By Tim Norman, Chief Growth Officer

Core processing systems are essential to keeping insurance operations running smoothly. They handle policy administration, billing, claims management, and underwriting, ensuring smooth day-to-day functions. Yet, many insurers still rely on legacy systems—outdated, inflexible, and costly technologies that pose significant risks and hidden expenses. It’s important to recognize that legacy is an ongoing term; even companies that have modernized in the past may now find themselves on outdated technology if their systems haven’t received regular updates and enhancements. While the initial reluctance to modernize is understandable, the long-term consequences of maintaining legacy systems can be far more damaging.

 The Hidden Costs of Legacy Systems

• Maintenance and Operational Costs
  • Older systems demand substantial resources to keep them running. Frequent patches, specialized IT support, and custom integrations add up, making them expensive to maintain. Additionally, as skilled professionals familiar with legacy technology retire, the cost of hiring and training new talent rises significantly.
• Security Vulnerabilities
  • Legacy systems are prime targets for cyber threats. Many operate on outdated architectures no longer supported by vendors, making them susceptible to security breaches. A single data breach can lead to financial losses, reputational damage, and regulatory penalties.
• Inefficiency and Lack of Scalability
  • Legacy systems struggle to integrate with modern technologies, creating inefficiencies in workflows and data silos. These bottlenecks hinder business agility and prevent insurers from scaling operations effectively, limiting their ability to adapt to market demands.
• Regulatory and Compliance Challenges
  • Insurance regulations are constantly evolving, requiring insurers to adapt quickly. Legacy systems often lack the flexibility to meet new compliance requirements, leading to costly manual interventions and an increased risk of non-compliance.
• Missed Opportunities for Innovation
  • With the rise of AI, automation, and data analytics, insurers leveraging modern technology can streamline processes and enhance customer experiences. Legacy systems, however, act as roadblocks to digital transformation, preventing insurers from capitalizing on new opportunities.
• Impact on Talent Acquisition and Retention
  • Modern professionals expect to work with up-to-date, efficient systems that mirror the technology they use daily. Legacy systems can be frustrating and inefficient, decreasing job satisfaction and productivity. Additionally, attracting top talent becomes more challenging, as skilled professionals often prefer companies that invest in modern technology and foster a forward-thinking work environment. The inability to offer a streamlined, digital-first work experience can lead to higher turnover rates and difficulty hiring new employees.

Why Now is the Time to Modernize

Modernizing core insurance processing systems is no longer an option—it’s a necessity. The competitive landscape is shifting, and customers expect seamless digital experiences. Insurers that delay modernization risk falling behind more agile competitors that can deliver faster, more personalized services. Moreover, modernizing systems can enhance employee satisfaction, making attracting and retaining top-tier talent eager to work with cutting-edge technologies easier.

How Finys Can Help

At Finys, we understand the complexities of transitioning from legacy systems to modern, efficient solutions. Our comprehensive core insurance processing suite is designed to enhance operational efficiency, ensure regulatory compliance, and enable seamless digital transformation. With scalable architecture, built-in security, and a user-friendly interface, Finys empowers insurers to future-proof their operations and drive sustainable growth.

The hidden costs of legacy systems are too significant to ignore. Now is the time to embrace modernization, improve efficiency, and stay ahead in an ever-evolving industry. Let Finys help you make the transition with confidence.

Note: This post was drafted before the fires that swept Southern California. In hindsight, it seems oddly prescient.

When we read the obligatory predictions for coming years in insurance trade articles and consultancy reports, we like to look for themes. Those themes are most often found between the lines of the text in the article and reports. This year is no different. Here’s what we mean.

According to an article in Risk & Insurance — “The State of the Insurance Market: What’s in Store for 2025” — there are some challenges ahead. We can’t remember a year in which there were no challenges. But let’s get to them:

Catastrophic property loss and auto lines bring considerable challenge to the market as historic loss levels continued to plague 2024 … Catastrophic events have also been linked to inflation and rising costs, including interest rates and supply chain issues, which further impact overall insurance costs.

To paraphrase, catastrophes are likely to occur and to be problematic.

Next, in its report, “Insurance 2025 and Beyond”, PWC wrote:

Continued rapid advancements in digital and analytics capabilities, from inside and outside the industry, have put many players under pressure. We’ve seen a sharp increase in digital efforts and adoption in areas like distribution, operations and claims. However, insurers still lack speed and agility due to inherent complexities such as legacy systems and traditionally siloed operations.

The report cited five specific factors on which to keep an eye:

1. A widening trust gap
2. Rapidly evolving customer needs
3. An increasingly digital and AI-driven world
4. Climate risk and a focus on sustainability
5. Convergence, collaboration, and competition.

To paraphrase again, relationships, consumer desires, technology, weather, and players in the market bear watching.

Finally, we looked at a report from Willis Towers Watson — “Insurance Marketplace Realities 2025 – Casualty” — that said this:

Casualty liability lines claim frequency and severity drive up loss ratios and subsequent premium while workers compensation results continue to mitigate those of liability and are leveraged accordingly. The marketplace is responding to increasing inflation and reserves while trying to competitively round out portfolios.

To paraphrase one more time, good news offsets bad in most property/casualty books of business. That’s the way the world and life work.

Let’s Connect Dots

Is there a unifying theme to be found by reading between the lines of these sources? Yes. In fact, it’s the same theme every year. That theme is uncertainty.

There’s a reason the expression, “There are no guarantees,” is a cliché. Given the truth of that expression, the notion or suggestion of control is a con, a source of deception. The truth is we control precious little. Rather than control or clairvoyance, the key to long-term success is preparedness.

To be adequately prepared, core system vendors should be digitally flexible enough to incorporate technical change and to integrate systems and data sources that suit their business models and provide discernible value to their customers.

That kind of preparedness is exactly what we mean when we say the Finys Suite is future-proof.

The December edition of Best’s Review contained an article that caught our attention: ”FAIR Plan Policies Nearly Double in Five Years”. It caught our attention for two reasons. First, we write FAIR Plans. Second, there seems to be some churning in the FAIR Plan vendor market. It’s no wonder. It’s not an easy market to serve. But that’s not to say it can’t be served … and served well.

According to the article:

Insurers of homeowners and even commercial property risks have had a tough time, due to [a lack of] positive underwriting results in recent years. Some of those factors, obviously, have been the greater frequency and severity of extreme weather events and weather events of different types, be they primary perils or the perils referred to as secondary perils like severe convective storms and wildfires, etc. They’ve also been challenged by inflationary pressures that have pushed average claim costs upward.

Yes. Managing increasing demand is a challenge; i.e., adapting to the growing demand for coverage while ensuring the long-term sustainability and effectiveness of the programs. Specifically, FAIR Plans have to:

• Balance the need to provide coverage to high-risk prospects’ with the need to maintain solvency and not disrupt the insurance market’s supply-demand equilibrium.
• Manage the complexity and variability of FAIR Plans across different states, with each plan having its own structure and regulations.

In a post update on March 20th of this year, the NAIC echoed some of these challenges:

FAIR plans are typically more expensive and have limited protection than insurance obtained in the regular market … FAIR Plan insurance coverage varies by state … Coverage for personal belongings and additional structures on the property are usually only offered as optional policy add-ons. Generally, loss of use and personal liability coverages aren’t offered via FAIR plans … Some states have a single state-run plan, while others have multiple plans operated by different insurance companies … Additionally, some states have residual market mechanisms, such as assigned risk plans, which serve a similar purpose to FAIR plans … the mission of FAIR plans broadened as these plans are increasingly viewed as tools for promoting economic development in coastal areas and providing low priced insurance.

But that doesn’t mean those challenges can’t be met and managed.

No Quick Fix

There’s no magic bullet for challenges as big and numerous as the ones outlined above. And we don’t claim to have one. But we’ve become the vendor of choice for FAIR Plans for a number of reasons:

1. We’ve been working with them for more than a decade.
2. The Finys Suite has a standard configuration for most FAIR Plans.
3. The Finys Suite is used to process more than 750 LOB combinations,
4. The Finys Suite contains pre-built, LOB-specific templates for ISO, MSO, and AAIS lines.

Will that solve everything? No. Will it make it easier for FAIR Plans to write business? Yes.

It’ll also make it easier for FAIR Plans to find a vendor who’s in it for the long haul.

Reliability is underrated.

Six years ago, we wrote a post called, “Keep the Change”. At the end of that post, we wrote this:

Since we have to keep the change, we may as well manage it effectively.

In the time that’s elapsed, we’ve come to realize two things: (1) We were correct. (2) We didn’t know how correct we were.

Today, of course, we’re likely to hear change referred to as transformation. Digital transformation. Financial transformation. Operational transformation. “We’re going to transform the enterprise!”

Are we really?

Transformation seems too abrupt. It feels like zero to sixty or a snap of the fingers. That’s not at all the kind of change we think about or that our software enables. Rather, it’s more gradual and deliberate. It’s more incremental and better managed. And it involves knowledge, learning, and what used to be called process re-engineering. Maybe it still is, for all we know.

Approach is Everything

Instead of transformation or process re-engineering, we’re more likely to call it change management. By that, we’re referring to a service that comes with our software. More specifically, we mean — especially when transitioning from fragmented legacy systems to an integrated suite — some processes are likely to change as they become more automated and efficient.

By the same token, people are likely to change in different ways. Some people may resist or have difficulty reconciling themselves to new systems and new processes. On the other hand, other people, who may have been considered marginal performers with the old system, may become stars with a new system and altered processes. And if we accept that best practices are static and determined in hindsight (they are) we can also tout that best practices, modified by experience, can be better practices. That creates the opportunity for people to suggest what’s possible, to build collaborative relationships, and to continuously improve requirements-identifying processes.

In other words, we view change management as a crucial aspect of of delivering our software. It’s a systematic approach to supporting people through their transitions to new processes with new tools.

Yes. We have to keep the change. We also have to manage it to keep it accessible and assimilable to everyone who experiences it. We have to ensure every link in the chain is secure.

It’s all part of the service.

Since we concluded our Innovation Advisory Board (IAB) meetings early last month, since the IAB comprises users of our software, and since (like our software) we intend to keep improving our IAB meetings, we were doing a little reading on the topic. We found a post from April of 2022, published by Forbes — “Why Customer User Groups Are Integral To The Success Of Today’s Technology Organizations” — that proved to be instructive and affirming. It said this, in part:

User groups exist to facilitate knowledge-sharing and communication among individuals who use the same technology, so providing a frictionless forum to share and receive information is critical … Many technology companies decide to form user groups when they have motivated and engaged customers who see the benefit of participating in a community around the company’s particular products or platforms. As groups grow, it’s the relationships — built among members and the vendor — that are the basis of user groups’ value.

We agree with all those points. And we’d add, in our experience, the relationships we build with our customers yield loyalty, which is a significant part of the IAB’s value to us.

There’s More

In addition to the points raised in the Forbes post, we find the IAB yields these things, as well:

• Expertise and Guidance: Since we’re all working in and sharing knowledge of the insurance domain, the input we get from our customers provides the insights we need to ensure our products and services evolve most beneficially.
• Stakeholder Engagement: Beyond our users, the IAB allows us to include other stakeholders, including vendors of other systems and data sources with which we integrate to provide the functionality and the information our customers need to do their jobs most efficiently.
• Improved Governance: Advisory boards can serve — our IAB provides — checkpoints for ensuring our accountability, transparency, and responsible decision-making.
• Effective Leadership: Our IAB also provides leadership by giving us feedback on practice standards and helping to keep us in compliance with ethical codes, as well as regulatory mandates.
• Resource Accessibility: Since we can’t know everything, our Advisory Board helps us identify and make us of existing vendors, resources, expertise, and networks, keeping us from reinventing wheels, reducing costs, and increasing efficiency.

What’s Next?

We’ve already received feedback from the attendees of this year’s IAB meetings. We’re considering all of it and will include it in the development of next years IAB meetings. And we’ll continue to ensure the Finys Suite contains the features our customers want and need. Otherwise, they won’t use it.

That’s how we keep the use in our user group.