Technology can be something of a double-edged sword in business as well as in legacy insurance systems. Its benefits are undeniable, especially in the financial services sector.
For one, it has given banks, investment firms, insurance companies, and other financial institutions the ability to develop new products and innovate on existing ones.
It’s also facilitated faster and more effective communications, not just within the enterprise but between companies and the people that they serve.
Most significantly, perhaps, is the fact that technology has also enabled the financial services industry to more efficiently make sense.
Also, to use the vast amounts of information they must process on a day-to-day basis.
It is not without its drawbacks, though. Some businesses can become overly dependent on the systems they use, which in itself can pose several risks.
The high cost of keeping up with the latest, greatest, and most cutting-edge technologies also tend to give most businesses pause.
This includes those that would benefit significantly from digital innovation, like insurance companies.
For these reasons, many firms choose to continue using legacy hardware and software long past their prime, simply tacking on updates and jerry-rigging solutions to save on costs.
But is your business truly making the wisest choice when it decides to retain legacy equipment instead of upgrading its core insurance system?
Here’s what choosing to stay in the past could really be costing your enterprise:
Various Security Issues and Vulnerabilities with Legacy Insurance System
Most people think of technology as an asset that can only be used for good.
Digital advancements have undeniably made lives better in many ways. Anyways, there will also always be people looking to use it to further their own nefarious ends.
Arms and drug traffickers, organized criminals, and terrorists all make use of technology to carry out financial crimes to defraud others and fund their illegal activities.
Sadly, they are only growing bolder and more sophisticated in their methods by the day.
Because of this, continuing to use legacy technology to manage sensitive customer information can be extremely dangerous to your business.
Both hardware and software have a shelf life of sorts. In a lot of cases, the manufacturer cannot indefinitely support them.
As they too must divert resources towards their newer products. And when your system is out of date, it is much easier to exploit.
Sticking with an antiquated, outdated system that only receives security updates once in a blue moon might seem functional now.
But the cost of having that system breached will likely cripple a business.
You also risk irreparable reputational damage if word gets out that your insurance company with its legacy insurance system were unable to protect customers’ sensitive data.
Difficulties Regarding Support and Maintenance
Some insurance companies might think that obtaining a core system for their business is a simple one-and-done purchase.
It may require a significant upfront investment to build the infrastructure and acquire the equipment.
But they believe that once they own it, they won’t need to pay any more.
They may also think that they’ll be able to use it indefinitely.
In truth, though, this is hardly ever the case. Systems like these require regular maintenance to keep them performing at their best.
And even if you do manage to preserve them well, they will still become antiquated eventually.
After a certain point, it may cost your enterprise more to keep these outdated legacy systems running than it would to replace them entirely.
Legacy systems aren’t just costly to maintain, either.
There may come a time that maintenance, improvements, and expansion simply won’t be possible due to a general lack of knowledge regarding how it works.
That is to say, the people who were considered experts on the system may have already retired or forgotten about it.
While new staff members simply never had a chance to learn about it. This can be worse if the documentation for the system is lost or inadequate.
Say your entire business runs on a platform that no one knows how to fix.
In such a case you may find yourself with an unprecedented catastrophe on your hands should it ever encounter any major issues.
Negatively Affects the Customer Experience
There is no doubt that legacy systems tend to run more slowly and less efficiently than their more modern counterparts.
This not only hinders the performance and productivity of your employees who use it.
It can also harm the experiences of your customers when transacting with your business.
Claims management is a major pain point in particular.
Many customers feel that their health insurance companies are less than timely when it comes to processing claims payments.
This is according to responses submitted to the 2019 American Customer Satisfaction Index.
Frustrated clients won’t hesitate to leave you.
And the legacy systems holding up these essential procedures if they know that they’ll receive better treatment and value for their money elsewhere.
The costs of retaining a legacy insurance system may not be apparent at first.
Why don`t you look closer and you may find them to be a drain on your insurance company’s budget and resources.
Ultimately, outdated systems are more trouble than they’re worth.
That’s why it’s best to invest in a modern, effective, and updated core insurance system to simplify your business operations and serve your customers better.