Insurers can’t afford to keep relying on legacy tech, study says

The legacy technology systems that many insurers rely on are holding them back. Still, it’s unsustainable for insurers to keep kicking the can down the road long-term, according to a new study published by Baringa.

“There’s a massive constraint in terms of their ability to get their current legacy environment to respond in terms of pace, in terms of value for money, but also in terms of how they think about being able to capitalize on a more modern architecture stack and what does that look like,” Roy Jubraj, partner of financial services, Baringa said.

Outdated legacy tech is one of the main barriers preventing insurers from capitalizing on AI and other technology advancements and from being able to deliver the level of service customers increasingly demand.

But Jubraj, one of the study’s authors, said it is not all “doom and gloom” for insurers, as there are many options for them to transition to more modern frameworks. The main point he emphasized was that insurers can’t afford to hold onto legacy tech “too long.”

“With the progression of technology and, importantly, the progression of data, I think insurers and organizations across the globe need to take the leap of faith and start thinking about how they update their capabilities and legacy environments in a way that is a lot more progressive,” Jubraj said.

“It can become very, very constraining in terms of those legacy environments not necessarily supporting the business and the business ambition in today’s environment. So, I don’t think you can hold on for too long.”

Insurance execs realize the problem

According to Baringa’s study, insurance executives recognize that keeping legacy tech is a problem, yet they know they are heavily dependent on it.

Just under 50% of the execs surveyed said they see existing IT as a barrier to supporting customer needs. Yet an equal percentage also said they believe legacy system failure would be fatal to their operations.

“We’ve got lots of insurers in the survey that are likely sitting on a core insurance platform capability that’s 20, 30 years old. So, your ability to then change and be able to do change, either from a customer proposition perspective or digital channels or being able to test and learn and be able to tweak the propositions in a very flexible and sort of fast-paced environment, becomes very limiting,” Jubraj said.

However, 39% of insurance leaders surveyed said legacy systems and the ability to capitalize on new technology are their company’s biggest strategic challenge.

“There’s not only a missed opportunity as it relates to the agility and speed that you need to service the customer’s needs in the here and the now, there’s a missed opportunity in terms of how organizations want to innovate, in terms of how they get value out of the new practices and methods and tools that are in the marketplace,” Jubraj said.

Baringa’s report homed in on how legacy tech is driving a wedge between client expectations and the digital services offered by their providers. It found that while 76% of customers today want to have an entirely digital interaction with their insurers, less than 40% said they are actually satisfied with the digital experiences offered by their provider.

“There’s a clear gap between customers’ expectations, from a digital perspective, and what we believe insurers can do to meet them,” Jubraj added.

Fixing the foundation

Jubraj acknowledged that modernizing core ecosystems is easier said than done for many insurers, who would have to invest considerable time, expertise and funds to make it happen. As such, he said there is a marked “hesitancy of organizations to be able to make that leap of faith in terms of how they embark on that modernization program and what does that look like.”

He nonetheless remained optimistic that there are feasible options for insurers to consider, such as those put forth in the Baringa report.

“One of the fears that insurers have is those investments don’t necessarily yield business value quickly enough. So, the approach that we’ve laid out in the report is that there is an iterative process that you can engage in, where you fix the foundations and the core, and then you build an operating model alongside fixing the foundations. You can then start to iteratively evolve and use the technology to deliver business value,” he explained.

The report also suggested legal reviews on how organizations may choose to approach their technology transformation agenda that could help address foundational capabilities and avoid “waiting for years and years to fix the problems that you have.”

“There are definitely solutions, there are definitely options. It’s not all doom and gloom, but insurers do need to take the conviction to actually go on this journey and address that and embark on those modernization programs,” Jubraj said.

Baringa is a global management and consulting firm founded in 200 and based out of the United Kingdom. Its insurance tech study, “Win loyalty, where others fail,” was based on the results of studies conducted in the United States and UK between March and April 2025. The study surveyed 4,000 customers and 4,000 senior insurance executives.

© Entire contents copyright 2026 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Rayne Morgan is a journalist, copywriter, and editor with over 10 years' combined experience in digital content and print media. You can reach her at [email protected].