Building insurance modernization that sticks 

Why execution, architecture and change management drive transformation that lasts

In the race to modernize, insurers are confronting a hard truth: improving and upgrading technology isn’t a one-time event — it’s an ongoing business function.

For decades, insurers treated modernization only as technological improvements to be completed every 10 to 15 years. Today, real-time customer demands, digital-first competitors and embedded ecosystems require insurers to rethink how they keep technology up to date.

That shift must start with architecture. Insurers need systems that enable rapid product launches, fast testing cycles and swift responsiveness to regulatory changes or customer feedback. But legacy infrastructure often holds them back. According to Deloitte’s Insurance Outlook 2024, outdated technology remains one of the biggest barriers to speed, innovation and improved customer experience.

To modernize in a way that lasts, insurers need flexible architectures for seamless integration, disciplined execution to deliver at speed and organizational agility to respond to change at scale.

Why modernization programs falter

To make modernization a continuous capability, insurers need to understand why so many transformation programs fall short.

Inflexible foundations

At the heart is rigid core architecture. Without fully re-architecting existing systems, insurers face constant bottlenecks — especially when launching new products or enabling digital partnerships.

That’s why basic system changes often drag on for weeks, stalling innovation and eroding insurers’ agility. For example, a usage-based pricing initiative in auto insurance may be delayed because adjusting pricing logic requires a full-system reconfiguration, something their current architecture simply can’t support without extensive development and testing.

Insurance transformation programs often fail to deliver continuous modernization for several key reasons:

Teams underestimate the cost of technical debt

Many insurance core systems are tailor-made, based on outdated business models. They are difficult to adapt and update due to point-to-point integrations, outdated custom codes and poorly documented data relationships.

Aged systems are also largely dependent on quickly shrinking talent pools. The IT staff who built them are retiring, creating knowledge gaps that newly graduated experts can’t bridge since they specialize in modern solutions and techniques, not homegrown and outdated ones.

These highly customized systems are not easy to maintain or update without creating additional costs. Without a full view of this technical debt, modernization efforts risk spiraling over budget or collapsing under scope.

Fragmented data environments make it harder to adapt and move quickly

Homegrown systems often also create fragmented, outdated data environments that slow insurers down. Many organizations still rely on separate policy administration systems for each line of business, making it difficult to consolidate data or gain a unified view of customers (360° view). Real-time insights are often unavailable because changes require batch processing or manual updates.

This lack of transparency makes it harder to respond quickly to market changes or meet new regulatory demands and customer requirements. Without centralized, real-time access to data, insurers face operational delays, compliance risk and poor decision-making.

The opportunity cost of disruption often outweighs the perceived benefit

Modernizing without fully understanding how deeply legacy infrastructure is anchored in core systems can cause major service disruptions. Even small mistakes can introduce significant risks for policy and claims management, at the heart of an insurer’s operations.

Tight regulatory obligations and customer trust demand uninterrupted service even during transformation. That requires running parallel systems, layering new capabilities over old and maintaining security and compliance at every step.

What are the people-related blockers?

Even the most advanced architecture will fail without the organizational readiness to adopt it.

As a business transformation, the involvement of full-time staff is key to ensuring success. Yet many insurers see insurance modernization as a part-time project internal experts can manage in parallel to their main duties.

This can lead to obstacles, such as employee resistance. Staff may hesitate to adapt to new tools and processes and is often skeptical about the benefits of the changes. Morale and productivity decline while larger scale implementation is delayed. Product teams may also lack the skills to fully use new platforms, leading to low adoption or heavy IT reliance.

Weak executive sponsorship is another blocker that can undermine modernization attempts. For example, a multi-national organization may struggle to agree on a single IT layer that all local teams can use unless there’s agreement on shared standards. Regional units could end up duplicating systems, processes and data structures.

Without ongoing, cross-functional leadership commitment, reinforcement and governance, initiatives lose momentum. This can delay cultural change, stalling the formation of agile, cross-functional teams made up of business, IT, risk and compliance.

Without a shared roadmap, modernization efforts become uncoordinated, leading to siloed initiatives, mismatched priorities and missed opportunities.

How leaders succeed: building modernization into everyday operations 

As covered earlier, making modernization a continuous capability starts with rethinking the underlying architecture. Without a foundation that supports speed, flexibility and integration, even the best transformation efforts will struggle to scale. There are two key ways insurers can design architecture to enable this:

1. Build a platform foundation that supports ongoing modernization

In Adacta’s 2025 survey of European insurers, just over half of modernization initiatives (50.5 %) opted for software-as-a-service deployment models. This reflects the growing confidence in modular, standardized and scalable platforms designed for insurance complexity, such as SAP Fioneer’s Cloud for Insurance. This kind of architecture-led foundation supports large-scale changes or even simple updates (e.g., adjusting underwriting rules or launching new products) without requiring deep reconfiguration, especially when paired with robust application management services (AMS) to execute and oversee these updates. This reduces costs and accelerates time to market.

To enable continuous modernization, insurers should prioritize platforms that enable architectural transformation by:

• Offering open APIs to integrate ecosystems with banks, insurtechs and embedded insurance distribution partners
• Supporting real-time data access, automated compliance and scalability without needing full replatforming
• Allowing for modular rollouts, from claims and policy admin to billing, helping insurers align with business priorities
• Supporting the handling of historical data and integration with legacy infrastructure during transformation, minimizing disruptions and helping create a smoother experience for customers and internal stakeholders
• Being compliance ready with built-in support for auditability, data security and financial traceability and designed to flexibly comply with different regulatory frameworks
• Enabling low- or no-code solutions, allowing product teams to launch offerings, tweak underwriting rules or adjust pricing logic directly without routing everything through IT

Standardization is also key in an insurance platform because it enables scalability, maintainability and alignment across business units, especially in complex or decentralized organizations. It brings fragmented teams together under one IT layer while enabling faster time to value through proven, out-of-the-box processes. It also has a significant impact on maintenance and costs.

An architecture-first strategy supports steady modernization by allowing insurers to improve and update components over time with scalable, interoperable modules. This gradual, coexistence-based approach ensures continuity for customers while steadily building toward a more modern foundation.

2. Turn architectural vision into business outcomes

Technology alone doesn’t deliver continuous modernization. Leaders back these architectural decisions with clear operating models, disciplined execution and clear outcomes.

They create operational roadmaps aligned with the organization’s strategic goals and plan migrations by evaluating existing technical infrastructure. This helps identify gaps in technology, the need for early investment in data tools and avoid downstream bottlenecks during execution.

Successful insurers secure long-term executive sponsorship from day one. This support fosters experimentation and cross-functional collaboration and makes sure business and IT work toward shared goals.

Leaders also treat change management as a priority. They assess cultural resistance, clearly communicate the reasons for modernization and invest in training and support to enable confident adoption across teams.

Insurers that treat modernization as a continuous capability, grounded in flexible architecture and reinforced through operational discipline, build the infrastructure to lead change.

And to lead change, they must also redefine what success looks like.

A new definition of success: adaptability beats delivery

Modernization used to mean delivering a system on time and on budget. But in today’s market, those metrics don’t reflect resilience.

Winning insurers now measure success by how quickly and reliably they can change, with key indicators such as:

• Release frequency, speed of launching new products or services
• Ease of configuration, scaling or integration without IT bottlenecks
• Reusability of components, such as product configurations or service layers that cut duplication and accelerate delivery across lines of business

That level of adaptability does not happen by chance. It’s built into the foundation of how leading insurers operate.

Modernization that sticks starts with the right foundation

Insurers that succeed don’t treat it as a milestone. They treat it as an organization- and a system-wide capability: the ability to change continuously and confidently. That capability is built on modern architecture, reinforced by operational discipline and sustained through committed leadership.

The ones who get that right will outpace disruption.