This post is part of a series sponsored by AgentSync.
The Southwest Airlines disaster that ended in 2022 may have been a nightmare for everyone involved, but there was one positive that came out of it. The debacle helped start a larger conversation about a topic we̵7;ve been talking about for quite some time now: the problem of outdated technology. As we begin the new year, we expect professionals from all industries to take a closer look at the cracks in their technology infrastructure and legacy systems.
Older technology and the insurance industry often go hand in hand
The insurance industry is no stranger to outdated technology. As an older industry, older technology is par for the course. It wasn’t until the covid-19 pandemic began causing business closures that many insurance companies were essentially forced to update their processes and software to continue operating under new security guidelines.
In many ways, the covid-19 pandemic was the catalyst for the insurance industry’s digital revolution. But countless carriers and agencies still rely on the old way of doing things. Why is it like that?
The answer is not straightforward. Some may be concerned about the cost while others are more concerned about the challenge of replacing older systems. Some are just afraid that the change will be too much for the employees and that it will cause more business disruption than it’s worth. But if Southwest’s collapse taught us anything, it’s that no excuse is worth risking the damage that outdated technology can do to your organization, employees, and customers.
So, without further ado, here are seven ways your legacy system could be causing your insurance business more harm than good.
**We will examine these issues from an insurance perspective (as that is our expertise), but many of these issues apply to companies in all industries that still rely on outdated technology.
1. Older technology is costly
One of the more common roadblocks we hear from insurance professionals who are still running their business on outdated systems is that a new solution just isn’t in the budget. While it’s true that the upfront costs of adding more modern tools to your technology stack can be significant, they’re nothing compared to the cost of maintaining legacy systems. Choosing to keep doing things the way you’ve always done them because it seems easier (or cheaper) now is called technical debt. And like most debts, they will eventually come due.
The older systems get, the more they cost to maintain. Additionally, legacy technology can eat away at an organization’s bottom line in other, less obvious ways. For example, an outdated agency management system (AMS) or customer relationship management (CRM) system may not be able to offer the features or ease of use that employees, producers, customers and downstream distribution channel partners are looking for. If these customers, employees and partners are not satisfied with their experience, they may take their business (and their talent) elsewhere in search of a more modern experience.
2. Older technology can damage your reputation
You work hard to maintain a positive reputation for your insurance business. A bad reputation can lead your customers straight into the hands of your competitors and negatively affect your bottom line. We saw firsthand how outdated technology managed to drag Southwest Airlines’ reputation through the mud in a matter of days.
When it comes to insurance, it doesn’t necessarily take a massive breakdown or failure with your old system to negatively impact the way current and potential customers and employees view your business. It could also be the day-in-day-out weariness of outdated technology finally reaching people. If you continue to use older technology, employees, potential customers, and clients may see your company as out of date. And if your technology infrastructure looks stuck in the past, you’ll have a harder time convincing anyone of your future place in the market.
3. Older technology can get you into regulatory trouble
A major disadvantage of older technology is its inability to integrate with newer software. Insurance professionals need systems that can communicate with each other and paint a holistic picture of their data in order to make informed business decisions. The complexity of the insurance industry’s state-by-state regulatory system makes it critical that all systems are integrated and updated in real time to avoid compliance violations.
Upgrading to an automated integrated compliance solution (such as AgentSync) can create significant compliance management cost savings and ensure continuous compliance for manufacturers and agencies – without the manual effort you would need to ensure the same level of compliance today.
4. Legacy technology can stunt the growth of your agency, operator or MGA/MGU
Older systems are rarely scalable. Modern problems need modern solutions and older technology is often unsuitable to meet current needs. Because of this, legacy systems can be a major hindrance to an organization’s growth and innovation.
The longer an agency waits to update its legacy systems, the harder it will be to meet current market needs and capture new market share. If you’re not ready to completely overhaul your organization’s legacy systems, there are other options that can help you dip your toe into the pool of innovation.
5. Older technology provides inefficient workflows
Legacy systems can block your organization from realizing its full potential. With outdated technology, your staff is likely to spend too much time on manual, repetitive and non-revenue-generating tasks. Not only is this a waste of talent, but it also increases the risk of human error and non-compliance.
Without up-to-date insurtech, processes like producer onboarding and compliance management eat up much more time and resources. Remember earlier when we mentioned that legacy systems typically don’t integrate easily with other technologies? This lack of communication can create data and workflow silos that block information from flowing between teams and ultimately slow down processes.
6. Older technology can make you more vulnerable to cyber attacks
Hackers are constantly finding new ways to sneak past an organization’s cybersecurity measures and access its secure data. As software ages, it may not have the defenses needed to protect against newer cyber threats. Cyber security is a major concern for insurance agencies and carriers who often store large amounts of sensitive customer information. Outdated software can make this data more vulnerable to a data breach, which takes you right back to previous points about reputation damage and hard dollar costs.
7. Older technology can negatively affect employment efforts
We’ve said it before and we’ll say it again – the insurance industry is in the midst of a hiring crisis. Mass retirement and a shrinking talent pool means high-quality candidates have more power to choose where they want to work. And if you think the chance to work with software that predates its grandmother is a good selling point, we’ve got news for you.
Today’s job seekers are looking for modern companies that use the latest technology to improve both the customer and employee experience. Offering producers a high-tech experience with less time spent on manual, repetitive, time-consuming tasks can help you as you continue to compete for talent.
The time to modernize your insurtech is now!
The best-before date on your insurance has come and gone, and it’s time to rethink the “if it ain’t broke, don’t fix it” mindset you may have previously had regarding your older systems. In reality, it’s much better to fix the problem before a major failure (again, you only have to look at Southwest Airlines for proof). Obviously, outdated technology can do far more harm than good when it comes to your agency, carrier or MGA.
Don’t be like Southwest and wait until the damage is already done. It’s time to throw out your old systems along with the problems they cause your insurance business. If you’re ready to declare your independence from outdated technology and processes, see how AgentSync can help you reach your full potential.