Why Legacy Systems May Hold You Back – and How to Break Free

For many insurers, legacy systems are the elephant in the (server) room.

They've been around for decades, often built in-house or heavily customised over time. They work - most of the time - but they're rigid, costly to maintain, and a major blocker to innovation. In a market where agility, automation, and digital distribution are no longer optional, legacy tech is quietly throttling growth.

In fact, a McKinsey report found that 9 in 10 insurance executives cite legacy systems as the biggest obstacle to digital transformation.

So, what's holding insurers back - and what does a realistic path forward look like

The True Cost of Clinging to Legacy

Maintaining legacy infrastructure might feel like the safer option, but the hidden costs multiply over time. Some common issues of legacy systems include:

Development bottlenecks

Making even small changes to products, pricing, or policy wording often requires going through overstretched IT teams or relying on a handful of developers familiar with the legacy codebase. What should be a quick tweak - such as adding a new cover level or updating a rating factor - can turn into a multi-week task involving change requests, testing cycles, and careful workarounds to avoid breaking something else. This slows innovation to a crawl and makes it harder to respond to market demands in real time.

Integration headaches

Legacy systems often weren't built with modern connectivity in mind, which makes integrating with new tools a slow and painful process. Whether it's plugging into aggregator platforms, embedding APIs for digital distribution, or introducing automation tools like chatbots or AI-based underwriting, every integration tends to require custom development, manual mapping, and lengthy testing. This not only delays go-to-market timelines but also limits your ability to experiment, partner, or innovate at speed. In a fast-moving market, that kind of friction is costly, both in time and opportunity.

Data silos

In many legacy environments, data is spread across multiple disconnected systems - claims management , underwriting, policy admin, customer records - each with its own structure, access rules, and reporting limitations.

This fragmentation makes it incredibly difficult to get a single view of the customer or track performance across the business. Teams spend hours reconciling spreadsheets, chasing down reports, or working with outdated information. Worse still, it limits the potential for automation, personalisation, and data-driven decision-making - all of which are increasingly expected in today's insurance landscape.

Escalating cost of ownership

Many insurers report that up to 7 0% of their annual IT budgets are consumed just keeping legacy systems running

Security risks

Older systems often rely on outdated technology stacks, unsupported software, or hard-coded processes that are difficult to patch and maintain.

This creates vulnerabilities that cybercriminals can exploit, and makes compliance with evolving regulations like GDPR or FCA standards much harder to guarantee. In many cases, even understanding where the risks lie is a challenge because legacy infrastructure wasn't designed with today's threat landscape in mind. The result? A greater risk of data breaches, reputational damage, and regulatory penalties - all of which could be avoided with a more modern, secure architecture.

Worse still, these issues don't just affect your internal teams-they impact your ability to meet customer expectations. Fast quotes, flexible products, and personalised journeys become harder to deliver.

Breaking Free: What Modern Looks Like

The good news is that moving away from legacy doesn't mean starting from scratch or signing up for a multi-year re-platforming project.

Insurance platforms like bluescape are explicitly built to help insurers transition from legacy to modern, with flexibility, speed, and minimal disruption. Here's how:

• Modular and configurable - Add new products, cover types, or integrations without ripping out your entire system.
• No-code tools for business teams - Empower product owners and analysts to make changes without developer bottlenecks.
• API-first architecture - Seamlessly connect with third-party tools, aggregators, payment providers, and more.
• Multi-line, multi-brand support - Manage complex structures in a single platform - ideal for MGAs, brokers, and insurers with multiple offerings.

By adopting newer models, you will position your business to respond faster to market shifts, customer needs, and growth opportunities.

The Competitive Edge You Can't Afford to Ignore

The gap between insurers with modern infrastructure and those without is only widening. Those able to launch new products quickly, plug into new distribution channels, and make data-led decisions in real time are already pulling ahead.

So if your team still relies on spreadsheets, workarounds, and systems that "just about" do the job, it's time to rethink what's possible.