The group industry is one of the last verticals of insurance to modernize, and cross the bridge of digital transformation. This is due in large part to a continued reliance on legacy systems; functional, yet outdated systems which may no longer be supported by modern operating systems. While legacy systems are long-time industry standards, modern cloud-based systems yield faster processing times, leading to greater sales capacity and increased revenue. So which one is the way to go?
In this post, we’ll cover the transformation within the industry as modern cloud-based systems seek to replace and integrate legacy systems, and provide insight into choosing the right solution for carriers. Weighing in on the topic are Garrett Viggers, co-founder and VP of Innovation & Product Evangelist at Limelight Health; a leading SaaS solution for group insurance carriers, and Ray Law, a group benefits expert with over 30 years of experience whose previous roles include CIO/CTO positions at MetLife, Prudential, and AIG.
What are Legacy Systems, and Why are They Considered Outdated?
First, let’s define what we mean when referring to “legacy systems.”
A legacy system is an antiquated method of technology or application program. This includes legacy programming languages such as ForTran, Cobol, Basic, and Visual Basic. On legacy systems, Garrett Viggers comments “Often referencing a system as ‘legacy’ means that it paved the way for the standards that would follow it” and notes that modern software developers should be grateful for the role legacy systems played in laying the foundation for today’s innovations in technology.
But although they played an integral role in advancing technology, legacy systems are now considered outdated as they are unsupported by modern operating systems and incompatible with newer digital devices. However, some of them (Cobol and Visual Basic in particular) still remain largely in use today within the group insurance industry.
While legacy systems are tried and true in terms of function, their continued use creates several inherent risks for carriers, as well as added frustration and potential delays for employees and clients.
Issues with System Maintenance
If there is an error or system failure, in some cases it can be incredibly difficult and costly to find a technician qualified to service an older legacy system coding language.
Garrett Viggers recalls a story of a group insurance carrier who suddenly needed Cobol support, and had to track down a retired Cobol programmer. They negotiated with the programmer until agreeing to his requested rate, and a work week that did not interfere with the retiree’s fishing schedule. “How can we really serve our customers if we’re drowning and shackled to a system where the only guy who can service it is fishing for the next three days and won’t be in until Friday?” asks Viggers.
System failures without quick remedies can lead to unforeseen delays, and result in loss of revenue.
Slow, Error-Prone Processing for Employees
Legacy systems also place an undue burden on employee talent at these carriers, as they are tedious to use and prone to error.
One incorrect entry can significantly increase the time it takes to process a request, since the employee then has to take additional time to go back and try to find the error. Or worse, the error may go entirely unnoticed and result in incorrect projections and rates which could be costly for the carrier.
Because legacy systems are not supported on newer versions of standard operating systems, an older OS must be used to run them.
Older operating systems offer less protection from modern viruses and hacking, since most software providers stop releasing updates and security patches for their older operating systems. Therefore, continuing to use legacy systems that need an outdated OS to function poses a serious security risk to the carrier, and may make them more susceptible to costly data breaches.
Lacking in Modern Digital Capabilities
Legacy systems lack robust digital capabilities and do not easily integrate with modern internal and external systems.
These features are essential to our modern work culture, and the need for these digital capabilities has only been accelerated by the current COVID-19 pandemic. There has been a quick evolution over the past several months to the way people work, and what they need their systems to be able to do.
It is now critical for employees to have a high level of digital functionality within the systems they use.
The New Frontier of Modern, Cloud-Based Systems and Their Benefits
So what are cloud-based systems, and what’s all the buzz about?
Cloud-based systems feature applications hosted by a service provider (e.g. Amazon Web Services) which are internet-based and can be accessed from anywhere. These systems are generally designed to be far more intuitive and user-friendly than their legacy predecessors, and are compatible with modern digital devices.
On companies at the forefront of the developing new SaaS for the group industry, Ray Law comments “I’ve been impressed by the way the insurtechs have looked at changing the way we do things. And they’re not encumbered by business models, and operating models, and how [insurance carriers] do business. They’ve been disrupting, and I mean I count Limelight [Health] in that class, where the disruption is happening from the outside. Because [they’re] looking at it from the perspective of what’s possible, and not the current model.”
Cloud-based SaaS systems seek to offer solutions to the shortcomings of legacy systems, while maintaining all the necessary functions carriers need to successfully serve their clients. The latest innovations in insurance technology software feature a host of benefits for carriers, as well as their employees and clients.
User-Friendly Interface and Quick Processing
Modern cloud-based SaaS systems are built with ease and simplicity in mind, and aim to create a more seamless user experience than their legacy counterparts.
They are also designed to automate processes that legacy systems require to be done manually (i.e. pulling data from spreadsheets or calculating rates), to significantly speed up processing times. This allows carriers to do more business in less time, as well as avoid costly mistakes.
Compatibility with Other Modern Software Solutions
Having been developed to keep up with major advancements in digital technology, cloud-based systems offer compatibility with modern operating systems and integrations with popular modern software solutions such as Salesforce and Ease. Functionality with the most up-to-date OS’ provides the opportunity for a high level of data security, and software integrations eliminate time-consuming duplicate entry and cross-referencing.
Tech Support and Off-Site Data Hosting
Software providers of SaaS systems typically offer comprehensive tech support during normal business hours, ensuring that customer inquiries and technical issues can be resolved in a timely manner. Combined with off-site data hosting maintained by the software provider, this leaves minimal need for in-house IT support on the carrier end.
The Best of Both Worlds; Legacy System Integration
Now we ask our central question yet again; between legacy systems and modern cloud-based systems, which is the best solution for group carriers?
The answer may actually lie somewhere between the two for the near future, with longer term plans to eventually replace legacy systems down the road. Legacy systems are still very much a part of the fabric and daily operations for most group carriers, but there is an undeniable need for the enhanced digital capabilities more modern solutions can provide. Ray Law predicts that the integration of legacy systems into cloud-based systems may help to provide all the features carriers need in the interim of the transformation from legacy to modern, saying “I don’t think we’re going to wave a magic wand and migrate everything off legacy. I do think that we’re going to introduce, and integrate with, a lot of new technologies and capabilities.”
On Limelight Health’s role in providing a cloud-based SaaS solution with legacy system integration, Garrett Viggers concurs that it is essential for software providers to understand the existing workflows within legacy systems, and design SaaS products that function with them. “When we go in and we look at current workflows, it’s not to recreate [them], it’s to have empathy” says Viggers. He is confident that Limelight Health will play a key role in providing solutions that facilitate the transition to modern systems, saying “There are challenges and roadblocks currently in the group space, but there are also many opportunities to overcome them.”
6 Tips for Navigating Digital Transformation in a Legacy Industry
1. Be Grateful for Legacy Systems
Honor the foundation that was laid with legacy systems which paved the way for new technology standards, and recognize the innovation they were in their time.
2. Welcome Change
Be open to change, and think differently so as not to recreate 1980.
3. Focus on Business Needs
Transformation must serve and support business needs, as opposed to letting the technology drive transformation.
4. Integrate Customer Experience with Carrier Systems
The customer is king, but the final transformation provided to the end customer must also successfully integrate with carrier core systems.
5. Prioritize Agile Transformation
Understand the risks and rewards of each legacy system, and how often code changes have been required in the past in order to drive prioritization for agile transformation.
6. Celebrate Small Wins
Congratulate yourself for small successes along the way. Digital transformation takes time.
To hear more from Garrett Viggers and Ray Law on the digital transformation from legacy to modern systems, check out their episode of the GroupTech Talks Podcast.
Garrett Viggers, Co-founder and creative force behind the Limelight platform, has worked in the employee benefits industry since 2002, driving product and modern tech innovation from the genesis of Consumer Driven Health to the Affordable Care Act. Garrett presents to many group carriers on the strategic path to insurtech success. He is an innovator in quoting, underwriting, renewal and decision support tools and continues to push the boundaries of what is possible in the group ecosystem.