The study reveals the real cost of tech debt — and the architectural approach already freeing up firms like Arch, American Equity, and Distinguished Programs to innovate faster and smarter
When legacy systems cost so much to run and manage, how can insurers stay ahead of rising policyholder expectations, constantly evolving regulations, and technological advances?
A new study from HFS Research, in collaboration with Unqork, highlights the strategic cost of tech debt at insurance firms, and offers a path that can simultaneously lower tech debt and unlock faster delivery of secure, modern applications.
How Tech Debt is Holding Insurance Firms Back
Across property & casualty, life & annunities, health, and specialty lines, insurers are spending as much 7X more on integration, implementation, and ongoing maintenance than on licensing software, according to the HFS study. The problem is compounded by decades-old policy administration and claims systems and heavy customizations layered in over time.
As a result, 86% of respondents say technical debt blocks strategic initiatives, resulting in:
- Slow product launches
- Manual underwriting processes
- Limited agility in responding to market demands.
And AI won’t automatically fix tech debt…
AI has tremendous potential to transform insurance operations, from underwriting automation to fraud detection and claims triage. And yet the HFS study includes a cautionary insight when it comes to AI-powered software development, with 43% of respondents expecting AI to increase, not lower, technical debt.
Top concerns include:
- Security vulnerabilities (59%)
- Legacy integration complexity (50%)
- Loss of architectural visibility (42%)
“If your architecture is brittle and code-heavy, AI will accelerate the chaos, not cure it,” says Phil Fersht, CEO and Chief Analyst at HFS Research.
The architectural shift: Componentized, no-code platforms
So how can insurers move beyond heavily customized, code-driven ecosystems? According to HFS Practice Leader and study author Hansa Iyengar, one answer lies in componentized, no-code platforms.
“They offer a way to break free from the maintenance treadmill and focus resources where they matter most—innovation and adaptability,” Iyengar writes.
In fact, some of the world’s leading insurance firms, including Arch North America, Distinguished Programs, and American Equity are already breaking free with Unqork’s AI-first no-code platform.
Arch Insurance
At Arch North America, business units were relying on their own set of siloed legacy underwriting systems, resulting in slow RQB processing times as underwriters toggled between 10+ tools. And mounting IT complexity and maintenance costs made it difficult to drive innovation.
With Unqork, Arch created an end-to-end underwriting experience that combines a unified engagement layer with a modular integration layer that connects to legacy systems. Importantly, Arch can now quickly adapt to evolving systems and data sources. So far, benefits include:
- Ideation to production in just 12 weeks
- Consolidation of 10+ legacy tools into a single, modern underwriting workbench
- Faster time-to-quote and improved employee productivity
- Increased agility with faster new product launches and updates
Distinguished Programs
After expanding to include new teams and programs, Distinguished, a leading national insurance program manager, wanted to harmonize disparate legacy platforms and deliver modern, intuitive agent/broker experiences.
Using Unqork’s platform, Distinguished created an agent portal that weaves together 10 products, 4 groups, and 12 internal systems, client, and third-party systems. Now, the firm is delivering seamless agent experiences, and in many cases agents can proceed straight to the payment process, thanks to straight-through processing.
“Brokers appreciate being able to determine eligibility upfront, saving valuable time and enabling faster decisions. And our underwriters are seeing benefits too. They’re focused on the right opportunities from the start,” says Mani Meiyappan, SVP & CIO, Distinguished.
For more details, hear from Distinguished on the vision, strategy, and execution behind new digital agent portal.
American Equity Life
To stay at the forefront of the market, American Equity Life (AEL) identified key opportunities to modernize its New Business processing, from suitability checks and e-application submissions to policy issuance.
By partnering with Unqork, AEL built a modern Suitability Decision Engine, an Application Entry Module, and a Workflow Management System in less than one year. The business impacts have been significant business, including:
- 15x faster annuities processing
- 50% increase in automated suitability
- 69% reduction in application review time