Over the last few years, the insurance needs of new-gen, tech-savvy customers have drastically evolved. But with old legacy systems based on dead coding languages, insurance companies struggle to offer enhanced service quality that the digital generation expects.
Thus, the limitations of the existing infrastructures have made many insurers opt for large-scale digital transformation to facilitate innovative services and fulfill customer expectations. And for doing so, the first step is to replace or modernize your legacy core systems.
Legacy system replacement bridges the gap between your current insurance system and making you a progressive digital insurer in the future. So, today, we will discuss how legacy system replacement can leverage your digital transformation journey.
Why do you need legacy system replacement?
Agility and flexibility are the primary reasons legacy system replacement is highly needed in the insurance sector. Unfortunately, old mainframe-based legacy systems do not integrate with today’s flexible open system platforms. Hence, insurers using outmoded legacy systems fail to address modern business demands and lose ample growth opportunities for the future.
However, apart from these, the following are some more driving forces behind legacy system replacement.
Step-by-step technological journey for legacy system replacement
Gone are the days when replacing old legacy systems took several years, costing a hefty amount to organizations. Now, by following the right approach and moving step by step, insurers can easily opt for legacy system replacement to leverage their digital transformation.
So, here are the stages that you need to undergo for effective legacy system replacement without hindering your current workflow.
Phase 1: Built a robust new foundation with an early impact
In the first stage, you must focus on forming a sturdy foundation for the target architecture while positively impacting customers’ experience. By the termination of this phase, insurers must have developed new data, integration, and consumer engagement layers. But the legacy platforms are operated in parallel so that their data can be extracted out by the new data layer of the new architecture.
However, while building the new technological foundation, insurance companies must try to improve customer experience by developing modern UI for digital channels. And for doing so, you can get the utmost support from the new data layer. Also, this new architecture comes with data analytics capabilities, which enable you to offer the latest digital services like location-based health insurance services, comparison of peer in auto insurance, and retirement and life insurance advice.
Besides, early lighthouse projects such as fraud detection, consumer self-services, and cross-selling can easily uphold the value of this replacement in the first few months. Thus, on successful implementation of the new framework, customers will start to experience the potential of the latest digital insurer.
Hence, insurers shall use the first stage to prepare for their digital transformation journey and mobilize their organization. In addition, it frees up funding by identifying quick-win efficiencies like the suspension of existing projects, improvement in procurement and sourcing, and the reduction in basic expenses.
Phase 2: Digitization of end-to-end customer journeys
A near-term value is created by automating customer journeys by implementing business rules to the newly created data layer in the 1st stage. In addition, the exclusion of expensive manual work processes and solutions adds significant value to your digital transformation landscape. Also, this stage offers top-line growth to your insurance business by enhancing the consumer experience, thereby increasing retention rates and decreasing attrition rates.
Thus, insurance companies develop new decision management and smart processing layers throughout this phase while extending the customer engagement layer. As the digital data layer is in place, insurers can quickly digitize operational processes like claims management. However, legacy systems are kept untouched.
Besides, in this phase, insurance companies can begin reimagining processes and products related to customer journeys. Also, by facilitating digitized interactions and adding enhanced functionalities to the decision and smart-process layer, insurers can render top-notch experiences to policyholders.
For instance, you can provide your customers with real-time results like offering accurate life insurance advice customized to the consumer’s requirements or facilitating claim processing in a single day under extreme circumstances.
Phase 3: Embarking on an end-to-end agile and flexible platform
Core insurance functionalities like PAS and underwriting are brought online in this stage. It is accompanied by a new product engine rollout that can facilitate flexible product offerings while eliminating IT processes and reporting complexities. Also, being highly configurable, these offerings can easily meet market demands.
This new online platform is usually formulated on a cloud-based PaaS based on the concept of open architecture. Hence, insurance companies can easily replace or modify individual elements based on future needs and at a lower cost.
Eventually, insurers migrate all their customers to the new modern platform. All relevant data is also transferred to this platform, which now serves as the record system. After that, insurers start using this platform to the fullest to run their businesses. Thus, the entire customer journey is digitized by decommissioning legacy systems in this phase.
Well, this new technology-based platform supports advanced features that require the usage of full-target architecture like real-time underwriting. Product experience is simplified on this platform while generating newer possibilities for service offerings and product combinations for customers. Also, this platform enables experimentation with new business models for enhanced outcomes.
The generation has changed, and customer needs are constantly evolving. But traditional insurance legacy systems fail to cope with these dynamic requirements. Hence, replacement is a better decision to make. Insurers adopting the above-mentioned phased approach to transform their businesses digitally will witness a manageable replacement journey that will produce enhanced values for both short and terms.