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A legacy system is an outdated computer system, technology, or application that is still in use.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However, as the health insurance industry has grown and evolved, these legacy systems have become outdated and no longer meet the needs of modern businesses.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Outdated Technology
Legacy systems often use outdated technology that is no longer supported by the manufacturer.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:
- Adoption of digital platforms: Implementing digital platforms like online portals and mobile apps to provide easy access to policy information, claims, and other services.
- Automation of processes: Automating manual and time-consuming tasks such as claims processing, underwriting, and customer service.
- Use of advanced analytics: Use data analytics to gain insights into customer behavior, claim trends, and operational performance, and make data-driven decisions.
- Integration of wearable technology: Integrating wearable technology like fitness trackers to provide customers with personalized health insurance solutions.
- Cybersecurity: Ensuring robust cybersecurity measures to protect customer data and prevent cyber threats.
- Customer-centric approach: Focusing on delivering a seamless customer experience by providing easy-to-use digital services and solutions.
- 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.
