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 something positive that came out of it. The debacle helped start a larger conversation about a topic we’ve been talking about for some time now: the problem of outdated technology. As the new year begins, we expect professionals across all industries to take a hard look at the holes in our technology infrastructure and outdated systems.
Old technology and the insurance industry often go hand in hand
The insurance industry is no stranger to outdated technology. As an old industry, old technology is par for the course. It wasn’t until the COVID-19 pandemic started causing business closures that many insurance companies had to essentially update their processes and programs in order to continue operating under the new safety guidelines.
In many ways, the COVID-19 pandemic has been the catalyst for the digital revolution in the insurance industry. But, countless carriers and agencies still rely on the old way of doing things. why is that?
The answer is not straightforward. Some may be concerned about the cost while others are concerned about the challenge of replacing outdated systems. Some fear that the change will be too much for employees and cause more disruption to work than it’s worth. However, if Southwest’s collapse has taught us anything, it’s that no excuse is worth risking the damage that outdated technology can cause to your organization, your employees, and your customers.
So, without further ado, here are seven ways your outdated system may be doing your insurance company more harm than good.
** We’ll explore these issues from an insurance perspective (that’s our expertise), but many of these issues apply to companies in any industry that still rely on outdated technology.
1. Old technology is very expensive
One of the most common drawbacks we hear from insurance professionals who are still running their business on legacy systems is that the new solution just isn’t in the budget. While it is true that the upfront costs of adding more modern tools to your tech stack can be significant, they are 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) is now known as technical debt. And like most debts, they are eventually due.
The older the systems, the more expensive it is to maintain. In addition, outdated technology can decimate corporate profits in other, less obvious ways. For example, a legacy agency management system (AMS) or customer relationship management system (CRM) may not be able to deliver the features or ease of use that employees, producers, customers, and downstream channel partners are looking for. If these customers, employees, and partners are unhappy with their experiences, they may take their business (and their talents) elsewhere, in search of a more novel experience.
2. Outdated technology can damage your reputation
You work hard to maintain a positive reputation for your insurance business. A bad reputation for your customers may lead directly into the hands of your competitors and negatively affect your bottom line. We’ve seen with our own eyes how outdated technology can drag Southwest Airlines’ reputation through the mud in a matter of days.
When it comes to insurance, there doesn’t necessarily have to be a major failure or error in your legacy system to negatively affect how current and potential customers and employees view your company. It could also be the everyday boredom of old technology finally reaching people. If you continue to use outdated technology, employees, prospects, and customers may see that your company is behind the times. And if your technology infrastructure seems to be stuck in the past, you will have a hard time convincing anyone of your future place in the market.
3. Outdated technology may cause you organizational problems
The main 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 complete picture of their data in order to make informed business decisions. The complexity of each state’s regulatory regime in the insurance industry means that it is critical that all systems be integrated and updated in real time to avoid compliance breaches.
Upgrading to an integrated automated compliance solution (such as AgentSync) can result in significant savings in compliance management costs and ensure continued product and agency compliance – without the manual effort you would need to ensure the same level of compliance today.
4. Outdated technology can inhibit growth in your agency, carrier or MGA/MGU
Legacy systems are rarely scalable. Modern problems need modern solutions and old technology is often ill-equipped to meet current needs. For this reason, 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 more difficult it will be to meet current market needs and gain new market share. If you are not ready to completely overhaul your organization’s outdated systems, there are other options that can help you plunge into the innovation pool.
5. Outdated technology fuels inefficient work flows
Outdated systems can prevent your organization from achieving its full potential. With outdated technology, your employees are likely to spend a lot of time on manual, repetitive, and non-revenue-producing tasks. Not only is this considered a waste of talent, but it also increases the chance of human error and non-compliance.
Without updated insurtech technology, processes such as product preparation and compliance management would be time and resource intensive. Remember earlier when we mentioned that legacy systems don’t usually integrate easily with other technologies? This lack of communication can create data warehouses and workflows that block the flow of information between teams and ultimately slow down operations.
6. Outdated technology may make you more vulnerable to cyberattacks
Hackers are constantly looking for new ways to sneak through an organization’s cyber security measures and gain access to its secure data. As software ages, it may no longer have the necessary defenses to protect against new cyber threats. Cybersecurity is a major concern for insurance agencies and carriers who often store vast amounts of sensitive customer information. Outdated software can make this data more vulnerable to a data breach, which brings you back to earlier points about reputational damage and hard dollar costs.
7. Outdated technology can negatively affect hiring efforts
We’ve said it before and we’ll say it again – the insurance industry is in the midst of a staffing crisis. Mass retirements and a shrinking talent pool mean that high-quality candidates have more power to choose where they want to work. And if you think the opportunity to work with software that preceded their grandmother is a good selling point, boy do we have news for you.
Today’s job seekers are looking for modern companies that use the latest technology to improve the experience of both the client and the employee. Offering producers a high-tech experience while spending less time on manual, repetitive, and time-consuming tasks can help you keep competing for talent.
It’s time to upgrade your insurance technology now!
It’s time to best by date in your Insurtech and it’s time to rethink the “if it ain’t broke, don’t fix it” mentality you may have previously had regarding your legacy systems. In fact, it’s best to fix the problem before there’s a major breakdown (again, just look at Southwest Airlines for proof). Obviously, outdated technology can do more harm than good when it comes to your agency, carrier, or MGA.
Don’t be like Southwest and wait for the damage to really be done. It is time to get rid of your outdated systems along with the problems they are causing to your insurance business. If you’re ready to declare your independence from legacy technologies and processes, see how AgentSync can help you reach your full potential.