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Next level thinking is needed when dealing with legacy systems

23 April 2019 Jonathan Faurie

Big Data is having a massive impact on the insurance industry. Like many other aspects of technology, Big Data is becoming a ticket to the game when it comes to the future success of insurers.

This can present an opportunity to the industry. However, it can also present a significant challenge as companies need to upgrade their legacy systems.

This is no easy task, especially considering the size of certain insurers. FAnews spoke to Kumar Utpal, Regional Sales Manager Banking and Insurance at In2IT Technologies, to find out more about the challenges associated with this undertaking. 

Upmost importance

Insurers have had to deal with data in the past, but never at the level that they are currently doing now. This increases the urgency for upgrading legacy systems. 

“The majority of insurance applications globally are written on a Mainframe or a AS/400 platform. This means that insurers struggle to migrate their legacy systems and data over to new systems. As a result, the challenges faced when trying to modernise legacy systems are quite significant,” said Utpal. 

As pointed out before, technology can only benefit insurers as it brings them closer to their clients. Therefore, significant benefit can be found in upgrading legacy systems. 

“Legacy systems are proven applications. However, they are not scalable enough to handle digital transformation requirements clients need to fulfil today. Insurers therefore need an advanced system that is customer centric and provides a holistic view of the policyholder and the individual’s life journey. By leveraging cloud platforms, new systems can offer a modern and simplistic user experience. Further, due to the fact that the systems are centralised, this enables mobility and real-time customer interaction,” said Utpal. 

A massive task 

Depending on the insurers size, modernising legacy systems could cost a lot of time, effort and capital. If an insurer undertakes this task, they will surely be hoping for a quick return on investment (ROI). 

“For medium and large insurers, the return on investment timeframe ranges from six to eighteen months. It is key to implement and update systems in phases so that immediate ROI can be achieved. It is also good to note that Robotics Process Automation (RPA) can provide an ROI within four to eight weeks. It is therefore highly recommended that insurers explore this option,” said Utpal. 

Utpal added that legacy systems can be given quick, relatively inexpensive upgrades by including robotics. “Robotics will equip legacy systems with the modernisation and automation it needs to offer the user and customer experience associated with new systems without actually using the new systems,” said Utpal. 

Robotics eliminates the need for retaining resources to manage legacy systems. This effectively allows insurers to automate traditionally lengthy processes and procedures on old systems. Insurers can process claims, invoices, policies and more on their old systems within seconds or minutes, mimicking the performance of their new systems, thanks to robotics. 

“Insurers don’t need to crumble under the weight and expense of modernising legacy systems. Rather, they should hold on to their existing investment while adding creative ways to phase in modernisation, managing it like their new system until the legacy system is no longer required,” said Utpal. 

Growing pains

Modernising legacy systems would require insurers to move most of their client data onto the cloud. This opens the door for cyber crime and criminals. 

“The path to legacy modernisation is typically from mainframe systems to web-based application and it certainly exposes more cyber threats. However, there are various security measures and methodologies that can be applied in order to ensure the security of online software. Insurers should have appropriate cyber security measures in place which prevent any kind of threat on network, systems and applications,” said Utpal. 

He added that robust security measures are highly recommended so that any information or data pertaining to the business, customer or even cash flow is protected. 

Find value

The fact that upgrading or modernising legacy systems will take a lot of time, effort and capital should not deter insurers from the task at hand. 

Insurers needs to derive value out of the client experience that brings further potential value to the client. The client will notice this value and then purchase products that display this value. Through data refinement, insurers can identify client behaviour and spending habits. They can then design appropriate products and advice. This is made easier by modernised systems. 

Editor's Thoughts:
When approaching a topic such as this, insurers need to look beyond the costs, time and risks that are associated with modernising or upgrading legacy systems. They need to look at the bigger picture and what value can be added by this. Pain is temporary, value is permanent. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za

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