System Audits in the Insurance IndustrySystem Audits in the Insurance Industry https://www.softwaresolved.com/wp-content/themes/corpus/images/empty/thumbnail.jpg 150 150 zoe.gill https://secure.gravatar.com/avatar/035245d334b8dbe098d4e12d8a3f501e?s=96&d=mm&r=g
The insurance industry is frequently accused of being slow to adapt. We often hear about the burden of legacy systems and how they cause problems for the industry.
It’s no surprise when you consider the scope, disruption and cost of updating a legacy system. Yet, with so much money left on the table and businesses at risk from more agile competitors, insurance firms must face up to modernisation.
So, when is the right time to maintain, modernise or completely replace a legacy system? This is a difficult question to answer, but regular system audits can help solve this problem.
Adapting legacy systems
As the insurance industry grew and developed, systems had to adapt to meet the demand. This meant patches and updates beyond a system’s original scope, which complicated them.
Many of the legacy systems used in the insurance industry will be decades old. Countless updates will have transformed them, adapting to each new regulation or requirement.
Modernising or replacing a system can be a big risk for an organisation. Nobody wants to disrupt business critical systems. What if the new system doesn’t work as intended? Or your clients and customers don’t like the changes?
If a system stopped working one day, the decision to invest in something new would be much simpler. But it won’t. It will keep plugging along. A new process here; a rushed update there.
That’s the problem. Legacy systems still ‘work’. But how well?
When should you update a legacy system?
A system audit looks at how your organisation uses all your systems. It gives you precise usage data and identifies priorities for modernisation or replacement.
This is often invaluable when trying to build a business case for investing in new software. Without this information, it’s almost impossible to assess the true value of an update.
In short, system audits help answer the question of whether you should maintain, modernise or replace a legacy system.
New technologies in the insurance industry
So, why has the insurance industry been slow to update ageing legacy systems? According to a survey by Willis Towers Watson, 42% of senior level executives believe that complex regulations slow digital adoption and innovation.
It would be easy to dismiss new technology as another regulatory hurdle to overcome. In reality, the insurance industry stands to gain more from developments such as the Internet of Things or data visualisation than most. More data points and machine learning assist with risk profiling, as well as the accurate and timely provision of data.
Of course, firms shouldn’t adopt these technologies in isolation. You should consider them in relation to the impact they will have on the performance and security of existing systems.
Again, a regular system audit helps ease the adoption of new technologies. It considers your entire system network, identifying appropriate solutions for the wider business.
Systems audits and business agility
We know that global insurance firms are being disrupted by more nimble competitors. Today, more than ever, business agility is imperative to remaining competitive. Firms must adapt to new models and ways of operating quicker than ever before.
For example, the market is currently experiencing a trend towards self-service and customer experience. Whilst this is most prominent in consumer insurance, we know from our own experience that corporate and commercial insurance isn’t that far behind.
How do you know when to adopt these new practices and technologies? A system audit builds a picture of how your business uses its systems so that you can prioritise accordingly. In other words, it helps a business stay agile.
By understanding your current systems, it is easier to assess the value of new technology. You become better informed and can be quicker to adapt when it is necessary.
Instead of reacting to changes, firms who use system audits can proactively plan for them. It creates a forward thinking culture, rather than one that is always fighting fires with patches and updates.
Which, if we’re being honest, is something that the insurance industry needs to be better prepared for.
If your business needs support with an external system audit.