Technological transformation is at the forefront of innovation in insurance. And yet amid this rapid evolution, many modern insurance companies are still grappling with a significant challenge – how to replace, integrate or phase out their older tech.  

Legacy technology, characterised by older systems and outdated infrastructure, has long been a thorn in the side of insurance companies. While it may sit in the “if it ain’t broke don’t fix it” camp ignore this at your peril as the long-term risks and escalating support costs associated with relying on outdated systems can hold insurers back.


One of the most pressing concerns with legacy technology is the heightened risk of security breaches. In an era where data protection is paramount, older systems often lack the robust security measures required to fend off modern cyber threats if they have not been patched appropriately. Insurers are entrusted with vast amounts of sensitive customer data, making them prime targets for hackers. Relying on outdated security protocols can leave these companies vulnerable, leading to costly data breaches and tarnished reputations.

Another peril of legacy systems lies in their limited compatibility with modern technology and automated systems. In the InsurTech space, seamless integration of data and systems is crucial for providing efficient services and insightful analytics. Legacy systems often create silos of data, hindering collaboration between departments and obstructing opportunities for innovation. This lack of integration can hamper a firm’s ability to respond rapidly to market changes and customer demands.

Shadow IT becomes an increasing problem with legacy platforms, where operational departments struggle to fulfil their day-to-day capabilities with old technology. This forces them to revert to creating off-platform and uncontrolled solutions, which is a high risk strategy if business critical decisions are being made from spreadsheets.

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Technical debt 

Maintaining outdated technologies is financially draining. The expenses associated with keeping legacy systems operational, including maintenance, regulatory changes, security updates and patches, can eat into a company’s budget. According to industry reports, organisations allocate a significant portion of their IT budgets—sometimes up to 80%—to maintaining legacy systems, leaving limited resources for growth and innovation.

Continuously deferring the upgrade of technology creates a mounting burden known as “technical debt.” This debt accrues when companies delay necessary updates, leading to more complex and costly migrations in the future. As competitors embrace modern systems and gain a competitive edge, those shackled by technical debt find it increasingly difficult to catch up. The longer a company waits to upgrade, the harder and more expensive the transition becomes.

Flexibility is essential 

The insurance sector is subject to ever-evolving regulatory and compliance requirements. Relying on older systems to be able to accommodate compliance changes is more likely to leave companies non-compliant with the latest data protection and financial regulations. Failure to adhere to these standards can result in severe penalties and potentially legal action. Staying abreast of regulatory changes is challenging when using outdated technology, as these systems often lack the flexibility, and technical capability to adapt quickly.

Perhaps one of the most significant risks of clinging to legacy technology is missing out on opportunities for innovation and growth. Companies that rely on outdated systems struggle to provide the level of service and personalisation that policyholders expect. They may miss out on features like real-time reporting, API integrations, pricing algorithms, AI-assisted applications, and advanced customer insights, integrated services, machine learning and even cloud computing in some cases. This stagnation can lead to diminished customer satisfaction and decreased competitiveness.

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Future-proofing the sector

Innovation is the key to a successful long-term strategy. Insurance companies must recognise the risks associated with legacy technology and prioritise modernisation. By embracing new digital architecture, robust security measures, and data-driven decision-making, firms can thrive in an ever-evolving industry. 

Ultimately those companies that build greenfield technology stacks hold a significant advantage, but they can’t stand still either. Any business that desires to stay ahead of the technology curve, must constantly adapt and upgrade its technology. That’s why a long term strategic approach is essential for insurers that want to avoid being left behind. Especially in this fast paced sector, today’s innovations are tomorrow’s legacy technologies.

Andrew Harrington is CIO of Ripe