Capitalizing on the “digitalization age” requires legacy system review

Insurers and brokers wishing to thrive in the era of digitalization may be underestimating the challenge posed by legacy systems, according to Kimberly Harris-Ferrante, vice president and analyst at Gartner Research.

She made this observation during her keynote address at the 10th annual Insurance-Canada.ca Technology Conference held in Toronto on Mar. 5, 2012.

Harris-Ferrante noted that the era of digitalization is making demands on insurers’ and brokers’ systems and processes, requiring them to be integrated, streamlined, agile and able to push content through multiple channels in real-time — everything legacy systems are criticized for being unable to do.

And yet, a recent Gartner study asked about insurers’ and brokers’ IT priorities in 2012. The legacy issue didn’t rank among the industry’s Top 3 priorities in 2012, which were customer retention, customer acquisition and expanding relationships with consumers through product delivery.

“Legacy concerns were not a top IT initiative from brokers or insurance companies alike, leading me to the question: ‘Have you overcome legacy?’” Harris-Ferrante said. “You have got a legacy system? [When talking about digitization,] I am talking about straight-through processing, all channels accessing the same source systems in real time and strike-through processing. You know that legacy systems can’t deliver.”

Harris-Ferrante defined “digitization” in part as the product of a consumer-centric form of business that has emerged alongside the use of tablets, mobile phones, social media, consumer-facing web portals and other forms of developing technology. But it is more than just “consumerization,” she said.

For example, digitizing an insurer’s data and delivery systems involves everyone across an insurer’s value chain and affects all parts of the organization, from claims adjusters to regulators. It means offering content delivery in an integrated and consistent fashion through more channels, using real-time processing. It means customers and even regulators being able to access all channels and databases simultaneously.

Legacy systems simply cannot do this, Harris-Ferrante noted.

“We’re moving in batches,” she said. “Why are we moving in batches? Our systems are generally batch-processed. We have a discrepancy between that and real-time processing that fundamentally [inhibits] innovation.”