Thoughts of digital transformation may be unnerving, but what should really scare you is your old tech. In fact, that old tech is likely haunting you.

It is common for carriers and MGAs to cling to outdated systems, nearly mummified with bandaged fixes. After all, change is hard. But leaders may not comprehend the full spectrum of inefficiencies, redundancies and security risks their legacy systems create.

The scary truth is legacy systems leave insurers to tackle inefficiencies daily. Newer technologies offer clever, user-friendly solutions without the fear factor. One of the best ways to conquer your fears is to recognize those inefficiencies and make a plan to reduce or eliminate them.

Inefficiencies and Required Maintenance

Companies using older systems remain trapped in the ’90s and early 2000s by systems designed around pre-defined workflows that reflected work practices of the past. They were never purpose-built for today’s insurance, and they cannot adapt to modern, more efficient workflows.

Plus, legacy systems often remain tied to on-premises hosting within ghostly data centers. Maintaining these systems is expensive and requires specialized tech expertise, which can be costly. As a result, carriers often wind up at the mercy of their vendors, which often results in slow and expensive upgrades, as well as the above-mentioned patchwork of Frankenstein-like fixes created to make incompatible legacy systems work together, but not necessarily well or efficiently.

Lack of Integration

It can be a nightmare when your current technology’s effectiveness determines whether your systems are connected or integrated. Connected systems can share data, but often do so in a manual, error-prone way, sometimes requiring IT support. In contrast, newer integrated systems work seamlessly or can automatically detect errors and either resolve or flag them for your IT team. They leverage application programming interfaces (APIs) to keep data flowing among your policy administration system, CRM and other core systems.

The flexible architecture of modern systems empowers carriers and MGAs to adopt artificial intelligence and other emerging technologies more quickly. It also opens the door to a best-of-breed approach, where you can choose the top solution in each category instead of relying on a single vendor. Savvy organizations can even take a best-of-breed-for-now approach by implementing a more current tool temporarily and swapping it out as soon as a better product hits the market.

Poor User Experience

Why does user experience matter? Consider the evolution of the horror movie. Thirty or more years ago, you could watch a movie in a theater and enjoy popcorn and a soda. These features were predetermined by the theater; you had a limited say. But today’s streaming options put the movie viewer in charge. You can choose the app on which you want to stream the movie, whether you want to fast-forward through the scary parts or mute a jump scare, and you can choose the snacks of your liking.

Insurance technology has experienced a similar evolution. Older systems set guardrails around what you could and could not do. Newer systems put the power in your hands. Take, for example, your organization’s data model. Legacy systems use rigid data models, which require most carriers and MGAs to adapt the way they do business to meet the system’s requirements. Newer cloud-native solutions accommodate multiple data structures that adapt to your unique business processes, putting you back in the driver’s seat. As your data needs expand, newer solutions will handle larger volumes with ease and grow alongside your organization.

Security Vulnerabilities

Legacy systems were built to address the threats and bad actors of the past, not the present. The only way to remedy this is with a complicated spiderweb of patches and updates, which often require specialized IT resources. Also, older systems typically live on premises within data centers far from where the actual work takes place. This creates latency that hinders the customer experience and exposes your data to potential threats for longer time periods.

In contrast, cloud-native systems bake security into their platforms from the start, addressing both current and emerging cyber threats. Today’s leading solutions embrace best practices for password protection. They use anomaly detection to identify behavioral patterns that may indicate a cyberattack. And they comply with global privacy laws such as the General Data Protection Regulation (GDPR). Plus, cloud-native solutions deliver near-instant response times, which means your data stays secure without compromising your customer experience.

Customer Experience Silos

Speaking of customer experience, meeting modern customer expectations is nearly impossible with legacy systems. Because decades-old technology is inflexible, you either need to write complicated logic to achieve the level of customer experience visibility you want, or you need to add a separate customer experience layer that you also must maintain and support.

Modern systems allow you to define and execute an ideal customer experience. They empower you to integrate your policy management, CRM, marketing automation and business intelligence platforms so you can track consumers through the customer journey to post-policy support.

Soothe Your Worries

Once you know all of the spooky scenarios your legacy systems can create, investing in an upgrade may feel less daunting. Consider these four best practices to usher in a worry-free digital transformation within your organization.

1. Start with strategy. The flexibility of cloud-native technology means you can upgrade with a clean slate. Start by mapping out your business strategy and data strategy. Then, explore systems that will help you achieve your ROI. For example, if you set a business goal to speed up product creation, then seek solutions that will help you launch new products to market faster.
2. Seek efficiency. As the hard market lingers, carriers and MGAs must continue optimizing productivity throughout their organizations. Bake efficiency into your digital transformation by seeking solutions that ease the burden on your employees. No-code and low-code platforms, for example, are easy to use for both technical and nontechnical users. They also require fewer IT resources.
3. Take your time. Thankfully, the gory days of ripping out the guts of your existing system are in the rearview mirror. So, you can proceed with your transformation at your own pace, replacing systems as needed without an expensive—and overwhelming—total overhaul.
4. Talk with the right people. Before buying any technology, do your research. Network with other carriers and MGAs. Interview multiple vendors—and their clients. Inquire about implementation timelines. Create a use case that your vendor can complete as proof of concept so you know the solution will deliver on its promises.

Make no mistake, digital transformation is a major organizational undertaking. But it doesn’t have to be scary. Once carriers and MGAs understand the true limitations of their legacy systems, they’ll ready those systems for the graveyard, recognizing now is the time to embrace innovation that will enhance every part of their business.