Insurance companies could lose years of potential pricing gains by making core system replacement a prerequisite for modernisation, according to Earnix principal solutions consultant for agentic and predictive AI Brian Shipley.

While replacing legacy technology can offer insurers a more flexible operating environment over time, large-scale programmes can also absorb budgets, stretch internal teams and delay the introduction of capabilities that could deliver business value sooner. Shipley argues that insurers should reconsider whether modernising pricing and rating systems independently could deliver faster returns while reducing the risks associated with replacing entire platforms.

As core insurance technology becomes more widely available, competitive differentiation increasingly depends on how effectively insurers develop products, set prices and respond to changing market conditions. Rules engines, automated filing, real-time rating and embedded decisioning are changing how insurers manage these activities. However, replacing a policy administration system (PAS) without rethinking the processes behind it risks carrying existing limitations into a new technology environment.

Separating pricing and rating from legacy core systems can allow insurers to introduce more advanced simulation capabilities, adjust rates more quickly and simplify filing processes without waiting for a complete platform replacement. This approach also allows modernisation to progress in stages, rather than making every improvement dependent on a single transformation programme.

Data migration presents another challenge. Insurers may underestimate the amount of proprietary pricing data and embedded business logic contained within legacy systems until a migration is under way. Moving information into platforms such as Snowflake or Databricks does not automatically resolve inconsistent field definitions, undocumented transformations or gaps in data lineage.

Source link