Why Modernizing Claims Management Should Be a Priority

Legacy systems limit claims efficiency and customer experience. Incremental modernization – through automation and integration – delivers faster results, reducing costs, speeding up processing, and helping insurers adapt to rising expectations and changing market demands.

Key takeaways

• Legacy architectures slow down change, as even small updates require coordination across multiple systems and layers.

• Stable core systems still create long-term complexity due to tight dependencies and outdated integration approaches.

• Fragmented processes reduce efficiency, with manual work and system switching impacting daily operations.

• Rising customer expectations and new risk types increase pressure for faster, more transparent claims handling.

• Incremental modernization reduces risk and delivers value faster than large-scale system replacements.

• Integration and automation improve efficiency by streamlining workflows and reducing manual effort.

Claims management is one of the core value propositions of an insurer. It determines how efficiently processes run, how customers experience service, and how economically a company can operate.

At the same time, this area in many organizations is still shaped by legacy IT structures, manual workflows, and complex process landscapes. Over the past 15 years, I have seen in numerous projects just how great the potential for improvement is – and how often modern requirements collide with systems originally designed for a different era.

This is no longer just about technology. It is about processing times, cost structures, service quality, and the ability to respond quickly to new market demands.

In this article, I outline the challenges insurers currently face in claims processing, why the pressure to act is increasing, and which pragmatic approaches have proven effective in practice.

Modern interfaces, legacy core systems

A recurring pattern in the insurance industry is the handling of legacy systems. In one project with a life insurer in southern Germany, the goal was to build modern services and user interfaces on top of an existing core system.

The technical reality was demanding: decades-old mainframe structures, COBOL-based core processes, limited documentation, and expertise held by only a few specialists.

The chosen approach was understandable: a modern Java layer was intended to enable new interfaces and relieve business units. However, implementation revealed a typical challenge of such architectures: while the front end is modernized, core dependencies remain unchanged in the background.

New requirements still had to be implemented across multiple layers, from modern APIs through mapping layers to existing core logic. Each change increased coordination effort, extended development cycles, and added complexity.

It is important to note that in many cases, the existing core logic runs remarkably stable and reliable. COBOL-based systems have processed critical business processes for decades, often without significant failures. This stability is a real strength and one of the main reasons companies hesitate to rebuild systems from scratch.

This reluctance is understandable, but it does not outweigh the architecture's structural drawbacks. Stability at the core does not change the fact that the overall architecture is reaching its limits.

This situation is not unique. Many insurers have expanded their systems over the years, often incrementally rather than through fundamental modernization. The result is that architectures that appear modern externally but create high maintenance overhead internally.

What this means in practice

The impact of such structures becomes especially visible in daily operations:

• Long implementation times

  Even minor changes often require coordination across multiple system layers, reducing responsiveness to market demands.

• High maintenance costs

  A significant portion of IT budgets goes into operating, stabilizing, and maintaining existing systems, rather than innovation.

• Dependence on specialist knowledge

  Legacy systems often rely on knowledge held by individuals. When that knowledge is lost, it creates operational risk.

• Limited scalability

  New digital services cannot be integrated quickly if core processes are not flexible.

A look at claims operations

These challenges become even clearer in day-to-day claims handling. In a digitalization project with a Swiss insurer, it became evident how much employees are burdened by fragmented processes. Information arrived via multiple channels – email, mail, phone, or individual portals.

Without a centralized case view, employees had to switch between applications, manually transfer data, and track processing status separately. Even under these conditions, teams often deliver impressive results. At the same time, the potential of modern process platforms becomes clear: fewer manual handovers, fewer system breaks, and significantly more efficient workflows.

Why the pressure to act is increasing

Existing challenges are further intensified by new developments:

• Rising customer expectations

  Customers expect digital, transparent, and fast processes, especially in claims situations.

• New risk types

  For example, electromobility is changing claims handling. Higher repair costs, battery inspections, and new evaluation logic increase complexity.

• Regulatory requirements

  Documentation obligations, data protection, and traceability place additional demands on systems and processes.

• Cost pressure

  Insurers must become more efficient while investing in future capabilities.

Proven modernization approaches

From my project experience, one thing is clear: not every company should replace its entire core system immediately. In many cases, a gradual and economically viable approach is more successful.

This is exactly the approach we follow at Mimacom.

Especially relevant for smaller insurers

Not every insurer has large IT departments or extensive transformation budgets. Small and mid-sized insurers in particular face specific challenges:

• Limited personnel resources
• High operational responsibility in day-to-day business
• Dependence on individual knowledge
• Limited capacity for long-term large-scale projects

This makes a pragmatic approach essential: manageable steps with quick impact instead of risky full-scale transformations.

Measurable business impact

Modernization is not just a technology initiative; it is a business decision. Typical outcomes of successful transformation projects include:

• Lower processing costs per claim
• Shorter cycle times
• Higher automation rates
• Fewer errors from manual handovers
• Improved customer experience
• Greater flexibility for new products and processes

As a result, investments often pay for themselves much faster than expected, especially when compared to the steadily rising maintenance costs of outdated infrastructure.

My conclusion: It’s no longer about “if,” but “how”

After more than 15 years in insurance IT, I am convinced: modernizing claims management is no longer optional; it is a strategic success factor.

Insurers that invest today in efficient processes, modern platforms, and integrated architectures improve not only their cost base but also service quality, adaptability, and competitive positioning.

The good news is that it does not require a big-bang approach. A pragmatic entry point through process automation, integration, and gradual transformation delivers measurable results quickly—and lays the foundation for sustainable modernization.