Most insurance companies use 18-year-old legacy systems, not enough to drive innovation: ZA Tech

Legacy systems often come with limitations that can hinder the development of new products and insurance channels.

The majority of insurers primarily begin their digital transformation with legacy systems too old to innovate, dragging their overall potential growth.

One of the key takeaways at the 2023 Insurance Asia forum in Manila from Tyler Thuy Long, country manager of the Philippines and Vietnam at ZA Tech, is the recognition that the path to digital transformation is neither smooth nor easy. Many challenges must be overcome, ranging from legal constraints and data limitations to legacy systems. 

Based on data from a BCG analysis, it is revealed that only 30% of digital transformation initiatives succeed. While ZA Tech has achieved remarkable success, the company acknowledges that they have encountered its fair share of obstacles.

These legacy systems often come with limitations that can hinder the development of new products and insurance channels. Long cited an example where a seemingly minor technical issue regarding character limits in an address field caused significant delays and financial setbacks. 

Recommendations for insurers

ZA Tech recommends that companies begin their digital journey by identifying and addressing legacy system issues and consider adopting modern cloud-native and microservices architectures to improve scalability and adaptability.

The second lesson Long emphasises is the importance of continuous investment and experimentation. ZA Tech's experience with a regional partner highlights the fact that there is no one-size-fits-all solution in the early stages of digital transformation. 

Long shared that they launched approximately 30 products in 18 months but had to discontinue over half of them due to poor performance. However, by utilising a no-code product configurator, they were able to pivot quickly, optimise products, and reduce time to market, resulting in significant improvements in the next 10 million policies issued.

Lastly, Long said it is a necessity to implement dynamic pricing strategies. In the rapidly evolving insurance industry, the ability to support dynamic pricing has become essential. 

He used an example from China to illustrate how leveraging data from platforms allows for real-time underwriting and repricing, enabling ZA Tech to keep premiums affordable while issuing hundreds of millions policies daily. 

This dynamic pricing capability is becoming a necessity for insurers aiming to remain competitive in the market.

While the path may be fraught with challenges, the rewards of innovation, adaptability, and continuous investment are evident in ZA Tech's digital journey.