Legacy Transformation in Insurance: Differences Across Continents

by Karen Monks,  Nicolas Michellod, October 17, 2014
Industry Trends


Insurers may succeed or fail over the next five to seven years depending on their ability to innovate the service experience they provide to agents and customers. The issue should not be how to operate the business while allowing for the dead weight of current legacy systems, but rather how eliminating them as constraints will move the business closer to its strategic goals. And it is not a question of whether these constraints must be removed, but when.

In the report Legacy Transformation in Insurance: Differences Across Continents, Celent analyses the differences among insurers in Asia-Pacific, Europe Middle East and Africa, Latin America, and North America in terms of their legacy and ecosystem transformation initiatives, investments, and programs.

Legacy transformation is a vast topic that insurers have tried to address for many years. We have heard cases where insurers are using systems that are more than 40 years old.  As such these systems are often expensive to maintain, inflexible and hard to change, ill-suited for today’s consumer demands, and integrated with internal and external ecosystems using point-to-point connectors.  As insurers introduce new products, distribution channels, or markets, these older systems become the greatest challenge in finding success in their new strategies. As a result, insurers begin transforming or modernizing their systems.

The report also details the results of Celent’s regional insurance CIO surveys and discusses how legacy transformation is being approached in insurance and how alternatives are being considered. Different options such as BPO, SasS, and IaaS are also discussed.

“Insurers across the globe are investing in legacy transformation, but the way they do it differs among regions. However, common themes are evident,” says Karen Monks, an analyst with Celent’s Insurance practice and coauthor of the report.

“Expectations of surround/contain vs. a complete replacement with a modern system point to certain benefit areas, which helps explain why both approaches are still very much in play. And the large cost associated with these projects explains why some insurers favor incremental improvements,” adds Nicolas Michellod, a senior analyst within Celent’s Insurance practice and coauthor of the report.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary


Survey Approach and Participants



Celent Research Themes



2014 Regional CIO Surveys



Survey Participants


Defining Legacy Transformation in Insurance



What Does Legacy and Ecosystem Transformation Mean?


Legacy Transformation in Action



Legacy Transformation Options



Legacy Transformation Is Not Taken Lightly


BPO, SaaS, and Cloud-Based Infrastructure



Business Process Outsourcing



Software as a Service



Cloud-Based Infrastructure


Final Thoughts



Implications for Vendors



Implications for Insurers


Leveraging Celent’s Expertise



Support for Financial Institutions



Support for Vendors


Related Celent Research


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