifying and building systems for new initiatives such as mobile apps or business intelligence. Rather, the greatest level of concern, cited by 31 percent of respondents, is modernizing their existing IT infrastructure. By comparison, only 13 percent and 11 percent, respectively, had mobility or BI projects on their tables.

The state of their current IT systems are holding a majority of respondents back from offering faster, more efficient service (61 percent), and greater self-service options (52 percent). Almost a third, 31 percent, of respondents say they would introduce new products quarterly if technology limitations were not holding them back, and 23 percent indicate that annual releases would be their ideal.

I recently had the experience of attempting to change my 18-year-old daughter's status on my existing auto insurance carrier's policy after purchasing a new car and giving her the older one to commute to college. The quote that came back was horrendous, more than three times our current rate. The contact center representatives did not seem to know why the rates were suddenly soaring. After three phone calls and threatening to move to another carrier, a representative with our provider (from whom we've always received good service in the past) finally figured out that our 15-year account was in the “old system,” and by moving our records to the “new system,” we were eligible for a range of discounts, which brought us in line with competitive quotes.

If our carrier had a well-integrated, modern system, would all this back-and-forth have been necessary? I wonder. How many customers is our carrier losing as a result of the “old system” spitting out outrageous quotes? I wonder about that, too.

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.

Readers are encouraged to respond to Joe using the “Add Your Comments” box below. He can also be reached at joe@mckendrickresearch.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments...

Already Registered?

If you have already registered to Insurance Networking News, please use the form below to login. When completed you will immeditely be directed to post a comment.

Forgot your password?

Not Registered?

You must be registered to post a comment. Click here to register.

Blog Archive

Driving Growth Through Distribution Management

In the current hyper-competitive marketplace, many carriers are focusing on improving their distribution practices as a key technique for driving growth.

Google and Insurance: One Year Later

Google is getting the approval for selling insurance on their compare site in a large number of states via a number of different insurance partners.

How IT Managers Can Get Close to Policyholders

Four steps CIOs need to take to lead insurance organizations to greater “customer obsession.”

Strategic Initiatives for 2015: Making Sense of the Shifts

Insurers must choose between embracing innovation or just continuing with business as usual and run the risk of becoming a casualty in the new competitive battle.

To Stay in the Game, Insurers Must Aggressively Embrace New Consumer Technologies

Emerging technologies displayed at the CES could be some of the greatest change agents since the introduction of the Internet, offering breakthroughs that could challenge many businesses.

Marketing: The Insurer’s Shadow IT Department

Marketing executives continue their march into the insurance data center.