Category: Health Core Systems

Health insurance disruption is killing the legacy core system

For insurance companies, one issue has been ever-present in recent years, and the longer it has gone unsolved, the bigger it has become. The culprit is the core administration system: the bedrock of the insurer’s aging technology architecture, and symbolic of the insurance industry’s failure to innovate and meet the rapidly evolving demands of customers. 

Change to compete, or stand still and surrender market share

The market may not have previously demanded this issue be solved, but that has changed according to Deloitte Insights, which recently authored an article titled “Digital disruption for health plans: It isn’t coming, it’s here”. P&C and life insurers have already begun addressing their legacy core administration systems and the myriad problems they cause, and if health insurers want to continue to be relevant going forward, the time to act is now if not yesterday.

The crux of the legacy core administration system problem

In a world of instant gratification, results have to be immediate. Whether you’re a business owner or a politician, your shareholders and constituents have one pivotal trait in common: a lack of patience. 

What is the point of devoting millions of dollars and thousands of man-hours to a vast improvement initiative – such as the technical and technological challenge of replacing a health insurer’s legacy core administration system with a modern platform built on data and analytics and with the customer experience at its center – when you won’t be in the job by the time it is complete?

Furthermore, the wondrous speed of technological innovation in the modern era brings with it another huge concern for insurers. When it comes to overhauling a system as critical and fundamental as the core administration system, the fear is that by the time the project is complete, the new system will no longer be at the forefront of technology, and will instead require an update just a few more years down the line.

How the problem has ballooned

Past executives in the technology organizations of health insurance companies have reflected on these issues, and how they were forced to work around antiquated technology as a result. Due to their organizations’ increasing reliance on legacy core administration systems, customer experience took a backseat, given the technology simply didn’t have the ability to support the functionality customers were looking for.

Only marginal improvements were possible, as code introduced into production could only be implemented around the existing technology architecture. Distinct parts of the system – for example, proposals and claims – were divided in such a way that data was not able to be transferred between the two functional areas efficiently due to their siloed nature. 

All the while costs ballooned as improvement projects seeking a quick fix still needed to be staffed by traditional multi-layered role structures – teams consisting of business analysts, project managers, and quality assurance testers, in addition to the developers themselves.

Agile transformation may have been the goal, but jarringly slow progress was the result, despite the best efforts of talented individuals with years of prior experience in the industry. As surrounding technology has sprung up – health insurance marketplaces, online brokers, and more – the difficulties of keeping pace with outdated technology have become increasingly apparent, and the maintenance of the latter is exceedingly costly.

Yet, integration was always too daunting and seemed to require far too much complexity than was palatable by practical technology leaders in the short term. Thus, the problem continued to be pushed down the road.

Now is the time to solve it

However, the legacy core administration system need not plague the health insurance industry any longer. The technology that IT executives in health insurance have wished for all these years is finally here. 

Even better, they don’t have to spend excessive amounts of money and face lengthy timelines overhauling their technology stacks. Today, transformation is possible in a fraction of the time and cost, especially as you don’t necessarily have to implement a brand-new end-to-end system. 

Implementation can be executed in a modular, gradual, and flexible manner, by integrating the functionality of new technology with your existing systems piece by piece. Practicality remains key to the undertaking – it is significantly easier to convince business owners and key stakeholders of your technology strategy when you aren’t asking them to commit to significant cost outlays and lengthy timelines upfront.

Advantages of replacing your legacy core system

Having been hamstrung by legacy core systems, health insurers have been limited in their ability to improve on long-standing internal business processes. Current technology has the potential to swiftly remove these impediments and completely transform insurers’ process flows and product journeys. 

The rise of low-code/no-code software tools like CoverGo has removed the necessity for expensive improvement projects with overly complex staffing structures as alluded to above, because business users can create products at speed without the involvement of developers or IT. As API design has progressed, products can be quickly connected to the front end, empowering seamless omni-channel digital distribution. 

In the insurance context, this means health insurers can easily sell products on their own website or on insurance marketplaces like Policybazaar, supercharging their go-to-market strategy. Furthermore, open APIs are also able to serve other key stakeholders in the insurance ecosystem by enabling customized agent and broker portals to be set up with ease, empowering the former to sell more policies and the latter to efficiently manage existing policies and claims.

Get in touch with us today

If you’re a health insurer looking to break out from the shackles of your existing legacy core administration system, look no further. CoverGo is the first fully configurable, modular, no-code insurance platform for rapid product launch and go-to-market, omni-channel distribution, and intelligent policy management. Powered by a suite of more than 500 open insurance APIs, our platform enables out-of-the-box integration and the ability to automate all of your insurance processes.

Explore how you can partner with us to unlock massive possibilities in your business. Get in touch with our expert team today to learn how you can take your health insurance products into the future.

How legacy systems are holding back health insurers

Legacy systems are holding back health insurers from modernizing and improving their operations, leading to inefficiencies, higher costs, and a less-than-optimal customer experience.

A legacy system is an outdated computer system, technology, or application that is still in use. In the case of health insurers, these systems were often implemented decades ago and were designed to handle manual and batch-oriented processes.

However, as the health insurance industry has grown and evolved, these legacy systems have become outdated and no longer meet the needs of modern businesses.

Challenges with Legacy Systems

Inefficient Data Management

Legacy systems are often not designed to handle the vast amounts of data generated by modern health insurance operations. This leads to slow data processing times, data loss, and difficulties in extracting valuable insights from the data. This problem gets worse as more specified insurance lines and products are added to the same customer database.

These days, insurers need to cater to more specific audiences, and legacy systems were never built to handle so many different types of products at once, especially when each product requires the same amount of data.

Lack of Integration

Legacy systems are often standalone systems that cannot be easily integrated with newer technologies. This results in siloed data and processes that are not easily accessible or usable by other departments within the organization.

This goes as far as even impacting customers who would otherwise prefer to access their own data through digital channels that they prefer, like apps, chat channels, modern web apps, and other popular interfaces.

Outdated Technology

Legacy systems often use outdated technology that is no longer supported by the manufacturer. This results in security vulnerabilities, difficulties in fixing bugs and performance issues, and the inability to scale the system to meet the changing needs of the business.

If the system was created in-house, the systems are often maintained by a small group of employees who possess specialized knowledge, meaning that they may be difficult to replace in the event that these employees retire or leave the company. Unexpected downtimes could be exacerbated by the lack of skills or the loss of skilled workers who are familiar with the systems.

Limited Customization

Legacy systems are often limited in their ability to be customized to meet the unique needs of individual health insurers. This results in a one-size-fits-all approach that may not meet the specific needs of different organizations.

One of the primary issues with legacy systems is that they are inflexible and difficult to modify. This can lead to problems in claims processing, policy management, and customer service. For example, suppose a health insurer needs to make changes to its claims processing procedures. In that case, it may need to make a significant effort to modify its legacy system, which can be time-consuming and expensive.

High Maintenance Costs

One of the biggest costs associated with legacy systems is the cost of maintenance. Legacy systems often require significant resources to maintain and keep running, even though they may not provide the same level of functionality and efficiency as modern systems.

These costs can be substantial, as they can include the costs of licenses, hardware upgrades, and the salaries of IT staff dedicated to maintaining the system. Furthermore, the cost of maintaining legacy systems can be ongoing, as these systems often require regular updates and patches to address security vulnerabilities.

Interested in going digital but skipping the cost of moving from legacy systems?

Check out how CoverGo helped XN Worldwide Insurance saved on costs by using CoverGo.

Moving away from legacy systems

Given these challenges, it is clear that legacy systems are holding back health insurers from modernizing and improving their operations. To address these problems, health insurers need to invest in modern systems that are flexible, scalable and integrated with other systems.

This will allow them to take advantage of new technologies to improve the customer experience, streamline operations, and reduce costs.

Additionally, health insurers need to ensure that they have the right talent and skills in place to manage and maintain these new systems, as well as a clear strategy for migrating their data and processes from legacy systems to modern systems.

Overall, the move from legacy systems can better be described as insurers transforming their business for a more digital world that said legacy systems were not fit for.

We don’t just mean transforming how the business is conducted or what medium is used to conduct it. We mean that insurers need to not only adopt digital strategies, but embrace the transformation that comes with it, and that could mean changing some of the DNA that existed in businesses for decades. It’s a big decision, and if you’d like to explore what that means, talk to an expert at CoverGo, we help health insurers adapt to the digital landscape, and that’s part of our DNA.

Is moving away from legacy systems for you?

When it comes to digital transformation, a lot of businesses will attribute a cost to moving away from legacy systems as well, even if the alternative is a cost-saving measure. Oftentimes the cost comes from the time needed to make that change, and that can be the pricey side of the argument.

And that’s ok.

Companies have many reasons to stick with their legacy systems. That doesn’t mean they’re completely out of luck when it comes to facing competitors who move from their legacy systems.

There are also platforms out there that help create all the necessary tools, front-ends, and back-ends for insurers to compete in digital landscapes without leaving their legacy systems.

At CoverGo, our modular health insurance platform is an end-to-end core system that plugs into more than 500 systems in the industry, including many types of legacy systems.

Getting started with digital transformation

A health insurance company can undergo a digital transformation by implementing various technology-based solutions to improve its operations and customer experience.

The following steps can be considered for a digital transformation in the health insurance sector:

  1. Adoption of digital platforms: Implementing digital platforms like online portals and mobile apps to provide easy access to policy information, claims, and other services.
  2. Automation of processes: Automating manual and time-consuming tasks such as claims processing, underwriting, and customer service.
  3. Use of advanced analytics: Use data analytics to gain insights into customer behavior, claim trends, and operational performance, and make data-driven decisions.
  4. Integration of wearable technology: Integrating wearable technology like fitness trackers to provide customers with personalized health insurance solutions.
  5. Cybersecurity: Ensuring robust cybersecurity measures to protect customer data and prevent cyber threats.
  6. Customer-centric approach: Focusing on delivering a seamless customer experience by providing easy-to-use digital services and solutions.
  7. Collaboration with technology partners: Collaborating with technology providers to adopt cutting-edge solutions and stay ahead in the digital transformation journey.

Benefits of using digital channels

Health insurers should use digital channels because they offer several benefits, including:

Increased engagement and loyalty

Digital transformation in health insurance companies can lead to increased engagement and loyalty among customers by providing a more convenient and personalized experience.

Customers want the option to be in control and access their data and accounts at any given time. Offering online portals and mobile apps can allow customers to access their health insurance information, manage their policies, and make claims at their leisure. For a lot of customers, this is the game-changer for them.

The use of data analytics can lead to more personalized health insurance plans based on the customer’s needs, preferences, and behavior. The integration of wearable technology and digital health tools to track and monitor health, provide health insights, and enable real-time engagement with customers.

And therein lies the key differentiating factor that is missing in a lot of insurers: Engagement.

By leveraging digital technologies, health insurance companies can enhance the customer experience, increase customer satisfaction, and foster customer loyalty through timely and personalized engagement points.

Increased reach and accessibility

Digital channels can help health insurers reach a wider audience, especially in remote and underserved areas, and make insurance services more accessible to everyone. This much is obvious.

But a lot of insurers don’t realize that entire customer bases exist day in and day out on their favorite apps, messaging services, websites, and so on. If insurers are not regularly selling and serving their customers on channels that they prefer, they will simply go elsewhere.

Digital distribution channels offer a convenient way for consumers to purchase insurance, as they can compare plans, enroll, and manage their policies online or through a mobile app. This eliminates the need for in-person visits or phone calls, making it easier for people to get the coverage they need.

Digital distribution channels enable health insurers to reach a wider customer base, including those who may not have access to traditional distribution channels, such as brick-and-mortar insurance agencies. This can be especially important for insurers looking to expand into new markets or reach younger generations that are more likely to use digital channels.

Back to you

Legacy systems are a major challenge for health insurers, as they limit the ability of these organizations to modernize, improve their operations, and provide a better customer experience. To address these problems, health insurers need to invest in modern systems that are flexible, scalable and integrated with other systems, and they need to have the right talent and skills in place to manage and maintain these new systems.

Ultimately, these investments will help health insurers to provide a better customer experience, streamline operations, and reduce costs, enabling them to compete more effectively in an increasingly competitive marketplace.

Interested in getting started in your digital transformation journey? Reach out to our team at CoverGo and we’ll walk you through how our platform helps health insurers tackle their legacy system hurdles.