Like all financial service companies, insurers are highly dependent upon technology. But their core information technology systems, including mainframe technology, are aging rapidly, causing significant problems. Timeworn legacy systems require increased maintenance, which drive up costs, while specialist operating knowledge is at risk of being lost as the workforce ages and retires. Older systems cause process and decision–making friction, degrading business agility, all of which can easily degenerate into strategic risks. To correct this problem, insurers need to modernize their core systems.
This paper examines the need for legacy modernization at insurance companies, setting out the risks and benefits of pursuing a core renewal program using a tried and tested approach.