The End of the Modern Legacy Insurance Platform

Like my MacBook Air, many insurance core systems look modern and deliver on today's requirements. But their replacements are already emerging, and serious buyers are right to question their short-term viability.

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The big news in consumer tech is that Apple is moving away from Intel chips in 2021. The more interesting debate, though, is among the cognoscenti over whether people should buy this last generation of Macs. The tech writers all are running through a series of arguments that essentially ask the same question: Are you focused on the future, or are you committed to running aged applications from niche vendors, and can you tolerate the limitations they impose?  

Whether you're pondering a $1,500 laptop or the digital transformation of your insurance core systems, it's precisely the right way to frame the discussion.

What is a Modern Legacy Core Insurance System?

Let's start with the obvious. The beating heart of modern legacy systems is called the policy administration system because they were built around policies. Notice they're not built around customers. That fundamental architectural decision is a serious impediment to achieving a complete view of the customer across products and understanding and satisfying the customer's additional insurance wants and needs. Modern legacy policy administration systems frequently require complementary technologies, typically through another vendor, to round up and supplement customer data and deliver digital self-service opportunities.

Secondly, architecture matters. It's not a conceptual difference. The architectures of many modern legacy systems are referred to by industry analysts as "monolithic." That means they are self-contained, independent from other computing applications, and that the user interface and data access code are combined into a single program from a single platform. The implications are nontrivial when it comes to customer experience, digital engagement, and integrations with insurtechs, third-party data, and other insurance applications. 

To compensate for these limitations, many insurance core systems vendors dress up their aged software by delivering it via the cloud. While modern legacy solutions may operate there, they were not designed with cloud-native architectures (containers, microservices, DevOps, etc.). No surprise then, that they don't offer the same benefits (infinite scalability, flexibility, distributed speed, openness, etc.). 

Further, hiding that architecture in the cloud behind a door labeled "SaaS" will not position you to participate in the ecosystem economy. Don't be fooled. Cloud-native and SaaS aren't just about software delivery. Cloud-native and SaaS are about designing, delivering, and supporting systems for the future of insurance.

Building for the Future of Insurance

Long before the global pandemic raised the urgency level to "PANIC!" there were two things you could say about the insurance industry. First, that it lived in a state of near-perpetual tech debt, that is: the onerous cost and effort of making do with insufficient tools. Second, that the future of insurance platforms was going to be customer centric, fully digital, and cloud-native, meaning that it would be built with containers, microservices, and open APIs. That's not just our opinion. It's the direction of enterprise software across the board. Also, if they don't already, insurers soon will want to participate in — or even create — digital insurance ecosystems.

Watch Video: What is a Digital Insurance Ecosystem? from EIS on Vimeo.

McKinsey reports that by the year 2025, 30% of the global economy will run through six major ecosystems.

Incumbent insurance platforms, by and large, were designed well before any of those needs were identified, and retrofitting or upgrading those systems is expensive and time-consuming. Rip 'n' replace? Also risky ‘n’ hard. It disrupts customers, employees, processes, and distribution. And insurers are nothing if not risk averse. That’s why insurers, across all lines of business, are turning to coretech. 

Coretech: Future-Proof Digital Insurance Platforms 

Coretech is a combination of cloud-native technologies, implementation methodologies, and insurance core systems that’s architected for the future of insurance.

While coretech offers the deep insurance functionality and enterprise scalability of modern legacy systems, it leverages the cloud’s on-demand, scalable and secure infrastructure, Agile approaches, and DevOps methodologies for rapid deployment and the continuous delivery of new business capabilities. That means the end of Big Bang upgrades and tech debt.

Because coretech shares DNA with insurtech, it’s built with the microservices, APIs, containers, and event-based workflows necessary to support emerging business models and customer-experience expectations. It’s open and easily joins digital insurance ecosystems and consumes third-party data. 

When it comes to tech purchases, whether we’re talking laptops or digital insurance platforms, it only makes sense to look to the future rather than the past.

For more information about coretech, download When Insurtech Meets Coretech, the Customer Wins.


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