The insurance industry is no stranger to outdated technology. But do you know how much it can cost your independent insurance agency?
In December 2022, Southwest Airlines canceled over 6,000 flights in a three-day period amid bad weather, staff shortages and scheduling issues. The airline's CEO, Bob Jordan, later admitted that the company's systems had failed in the face of “extreme circumstances."
The debacle helped start a larger conversation on an important topic: the problem with outdated technology. The insurance industry is no stranger to outdated technology. However, if Southwest's breakdown taught us anything, it's that outdated technology can cost your organization.
Here are seven ways a legacy system may be doing your business more harm than good:
1) Legacy technology is cost-heavy. One of the more common roadblocks for agency owners who are still running their business on outdated systems is that a new solution is just not in the budget. While it's true that the upfront costs of adding more modern tools to your tech stack may be substantial, they're nothing compared to the cost of maintaining legacy systems. Choosing to do things the way you've always done them because it seems easier or cheaper in the short-term is known as technical debt. And like most debts, they eventually come due.
2) Legacy technology can harm your reputation. You work hard to maintain a positive reputation. A poor one could lead your clients straight into the hands of your competitors and negatively impact your bottom line. There doesn't necessarily need to be a breakdown or error with your legacy system to negatively impact how current and potential customers and employees view your company. It can just be the day-in-day-out tedium of outdated technology that finally gets to people. If you continue using legacy technology, employees, prospects and clients may view your company as being behind the times.
3) Legacy technology could get you into regulatory trouble. A major drawback of legacy technology is its inability to integrate with newer software. Insurance professionals need systems that communicate with each other and paint a complete picture of their data in order to make informed business decisions. Also, the complexity of the insurance industry's state-by-state regulation system means it's crucial for all systems to be integrated and updated in real-time to avoid compliance violations.
4) Legacy technology can inhibit growth. Legacy systems are rarely scalable. Modern problems need modern solutions, and legacy technology is often unequipped to address current needs. Because of this, legacy systems can be a major barrier to an organization's growth and innovation. The longer an agency waits to update its legacy systems, the harder it will be to address current market needs and gain new market share.
5) Legacy technology fuels inefficient workflows. Legacy systems can block your organization from realizing its full potential. With outdated technology, it's likely your staff is spending too much time on manual, repetitive and non-revenue-generating tasks. Not only is this a waste of talent, but it increases the chance of human error and non-compliance.
6) Legacy technology could make you more vulnerable to a cyberattack. Hackers are constantly finding new ways to sneak past cybersecurity measures and access your data. As software ages, it may not have the defenses needed to protect against newer cyber threats. Outdated software could make that data more vulnerable to a data breach.
7) Legacy technology could negatively impact hiring efforts. Retirements and a shrinking talent pool give high-quality candidates more power to choose where they'd like to work. Today's jobseekers are looking for modern companies that are using the latest technology to improve both the customer and employee experience. Offering producers the opportunity to spend less time on time-consuming tasks will help you compete for talent.
Holly Monroe is a content specialist at AgentSync.