This article is by Tim Hardcastle, CEO at Instanda;
Growing insurers know they need to keep evolving to meet customers where they are. Customer expectations are changing, AI is moving quickly, brokers want better tools and the pressure to reduce costs through AI is rising.
All these pressures can only be met using modern technology, yet many insurers don’t have everything they need. The more challenging problem, therefore, is how to adopt modern technology without causing unnecessary disruption.
Too often, modernisation is presented as a binary: live with existing systems or embark on a large, expensive transformation programme. Think of a busy international airport: you cannot close the terminals, gut everything back to the concrete and reopen when the job is done. Passengers still need to travel, flights still need to take off, and safety cannot be compromised. Modernisation in insurance works the same way. One option feels too slow. The other feels too risky. This leads insurers to delay.
Most have also lived through transformation programmes that took longer than planned, cost more than expected or failed to deliver the promised flexibility. Some found that newer platforms introduced their own constraints, leaving the business with a different set of limitations rather than the freedom to move faster.
What worries insurers most is the prospect of spending heavily, disrupting the business, and still ending up with a platform that cannot keep pace with the market. But modernisation does not have to mean ripping out what already works. With an AI-embedded, cloud-native, no-code platform that integrates with existing systems via modern APIs, insurers can modernise incrementally, improve agility and accelerate product innovation without the upheaval many fear.
Why rip and replace can disappoint
There are times when replacing a core system is the right decision. Some technology environments are too costly, too constrained or too difficult to maintain. These factors, combined with the graveyard of failed implementations, mean that increasingly “rip and replace” is no longer seen as default solution.
The phrase itself promises something that is illusory, making large scale transformation sound cleaner than it really is. Take out the old, put in the new, move forward, but anyone who has worked inside an insurer knows it rarely happens like that.
Insurance businesses are full of dependencies. A policy administration system connects into pricing, rating, claims, broker portals, finance, compliance, documents and data warehouses. Products have variations built up over years. Processes differ by region, class of business, distribution partner and customer segment.
A large programme may begin with a clear plan, but the market does not stand still while that plan is delivered. Customer expectations move, AI is developing rapidly and competitors are launching new offerings. By the time a multi-year project reaches the finish line, the original requirements may already look outdated.
In short, an insurer can replace old technology with a new core system that is itself out of date and then find they are struggling to change quickly enough.
The real problem is speed
Many insurers are not dealing with broken technology. Much of what they have in place still performs important functions every day. The problem is that these systems often slow down the very changes the business now needs to make.
A product team sees an opportunity, but launching takes months or over a year. A broker journey needs improving, but integration work slows everything down. A customer wants to make a simple policy change, but the process crosses too many disconnected steps. A leadership team wants to make better use of data, but information is scattered and hard to access. Combined, these issues create drag.
That matters because insurance customers now compare their experience with banking apps, travel platforms, online retailers and other digital services that have taught them to expect clarity and control. Brokers and partners feel the same pressure. They want faster quote-to-bind journeys, less rekeying, clearer information and fewer administrative delays.
Modernisation should therefore be seen as more than a back-office clean-up exercise. Its real purpose is to give the whole business more room to move and, critically, to reduce friction with customers by meeting them where they want to be met.
AI makes the foundations matter
AI is adding urgency to this debate.
There is no shortage of enthusiasm about what AI could do in insurance, from underwriting insight and claims triage to fraud detection, document ingestion and analysis, customer service and product design. Used well, it can help people make better decisions faster. But AI will not fix poor foundations by itself.
If data sits in disconnected systems, if workflows are rigid, if rules are difficult to change and if every improvement depends on scarce technical resource, AI will struggle to deliver more than isolated gains. It may make one task faster without changing how the wider business operates.
The AI conversation cannot sit separately from the modernisation conversation. To use AI properly, firms need clean data, more flexible processes, better integration and strong human oversight. They need environments where new ideas can be tested and scaled without waiting for a major rebuild.
A better route: build around what works
The better route for many insurers is to stop thinking in terms of all-or-nothing replacement.
Instead, they can build around what already works and improve the areas that are holding them back. That might mean adding a digital layer over existing systems. It might mean launching new products
on a modern platform while current books continue to run as they are. It might mean giving business teams no-code tools to configure products and journeys faster. It might mean using APIs to connect systems more cleanly (including ChatGPT!), automate manual steps and make data easier to use.
The important point is that change can be phased. It can be targeted. It can deliver value while the wider business continues to operate.
This approach requires discipline. Insurers must identify where the biggest constraints sit, decide which processes are worth protecting and measure value as they go.
A phased approach allows insurers to prove progress early. Faster product launches, smoother broker journeys, better self-service, cleaner data flows or reduced manual work can all build confidence. As new capability proves itself, reliance on more restrictive systems can be reduced over time.
To return to the airport analogy, this is not about pretending the old terminal is perfect. It is about building the new gates, keeping passengers moving and closing outdated parts when there is a better alternative already working.
Modernisation without the upheaval
A good modernisation strategy starts with the business problem, not the technology blockers. If the problem is speed to market, focus there. If the problem is broker experience, fix that. If the priority is AI readiness, look hard at data quality, workflow flexibility and governance.
The insurers that succeed will not necessarily be those that run the biggest transformation programmes. They will be those that become easier to change.
They will launch products faster, connect better with brokers and partners, use AI where it genuinely adds value and give customers simpler, more transparent experiences. They will protect what works while fixing what slows them down.
The industry needs to move beyond the false choice between standing still and tearing everything out. Insurers do not need a wrecking ball to modernise. They need a practical route that lowers risk, controls cost and delivers value sooner.
That may not sound as dramatic as rip and replace. But for many insurers, it is far more likely to work.
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