2025 and Beyond: Challenges Insurance Carriers Continue to Face

By Kurt Diederich, President & CEO

Evolving customer expectations and technological advancements consistently drive the need for innovation. As we enter 2025, insurance carriers are still dealing with outdated technology and the pressure to modernize while keeping their business running smoothly.

Legacy systems continue to create roadblocks, making it difficult for carriers to scale, innovate, and integrate with the latest technology. At the same time, policyholders now expect a seamless and user-friendly digital experience, and insurers who fail to meet these expectations risk losing business to more tech-savvy competitors.

Let’s take a closer look at these persistent challenges and, more importantly, how carriers can finally overcome them.

Legacy System Modernization

Many insurance carriers still rely on outdated legacy core systems that were built decades ago. These outdated systems create operational inefficiencies, limit scalability, and make it difficult to integrate with modern technologies such as AI, machine learning, and real-time data analytics.

The drawbacks don’t stop there. Maintaining outdated systems is costly, prone to security vulnerabilities, and slows down innovation. In a recent report, Martina Conlon from Datos Insights indicated that the type of system modernization in 2025 would vary by the size of the carrier, with smaller insurance modernizing core systems and larger ones focusing more on underwriting and finance systems. Regardless of size, one thing is clear: modernization is a necessity.

To remain competitive, insurers must modernize their core systems by transitioning to cloud-based, modular, and API-driven architectures. Adopting a flexible, cloud-based core insurance processing system allows carriers to enhance agility, scalability, and security. Working with the right technology partner is key to making this transition seamless and minimizing disruption to day-to-day operations.

Customer Experience and Digital Engagement

Policyholders no longer compare their experiences to those of other insurers. Instead, they compare them to companies like Amazon, Apple, and other digital-first brands. Unfortunately, many insurers still rely on manual processes, disjointed communication channels, and outdated customer portals, which can lead to frustration and churn. These manual processes and dated technology can also lead to poor customer service, forcing policyholders to call agents for simple requests, slow claims processing, and fragmented interactions across mobile, web, and phone.

Investing in omnichannel digital engagement can significantly enhance customer experience by streamlining processes, personalizing interaction, and enhancing self-service capabilities. Look for a core processing system that includes built-in tools that enhance your customer experience for both agents and policyholders.

How the Finys Suite Can Help

Modernization isn’t just about keeping up – it’s about staying ahead. Carriers that embrace technology and address these challenges head-on will be the ones leading the industry in 2025 and beyond.

The Finys Suite is a cloud-based, modular core processing system that enables carriers to modernize at their own pace. Its flexible architecture, API integrations, and real-time processing help carriers transition from legacy constraints without disrupting daily operations. With intuitive self-service portals, automated workflows, and seamless claims and billing management, the Finys Suite empowers insurers to deliver the fast, digital-first experience that policyholders expect.

By investing in the right technology solutions, insurers can finally overcome these familiar challenges and set the stage for long-term success.