Creating a Future-Fit Insurance Tech Stack

What We Can Learn from Two Decades of Deconstructing Legacy Estates

This piece is by Ben Gower, Partner at Elixirr.

Insurance hasn’t just flirted with transformation — it’s poured billions into it. At the top of that spend sheet? Replacing the core Policy Administration System (PAS). This is usually eye-wateringly expensive and rarely delivers the business value it promises.

There is a better way.

Whether you’re on your fifth transformation or facing your first, the need for a different approach has never been greater. We’re now at a critical moment — AI is not a passing trend. Its transformative force offers insurers a once-in-a-generation opportunity to differentiate on both service and cost. But to unlock that potential, you must first tackle the foundations — your tech stack and the data that flows through it.

The Hidden Cost of Legacy

Most insurers are held hostage by decades-old policy administration systems — sometimes ten or more at the heart of a single firm. At the time they were cutting edge but today, they’re expensive to maintain, hard to integrate, and dangerously fragile.

The result? Up to 70% of IT budgets being swallowed to keep these legacy systems running — resources that could be driving real transformation instead. Updates are risky, costly, and often delayed due to systems built on ancient code or tangled in bespoke modifications. For many, this isn’t just an inconvenience — it’s a compliance risk. Nearly, half (49%) of insurers have faced fines or had to issue refunds in the past year due to errors caused by outdated systems.

Poor service resulting from legacy system inefficiencies can also lead to increased customer churn, with rates in insurance companies ranging between 24% and 31%.

However, this isn’t just about outdated tools. It’s about outdated mindsets.

Why Ripping and Replacing PAS Doesn’t Work

Many insurers default to full PAS replacement projects. These are slow, costly, and rarely deliver a competitive edge. The rigidity of these legacy systems means that updating each insurance products can take an average of four to five months, making it difficult to respond swiftly to changing market needs. 

Here’s the truth: administering policies is essential, but it isn’t what helps you win in the market.

Real value comes from:

• Seamless, high-quality experiences
• Data-driven personalisation and pricing
• Operational excellence that optimises costs

The main benefactor of big PAS replacement projects are the consultancies that recommend them — often at the expense of their clients.

A Smarter Play: The Skinny Core and Insurtech Edge

The future isn’t a bigger system. It’s a modular one. A lean system of record at the centre, surrounded by a curated, connected ecosystem. This isn’t patchwork. It’s deliberate architecture. Insurers adopting this approach unlock:

• Agility to pivot and adapt
• Real-time personalisation
• Rapid launch of new products
• Swap-in, swap-out innovation without vendor lock-in and big costs

There are four steps to make it happen:

1. Start with Vision
   • Define what success looks like based on customer needs and business strategy
   • Align the leadership team around a compelling case for change
2. Design from the Outside-In
   • Map future-state journeys for brokers, customers and colleagues
   • Identify the data required at every interaction
   • Define how the architecture will enable access, interoperability, and governance
3. Architect Intelligently
   • Make sure your architecture is clear on the data needed at each stage of the value chain and therefore what is needed at the core versus other solutions in the ecosystem
   • Invest in a data and systems architecture that supports long-term differentiation, lower cost, and future evolution
4. Curate the Right Ecosystem
   • Research insurtech providers who bring tangible innovation
   • Use your networks to vet and validate to get beyond the marketing
   • Make sure you integrate and contract in a way that enables you to change at a later date
5. Build with Agility
   • Focus on discrete use cases with clear value
   • Prove outcomes early and iterate
   • Ensure flexibility to pivot and scale

Final Word: Don’t Just Transform. Compete.

Transformation isn’t about launching a programme. It’s about rethinking how you compete. Don’t outsource your future to transient armies. Work with a small number of experts who’ve done this before. Know that will enable you to win in your markets — and the technical architecture that makes it possible. 

Cut loose or shrink down and contain your legacy so you can make transformation a reality with less pain and cost. You don’t need a bigger PAS. You need a better tech stack. Start with intent. Build with precision. Move with purpose.