Legacy systems are holding insurers back – and they know it. A 2024 Novidea survey report showed that more than two-fifths (41%) of respondents admit that their most essential core systems haven’t been updated in more than five years, meaning they rely on legacy and outdated systems for some of their most critical day-to-day operations. Three-quarters (76%) of companies with more than 5,000 employees are juggling more than six systems, nearly a fifth (17%) are using at least 10. This leads to data quality or security issues, as well as scalability concerns.
“There is still some very old tech being used out there. Brokers and insurers know that digital tech is now available but they don’t necessarily know what that might mean for them but they absolutely know they have to get off those legacy systems,” Paul insists.
It’s a huge concern and one that nearly all – 99% – insurance executives are keen to address. However, despite recognising the pressing need, three-quarters (74%) have been holding back. That said, there seems to have been something of a switch recently.
Paul reveals that there are two key shifts in the sector over the last 12 months. The first is AI. He acknowledges that there can be a lot of hyperbole and a lack of clarity about what AI systems might actually do for insurers. However, he also notes that insurers realise that many may not be in a place to take advantage of solutions when there is a clear path to adoption.
Unless they’ve got a basic digital platform in place where data sets are organised and structured, they’re not going to be able to take advantage of what AI gives them.
The other motivating factor is the behaviour of the London Market, specifically Lloyds. “If you’ve got the grandfather of insurance doing this, then brokers and insurers are starting to look at themselves and think – we should do this too,” he adds.
Data quality and security are executives’ most pressing concerns when it comes to being stuck with their old systems. In such a heavily digitised age, it seems anathema that there are still many processes dependent on manual or spreadsheet-based data entry. This presents an obvious risk in terms of human error, omissions and issues relating to regulatory compliance.
Paul reveals: “This is typically why companies come to us in the first place. Being built on Salesforce, the security around insurers’ data is second to none. That starts the conversation, and then it moves on to generating efficiencies.”
Efficiency is a hot topic in the industry in 2025. Insurers are facing stressors from all angles. A succession of extreme Nat Cat events have demonstrated the need for rapid and comprehensive response from insurers, while even everyday consumer expectations are rising – Lemonade’s three-second claim before that, for example, pushing insurers to integrate automated systems.
But the pressure is also coming from within the organisation. Growth is always a priority but manual processes are holding insurers back. “You’ve got a lot of people spending a lot of time completing processes that could be done in a shorter space of time by fewer people,” Paul argues. “The big step is realising how much more business insurers could be doing with the same number of people. You can distribute more product, underwrite more risks, all in the same amount of time.”
He acknowledges that there are a number of providers in the insurtech space that can help insurers achieve these sorts of efficiencies, but that, in itself, can introduce complexities. Novidea’s 2024 research already identified that nearly a fifth of respondents in large organisations were working with more than 10 different systems. When you’re in pursuit of greater data quality and security, this has to be carefully managed.
“There are other vendors that can provide solutions for specific areas and we also partner with them. But, when it comes to overall data security, if you have a standalone application, you’ve got data going in and coming out and there are more points of data protection to consider. When there’s a full, end-to-end ecosystem – you don’t have those issues.”
Another reason for the somewhat halting journey towards more seamless, digitised processes has been insurers’ approach to sourcing new technology, or more accurately, the trend towards DIY.
Many insurers have tried to design their own architecture. It has proven to be expensive, and time consuming. Understandably, the talent at the cutting edge of insurtech is hard to find. Working with providers like Novidea gives insurers the flexibility to build a solution that suits them, without having to reinvent the wheel.
“They might want to keep certain elements of systems they’ve designed themselves. They don’t want to throw the baby out with the bathwater and tech debt is a real concern,” Paul acknowledges. “But they do realise that we’ve been iterating these processes since 2009 and they can benefit from that experience.”
Choosing a partner in tech innovation is only half the battle. Designing the ecosystem for each insurer’s needs doesn’t have to just take into account today’s demands but accommodate tomorrow’s needs as well.
There is a temptation to assume that it’s a question of plugging in a new piece of tech and watching cost savings flood in. It’s a simplistic view both of what the new tech ecosystem can deliver for the business, as well as what the business will need to implement itself to maximise its investment.
It can best be described as a series of layers. The first to tackle is the Target Operating Model. How will the ecosystem work purely from an operational point of view. From there, what applications and architecture will be needed to support that operation model.
Then, it comes to the users. Who will use these systems, and who will manage those users? The insurer must define a pyramid of access to data, dashboards, reporting and so on, all the way up to the C-Suite, and make sure this adheres to the necessary compliance and regulatory issues.
“The key to managing all of this is a 360-degree view of processes and data in real time,” Paul claims. “In the past, you had to wait until the end of the month before you could see where you stood as a business in terms of claims or renewals processed, for example. Those days are long gone. With a full view of activities from front, to middle, to back office – for the C-Suite, that’s revolutionary. They can make decisions in real time according to what the data is telling them.”
Looking to the future, the investment isn’t just about the here and now but making sure the budget is there to build systems built for the future, but also build the teams. Organisations like Novidea have teams of project managers, business and configuration analysts and more besides. The target business must have the right people in place to make it all happen smoothly.
It’s not just buying tech, it’s investing in people to make it happen properly. This is why many are still thinking they could muddle through for another year. But, when they realise it’s not just about the tech that exists today, and how they can transform their business as it currently is and start thinking about a year or two down the line, that’s when they start thinking about a completely different way of working. And how much of their current way of working is adversely affected by the poor tech they currently rely on.
Novidea may sound as though it is producing a blueprint for futureproofing technology but in truth, no broker, MGA or insurer is the same, no regulatory system is the same and no need is the same. With more than 300 experts around the world, two-thirds of whom are based purely in research and development, Novidea is committing its own time and resources to developing solutions that can be tailored to individual market needs, all based on the universally secure Salesforce platform.
Into 2025 and beyond, Paul envisages that insurers, brokers, MGAs will be faced with continued and constant innovation and iteration to make sure systems stay fit for purpose today, and ready to adapt to tomorrow.
“Take climate change and the recent wildfires in California. That is of huge significance to our industry and understanding what it means for brokers, but especially insurers. It’s incumbent on us to say, if this is going to happen more regularly, what can we do to support these organisations in getting a huge number of claims processed in a short space of time.”
