Modern infrastructure without tomorrow's legacy
Most claims transformations don't fail for lack of ambition. They fail on the infastructure underneath
PERSPECTIVE ~ TECHNOLOGY & DIGITAL SOLUTIONS ~ INSURANCE OPERATIONS
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This is not a failure of ambition. It is a failure of infastructure.
Across claims and insurance operations, most firms are not short of vision. Talk to any leadership team and they will tell you, accurately, what good looks like: better transparency for policyholders and clients, faster cycle times, stronger governance, smarter use of AI, better outcomes at lower cost to serve. The strategy documents are fine. The ambition is real.
Where the transformations stall is underneath all of that — in the infrastructure the strategy has to run on. Legacy core systems that were never designed for the workflows now being asked of them. Fragmented processes stitched together across teams and third parties. Data that lives in silos, each with its own definition of a claim. And, most stubbornly, decades of operational workarounds — the manual steps, side spreadsheets and “that's how we do it here” habits that quietly became the real operating model. Even the best strategy is hard to scale on top of that.
A recent piece of Carrier Management research on modernizing legacy technology for the AI era makes the same diagnosis from the carrier side. It's worth reading. What follows is what I think it means for the people building and running claims operations.
The new-entrant advantage — and its trap
All of this creates a genuine opening for a new entrant built from scratch. No legacy drag. No inherited mindset. No need to rebuild old habits inside new systems. A firm that starts today can design its operation around the outcomes the market now wants, rather than retrofitting them onto an operation designed for a different decade.
But the advantage is easy to squander, and the way it usually gets squandered is by mistaking “new” for “build everything.” A new entrant that sets out to own its entire technology stack ends up, three years later, maintaining a stack — and has created tomorrow's legacy with today's money. The advantage was never in owning every component. It was in the freedom to choose.
What should be proprietary, and what shouldn't
The discipline that separates the winners is knowing where proprietary capability actually creates an edge and where best-in-class third-party technology already solves the problem better than you ever will.
In claims, the proprietary layer is the intelligence: how you triage, route and prioritize; the decisioning that sits on top of the data; the analytics that tell you where leakage, delay and dissatisfaction are really coming from; and the client- and policyholder-facing workflow that makes your service visibly different. That is where a firm's know-how lives, and it is worth owning.
Almost everything else is not. Core claims administration, document management, payments, communications, telephony, identity, reporting infrastructure — these are markets with mature, well-capitalized specialists whose entire business is being better at that one thing than any insurance firm's internal team could be. Building them yourself doesn't create advantage; it creates maintenance.
Robert Dewen
"the advantage won't come from owning every component. It will come from architecting the ecosystem better than anyone else."
The real skill is architecture
So the winners in the next phase of the market will be the firms that combine three things: proprietary intelligence, best-in-class ecosystem partners, and AI-enabled human workflows that tie the two together and keep experienced people doing the work only they can do.
Choosing the partners, defining the interfaces, owning the data model across them, and designing the human workflow so that automation removes drudgery rather than judgment — that is a harder skill than building, and a rarer one. It is also the one that lets a firm modernize without creating the next generation of legacy.
What this means if you're not a new entrant
Most of the people reading this are not starting from scratch, and the point still holds. An incumbent cannot delete its legacy, but it can ring-fence it: decide which parts of the estate are genuinely proprietary and worth investing in, which should be replaced by a partner, and which should simply be contained while the operation is re-architected around them. The firms that do this deliberately end up with a clear map of what they own and why. The firms that don't end up with a modernization program that is really just a very expensive re-platforming of the old habits.
That is how you build modern infrastructure without creating tomorrow's legacy: decide what deserves to be proprietary, partner for everything else, and put your best people on architecting the whole.
Which parts of your claims operation are genuinely proprietary - and which are just old?
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Robert Dewen
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