Your legacy insurance software solutions are costing you more than you think. Not just in maintenance fees or the developers who understand COBOL, but in the business you’re losing to competitors whose software vendors deliver systems that can quote in seconds, process claims in hours and launch new products in weeks instead of quarters.
The insurance industry hasn’t fundamentally changed its technology infrastructure in decades. The same companies now facing Consumer Duty regulations,²⁹ climate-driven catastrophe modelling and customers who expect Amazon-level service are running on systems built when fax machines were cutting-edge.
The maths is straightforward: modernised insurance software solutions cut claims handling costs by 25–50%.⁴⁸ ⁵⁸ They launch products faster, satisfy regulators more easily and don’t lose customers to InsurTechs with better apps. Yet 76% of insurers still cite implementation complexity as a roadblock and 28% struggle to prove ROI on digital transformation.¹⁷ The difficulty is real, but so is the cost of standing still.
This report identifies the 10 must-have software features of modern insurance software, categorised into Foundational Core Processing, Strategic Enablers and Governance Requirements. Not aspirational nice-to-haves, but the actual software features required to compete in 2025.
The mandate for core system modernisation
The insurance industry is currently navigating a period defined by intense economic uncertainty, escalating regulatory pressures, heightened consumer expectations and a dearth of tech talent.⁶⁴ Against this backdrop, technology systems must evolve beyond mere administrative tools to become strategic drivers of growth, efficiency and compliance.
The core finding is that organisational success is contingent upon resolving the technical debt accumulated through decades of reliance on outdated infrastructure.
The transition away from monolithic legacy systems is not simply a cost-cutting exercise; it is a prerequisite for survival. While 28% of companies report difficulty proving the Return on Investment (ROI) for digital transformation and 76% cite the complexity of implementation as a challenge, the evidence demonstrating the value of modern insurance software solutions is definitive.¹⁷
Modernisation offers demonstrable operational efficiency, such as reducing claims handling expenses by 25–50% ⁴⁸ ⁵⁸ and ensures resilience against increasingly stringent regulatory environments, notably the Financial Conduct Authority’s (FCA) Consumer Duty in the UK.²⁹
This report details the 10 must-have software features of a modern insurance software solution, categorised into Foundational Core Processing, Strategic Enablers and Governance Requirements. These features are indispensable components that enable insurers to achieve superior customer experiences, advanced risk management and guaranteed regulatory adherence in the dynamic operating environment of the 21st century.
The strategic imperative: why current insurance software solutions fail
The inherent limitations of legacy insurance software have reached a critical inflection point where technical stagnation directly translates into commercial vulnerability. Examples of these legacy systems include mainframe-based monolithic architectures, proprietary software that resists updates and batch-processing systems that cannot offer the crucial advantages of real-time data handling.
Software vendors have been slow to modernise these outdated structures, which impede integration with modern applications and create siloed data environments that severely impact decision-making capabilities.⁴¹
The pressure to modernise
The pressure to modernise stems from dual forces: shifting customer expectations and escalating competitive demands. Policyholders are now mobile-savvy and demand a hassle-free, self-service experience, often choosing new InsurTech players if incumbent carriers cannot meet these needs.⁵³
The inability of legacy systems to provide coordinated, seamless service across multiple digital and traditional channels directly contributes to the erosion of the customer base.⁴¹ Customer loyalty is fragile, with nearly a third (29%) willing to churn after just one negative service experience.²⁸
A critical underlying factor driving this trend is the direct link between technical rigidity and customer attrition. When core systems are inflexible and data is fragmented across separate, siloed databases, providing a consistent, secure and effortless omnichannel experience becomes impossible.²⁸
For instance, if a customer begins a claims process on a mobile application but needs to continue via a call centre, the system must recognise and continue the process without requiring the policyholder to start over.²⁸ The operational inefficiencies generated by outdated technology thus translate into poor customer experience (CX), confirming that the technical backend architecture is a fundamental determinant of commercial success and customer retention.
Therefore, the implementation of flexible, adaptive and customisable systems is paramount for insurers seeking a competitive edge.
The Foundational Five: operational must-haves
The core operations of any insurance carrier (policy, claims and underwriting) must be built upon sophisticated, integrated software components. These insurance industry software solutions represent the “brain” of the insurance carrier, designed to manage all vital aspects of the business.
Software vendors now compete on their ability to deliver these software features as unified platforms rather than disconnected modules.
Feature 1: unified, end-to-end policy administration
Policy administration serves as the foundational infrastructure underpinning the insurance and annuity industry. A modern insurance software solution must provide a single, unified platform capable of orchestrating processes related to managing, maintaining and servicing insurance policies throughout their entire lifecycle, spanning from initial issuance through updates and final renewal.
Managing the policy lifecycle
This feature is indispensable for tracking policy details, coverage specifications, start and end dates and ensuring that all documentation is accurate and compliant. For annuities, the system must effectively manage contract terms, define payout options, process automated payments accurately and handle efficient contract modifications.
Additionally, policy administration systems aid in compliance with complex regulatory requirements in sectors like annuities, particularly regarding taxes and payout guarantees. By centralising these tasks, the system improves overall operational efficiency and contributes directly to enhanced customer satisfaction by enabling service representatives to access policy data quickly and respond to inquiries faster.
Driving efficiency and accuracy
A highly effective policy administration system also accelerates product innovation, allowing insurers to rapidly define and launch new offerings to gain a competitive advantage. The speed-to-market advantage provided by flexible policy administration is a key strategic benefit that distinguishes leading insurance software solutions from legacy alternatives.
Feature 2: intelligent claims automation (straight-through processing)
The claims management component is activated when a policyholder files a loss notification, guiding the insurer through the entire process from receiving the claim to assessing damage and issuing payments. Modern requirements dictate that claims processing must move beyond basic workflow management to embrace intelligent automation, leveraging Artificial Intelligence (AI) and Machine Learning (ML) techniques.⁵⁶
The quantifiable benefits of claims automation
This is arguably the most financially impactful feature on this list, offering substantial and well-documented ROI. McKinsey analysts estimate that utilising straight-through processing (STP) and AI could reduce claims handling expenses by 25–30%.⁴⁸
Deloitte shows that organisations successfully scaling intelligent automation see an average cost reduction of approximately 27%.⁴⁸ More ambitious transformation projects detailed by BCG and Bain suggest fully automated end-to-end process redesigns for simple claims could cut operational costs by 30% to 50%.⁴³
Generative AI is forecasted to reduce loss-adjusting expenses by 20–25% and leakage by 30–50%, potentially creating benefits exceeding $100 billion for the industry.⁵⁸
Leveraging AI for augmented fraud detection and triage
Modern insurance industry software solutions must support AI-driven functions like automated fraud detection, data capture and triage.⁵³ Automated fraud detection helps insurers prevent payouts for the same incident multiple times, ensuring accurate and fair claims processing.⁶
A best practice is to automate simple claims based on predefined rules while reserving complex or potentially fraudulent cases for human processors, augmented by machine learning insights and advanced data analysis.¹¹
Elevating the role of claims professionals
As AI and automation handle routine tasks,⁴³ the role of the human claims professional is elevated to complex problem-solving, negotiation and maintaining personal, empathetic engagement during crucial customer interactions.²¹ The transition requires claims teams to develop new skills, particularly in data analysis and emerging technologies.²¹
Feature 3: advanced, predictive underwriting engine
Underwriting management is the specialised component responsible for risk evaluation and policy pricing. Modern requirements dictate that insurance software solutions must utilise sophisticated analytics and ML, rather than being confined by legacy systems with limited automation and complex routing.
The engine of profitable growth
A modern underwriting engine must analyse diverse factors related to a policyholder’s profile, such as age, driving record or property history and incorporate external data streams, including IoT and telematics.⁵³
Advanced software features like agentic AI can drive automation by analysing structured data, assessing risk, applying rules and suggesting steps in real time.¹⁹ By simplifying and analysing these details, insurers can determine appropriate and profitable premiums more efficiently, enabling sharper risk selection.
Refining pricing and loss ratios
The ability to rapidly incorporate new data models and adjust risk parameters is crucial for achieving superior pricing profitability and competitiveness.⁶⁰ These software features deliver benefits including increased premiums, reduced loss ratios, shortened quote-to-bind times and improved risk discrimination.⁶⁰
The implementation of AI across core areas, including underwriting, drives accuracy and effectiveness.⁵⁶
Feature 4: centralised customer 360-degree view (integrated CRM)
A centralised Customer 360-Degree View, typically managed through an integrated insurance CRM, is vital for building and strengthening relationships with clients.⁶¹ This system must centralise all customer information, including policy details, interactions across all channels and claims history, in a single, accessible platform.⁶²
Leading software vendors differentiate themselves by how comprehensively they aggregate and present this data.
Beyond transaction processing: relationship management
By consolidating data from multiple corporate systems, an insurance CRM provides a comprehensive perspective of each customer, enabling prediction of needs and preferences.⁵⁹ This allows insurers to offer personalised services, tailored coverage and proactively identify upselling and cross-selling opportunities.⁶¹
Modern platforms also incorporate social network analysis features to calculate engagement and analyse sentiment trends, giving deeper insight into customer behaviour.
Driving retention and identifying cross-selling opportunities
This system aids in predicting customer churn, a significant risk in the competitive motor market.¹ Since it costs five times more to acquire a new customer than to retain one, the system’s ability to target at-risk customers provides an immediate boost to profitability.⁷
This focus on retention ensures the value proposition of modern insurance software solutions is maximised.
Feature 5: cloud-native, API-first architecture
Moving core insurance processes to a cloud-native, API-first architecture represents a fundamental technological transformation. Leading software vendors now build insurance software solutions that shift away from monolithic, mainframe-based systems toward public cloud deployment.
Strategic importance of cloud architecture
Cloud-based technologies are seen by 67% of insurers in an Accenture and Oxford Economics study as having the greatest impact on operational efficiency.³¹ This architecture is the technological prerequisite for many of the software features outlined in this report.
Cloud services deliver enhanced IT agility, reducing time-to-market for new products.³¹ They enable insurers to rapidly deploy and test new technologies and features, supporting accelerated product innovation.
Building a resilient technology platform
Cloud-native architecture overcomes the limitations of legacy systems by providing the flexible, high-capacity infrastructure needed to leverage advanced analytics, AI and IoT data for superior risk profiling and decision-making.⁶³
Modern insurance software solutions built on cloud infrastructure allow insurers to offload non-differentiating technical aspects, so internal teams can focus entirely on growth and customer experience.²⁹ The cloud is not merely a deployment choice but the primary technological engine driving competitive strategy.
The Strategic Five: growth enablers and governance
Beyond the foundational operational capabilities, modern insurance software solutions must deliver strategic advantages through automation, integration and intelligence. These software features transform insurers from reactive administrators into proactive market leaders.
Feature 6: ecosystem integration via open APIs and microservices
Modern core systems must be architected using an API-first approach, enabling fluid, secure and rapid exchange of data with external partners. This is the mechanism by which insurers participate in the growing ecosystem economy.⁴⁵
Advanced interoperability and ecosystem integration
By utilising open Application Programming Interfaces (APIs), the system allows seamless connectivity to InsurTech providers, brokers and partners, supporting innovative distribution models such as embedded insurance.³⁶
This partnership approach grants insurers access to new customer segments, increases brand recognition and provides cross-selling opportunities, building the foundation for long-term customer lifetime value.³⁶ The flexibility offered by APIs is crucial for escaping the inflexibility of historical, proprietary, non-customisable software, ensuring the organisation can adapt quickly to market demands.
Leading software vendors prioritise this capability in their insurance software solutions.
Feature 7: integrated financial, actuarial and reporting tools
Financial management within the insurance context is highly complex, requiring systems that support accurate accounting and sophisticated risk modelling. A critical feature is a unified platform that consolidates data from the policy and claims systems to deliver real-time financial insights.
Automating collection and reconciliation processes
This integrated system is essential for accurate financial management, helping track income and expenses to identify cost-cutting opportunities and maximise profitability.⁶⁶ It must support sophisticated functions such as integrated budgeting, forecasting and scenario analysis, eliminating the time-consuming errors and inconsistencies associated with manual data entry.⁶³
Crucially, the software must manage complex regulatory reporting requirements for multiple entities across jurisdictions, supporting key frameworks such as GAAP, Risk-Based Capital (RBC), Solvency II, IFRS 17 and the regulatory demands of bodies like the European Insurance and Occupational Pensions Authority (EIOPA) and the FCA.³⁸
The financial system’s ability to quickly and compliantly calculate the risk and profitability metrics of new products is the necessary counterbalance to the agility provided by external ecosystem integration.
Feature 8: real-time regulatory and governance automation
Regulatory compliance is a rapidly evolving field, necessitating software designed for automated governance and auditability.² Modern insurance software solutions transform compliance from a manual, error-prone process into a faster, more accurate and auditable operation.²
FCA Consumer Duty and transparency requirements
In the UK market, compliance with the FCA’s Consumer Duty necessitates specific software functionalities.³⁰ This regulation requires financial services firms to consistently deliver “good customer outcomes,” which demands moving beyond traditional operational metrics.
The software must enable firms to demonstrate that their products meet customer needs, avoid causing foreseeable harm and offer fair value.³ ³⁰ ⁹ This requires enhanced data collection and reporting capabilities focused on customer welfare, extending even to the management of “closed book products” with the same rigour applied to open products.⁵ ⁹
Therefore, the system must facilitate proactive monitoring and data analysis to demonstrate this commitment. Generative AI and automation can proactively identify customers who may be veering off the “happy path” or experiencing potential harm.⁵⁹
Software solutions for regulatory reporting
UK insurance firms are required to submit various regulatory returns and specialised reports to the FCA and the Prudential Regulation Authority (PRA).¹⁵ ⁴ Compliant insurance software solutions automate the often cumbersome and manual process of statutory reporting, including annual accounts, product sales data and specialised returns like the Mortgage Lenders & Administrators Return (MLAR).¹⁵ ¹³
The system must utilise advanced techniques, often powered by AI, to simplify the verification of complex calculations required by standards like Solvency II and IFRS 17.² This capability significantly reduces the risk of errors and costly fines.²
Feature 9: omnichannel self-service and policy portals
As consumer expectations for convenience and digital interaction accelerate, providing robust omnichannel capabilities is mandatory.²⁸ Customers expect seamless access to policy details, claims submission forms and support, regardless of the device or channel used.²⁸
Customer interaction and service cost reduction
This feature includes high-quality online portals and mobile applications that enable policyholders to effortlessly access details, make changes and submit claims without requiring manual processes. A crucial requirement is the elimination of siloed systems across departments (e.g. billing, claims, service).²⁸
For instance, a policyholder should be able to check FAQs on a website, speak with an adjuster by phone and then submit the final form via a tablet hours later, with the process remaining continuous and coordinated.²⁸
By providing this enhanced customer experience, insurers can increase customer experience (CX) scores, achieve a 25% reduction in processing times and meaningfully improve retention rates.⁵⁰ The seamless, hassle-free experience provided by modern portals is essential to meet the demands of the digital-first policyholder.⁵³
Feature 10: enterprise-grade data security and privacy controls
Insurance software manages highly sensitive personal and financial data, making robust security a non-negotiable feature. As core systems centralise client information and operations, the potential risk from a security breach escalates.
Cyber resilience as a systemic requirement
Modern insurance software solutions must incorporate enterprise-grade security protocols, including comprehensive data encryption, stringent access controls and enhanced risk management features to maintain regulatory compliance.⁶²
The necessity of this feature is underlined by the substantial financial risks involved: cybercrime costs businesses an estimated $400 billion annually and the average total cost of a data breach is approximately $3.8 million.⁶⁹
Furthermore, 81% of large UK businesses and 60% of small businesses suffered a cyber security breach in a recent year, demonstrating the pervasive nature of the threat.⁴¹ Secure systems are fundamental for enhancing security around sensitive customer data and upholding the policyholder trust that is built through positive interactions.
Lloyd’s has mandated that all policies clarify whether cyber coverage is provided or not, highlighting the systemic importance of cyber risk management.⁶⁹
Feature justification: quantified operational and strategic returns
| # | Feature | Primary Business Benefit | Quantified Impact / Data Source | Competitive Advantage |
|---|---|---|---|---|
| 2 | Intelligent Claims Automation | Reduction in loss adjusting expenses and leakage. | Up to 50% cost reduction in claims handling.⁴⁸ ⁵⁸ | Real-time resolution, higher customer satisfaction.⁴³ |
| 5 | Cloud-Native Architecture | Accelerated product launch cycles and agility. | 67% of insurers see cloud improving operational efficiency.³¹ | Faster deployment of new features and capabilities.³¹ |
| 4 | Centralised Customer 360 | Customer Experience & Growth | Winning new customers costs 5x more than retaining existing ones.⁷ | Personalised offerings, optimised upselling / cross-selling.⁶¹ |
| 9 | Omnichannel Self-Service | Reduced service cost and improved CX. | 25% reduction in processing times; improved retention.²⁸ | Meeting demands for hassle-free, self-service experiences.⁵³ |
Implementation and strategic linkages
The adoption of these 10 features forms a unified strategy for competitive differentiation, operational mastery and governance resilience. The features collectively form a synergistic framework: the Cloud-Native Architecture (Feature 5) enables Ecosystem Integration (Feature 6), which drives revenue growth.
Simultaneously, the centralised data (Feature 4) feeds Intelligent Automation (Feature 2) and Real-Time Regulatory Automation (Feature 8), ensuring compliance while maximising efficiency. Security (Feature 10) underpins the entire structure of customer trust and data integrity.
Overcoming implementation challenges
The strategic necessity of modernisation is clear, but implementation complexity remains a significant hurdle. Up to 76% of firms find the complexity of implementation challenging¹⁷ and cultural resistance to change is cited by 26% as stymying progress.¹⁷
To mitigate these implementation difficulties, modern insurance software solutions should incorporate tools that facilitate the transition. For example, AI can be leveraged to analyse legacy code, extract existing business rules and automate data mapping, cutting migration time in half and reducing transition costs by up to 30%.⁴³
So why now?
The cost of inaction compounds daily. Every manual claim that takes weeks instead of hours, every product launch delayed by inflexible systems, every customer lost to an InsurTech with better software features represents revenue that legacy infrastructure is actively destroying.
The question facing insurance executives is no longer whether to modernise, but whether their organisations can afford to wait another quarter.
The 10 software features outlined in this report aren’t a wishlist for the future. They represent the operational baseline for competing today. Software vendors offering modern insurance industry software solutions are already helping insurers cut costs by 30–50%, launch products in weeks and retain customers that legacy carriers are losing.
The technology exists. The ROI is proven. What remains is the willingness to confront the technical debt that decades of incremental patches have created and commit to the infrastructure that will define the next decade of competition.
FREQUENTLY ASKED QUESTIONS
What are insurance software solutions?
Insurance software solutions are specialised platforms that automate and support the core functions of an insurance business, such as policy administration, underwriting, claims, billing and customer management. They help insurers operate more efficiently, reduce manual work, improve accuracy and deliver a better experience for customers and brokers.
What is a policy administration system in insurance?
A policy administration system (PAS) is the central platform insurers use to manage the entire lifecycle of an insurance policy, from product creation and quoting to policy issuance, endorsements, renewals and cancellations. It acts as the backbone of insurance operations, ensuring policies are processed accurately, data is stored securely and workflows run smoothly.
What are the benefits of using insurance software solutions?
Insurance software improves efficiency by automating manual tasks, reducing errors and speeding up processes. It enhances customer experience with faster service and self-service options, improves data accuracy for better decision-making and supports regulatory compliance. It also helps insurers scale their operations and launch new products more quickly.
How do insurance software solutions improve operational efficiency?
These solutions streamline workflows by automating routine processes, eliminating duplicate data entry and centralising information in one system. They improve collaboration across underwriting, claims and policy teams, reduce processing times and allow staff to focus on higher-value tasks. Integration with third-party data sources further accelerates decision-making and reduces friction.
What are the key features to look for in insurance software?
Key features include strong policy administration capabilities, flexible product configuration, automated workflows, integration with underwriting and claims systems, robust data and reporting tools, user-friendly interfaces and compliance support. Modern solutions should also offer cloud deployment, API connectivity and scalability to support future growth.
What is the difference between legacy and modern insurance software systems?
Legacy systems are older, often on-premise platforms that can be rigid, slow to update and difficult to integrate with modern tools. Modern insurance software is typically cloud-based, API-driven and configurable without heavy coding, making it faster, more flexible and easier to integrate. Modern platforms enable faster product launches and better customer experiences.
How do you choose the best insurance software solution for your business?
Choosing the right solution depends on your business needs, size, product complexity and growth plans. Evaluate how well the software integrates with existing systems, its flexibility, scalability, ease of use, vendor support and total cost of ownership. A proof of concept or pilot project can help test whether it meets operational and strategic goals.
What is an insurance core system?
An insurance core system is the central technology platform that manages an insurer’s primary operations, including policy administration, underwriting, billing and claims. It acts as the system of record, ensuring data consistency and enabling seamless workflows across the business. Most other systems, like CRM or analytics platforms, connect to and rely on the core system.
How does insurance software integrate with other systems (e.g., CRM, claims, billing)?
Insurance software integrates through APIs, middleware or built-in connectors that allow different platforms to share data in real time. This enables smooth communication between core systems and tools like CRMs, claims platforms, billing systems and data services, reducing manual work, improving accuracy and creating a unified view of the customer and policy lifecycle.
What are the top insurance software vendors or platforms?
Some of the leading insurance software platforms include Genasys Technologies, Guidewire, Duck Creek Technologies and Majesco. These providers deliver comprehensive core systems that support policy administration, claims, billing and underwriting. The right choice depends on your product lines, deployment preferences, regional support and how well the platform aligns with your digital strategy.
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