The insurance industry is undergoing a seismic shift. Customers now expect seamless, fast, and intuitive interactions, driven by technological advancements and an increasingly digital-first world. Yet, many insurers are struggling to keep up. Legacy systems and expensive manual processes create friction and inefficiencies, making delivering the modern experiences customers demand harder.
These inefficiencies waste time and resources, increase the risk of revenue loss, and create barriers that frustrate customers and employees. As a result, established insurers are increasingly vulnerable to disruption by digital-first competitors offering smoother, more modern experiences. The decision to maintain the status quo now carries significant risks. To thrive in this modern reality, insurers must address these challenges and explore paths forward.
From coverage to convenience
Technology has raised the bar for what customers expect from the businesses they interact with. With innovations like one-click purchases, instant communication, 24/7 digital service, and personalised digital experiences becoming the norm in other industries, customers now expect the same seamless efficiency from their insurers. They expect more than just coverage; they demand convenience, transparency, and efficiency at every touchpoint. From paying for policies easily to managing them efficiently and resolving claims quickly, the demand for speed and simplicity has never been higher.
And the bar is set to get even higher. Gen Y (Millennials) and Gen Z, who are more digitally savvy and expect easy payment experiences, are predicted to make up 70% of the workforce by 2030.
Gen Z, in particular, sees technology not as a novelty but as an extension of their everyday lives—effortlessly woven into everything from streaming a show on their daily commute to online grocery shopping or sharing moments on social media. In their world, instant is important. An EY survey found that Gen Z doesn’t like to take any extra steps when paying than they need to. This point was highlighted by their findings among Gen Z respondents; 39% considered entering a PIN to be a pain point when using a debit card compared with just 29% of other generations.
Improving customer experience benefits more than just the customer. Research from McKinsey’s Global Insurance Report 2025 showed that moving from the bottom quartile to the top in customer experience can result in a 20-30% reduction in policy cancellations and up to a 30% increase in the rate of winning new business.
The cost of inaction
With customer expectations rapidly evolving, the greatest risk insurers face is inaction. It’s easy to fall into the comfort of maintaining the status quo—after all, existing systems may seem ‘good enough’ to keep operations running. The perception of change naturally carries an aspect of risk. But if risk is a concern (as it naturally is for the sector), then the risks of not doing anything must also be acknowledged. While it might feel safe to avoid the disruption and effort of modernisation, the truth is that this approach often results in missed opportunities, increasing inefficiencies, and growing frustration among customers and employees.
First and foremost, insurers risk alienating their existing customers. As mentioned above, policyholders expect effortless, intuitive experiences at every touchpoint—whether it’s purchasing a policy, making a payment, or making an enquiry. When these expectations aren’t met, customers begin to look elsewhere, eroding loyalty and driving churn. According to an article by PWC, ‘poor customer service is one of the top reasons customers leave or switch financial institutions’.
The difficulty isn’t just in retaining customers, though. Outdated buying experiences also create barriers to acquiring new ones. Consumers are drawn to companies that offer simplicity and speed, and insurers who can’t deliver on these expectations will struggle to compete in an increasingly crowded marketplace. An example of how an easier buying experience can affect direct insurers is found in a global insurance consumer study by Accenture, which revealed that 'consumers show increasing interest in embedded insurance offers in which the relevant risk protection is integrated into their purchase.’ This shift is reflected in the 10-percentage-point increase since 2018 in the number of consumers likely to purchase auto insurance directly from a car dealer, rising from 32% to 42%.
Operational inefficiencies compound the problem for insurance businesses. Manual processes tied to outdated infrastructure are prone to errors, particularly in data entry and reconciliation. These mistakes not only disrupt internal workflows but can also undermine customer trust (e.g., the issues with multi-policy discounts). Moreover, as insurers grow, the inability to scale effectively becomes a bottleneck, limiting opportunities to expand and innovate.
Then there’s the question of compliance. Regulatory requirements are becoming increasingly stringent, and insurers must navigate complex reporting and data governance obligations. With their fragmented and siloed data, legacy systems make it harder to ensure accuracy and timeliness—leaving insurers exposed to penalties and reputational damage.
The threat of disruption looms even larger. Staying stagnant can lead to a slow erosion of competitive edge, as nimble, tech-driven companies continue to innovate and capture market share. History is full of cautionary tales, from Blockbuster’s failure to respond to Netflix’s streaming model to Kodak’s resistance to digital photography (a technology they invented). Similarly, insurers clinging to the status quo risk being outpaced by agile, digital-first competitors who can innovate faster and scale seamlessly. As Deloitte highlights in a recent insurance innovation report, 'The Australian and New Zealand insurance market is at a critical point: adapt or fall behind.'
Inaction isn’t just a passive choice—it’s an active risk. What feels like a safe, low-risk approach today may become a significant liability tomorrow, threatening growth and relevance in a rapidly transforming market.
The challenge of relying solely on legacy systems
Many insurers' inability to modernise stems from their reliance on legacy infrastructure. These systems were designed for an era when paper trails and manual reconciliations were the norm. Over time, these outdated systems have been pushed to handle tasks they were never originally designed to manage, as their internal frameworks were traditionally built around a ‘policy-centric’ approach. Unfortunately, they are technically ill-equipped to handle the demands of today’s hyper-connected world and deliver the experiences consumers expect now, and in the future.
Legacy systems create other inefficiencies that ripple across the organisation. Finance teams struggle with manual reconciliations, arrears, and reporting, marketing efforts are hampered by a lack of real-time customer insights, and operations staff face delays in responding to customer queries caused by disconnected policy management systems.
In an article about rethinking customer experience in the insurance industry, PWC states that many insurance companies face a disconnect between what customers expect and how employees deliver services. They suggest ‘Arming employees with the right innovation and information that they require to best serve customers, could help to close this gap.’
To thrive in this new era, insurers will have to move beyond legacy technology built around policies to adopt a ‘customer-first’ approach. They will need to embrace modern solutions that not only meet customer expectations and deliver internal efficiencies but also safeguard and grow their position in a rapidly changing market.
There are often perceptions that modernising these systems can be hugely expensive, time-consuming to develop and carry risks of non-delivery or project failure. An article from Bain & Company, about how Insurers can parlay technology into a competitive edge, acknowledges this perception and how many insurers can ‘typically experience long, costly overhauls’. Even while recognising the stakes are high, the article states that modernising technology effectively can unlock significant value. Companies can succeed by investing in the right tools and capabilities, specifically through 'a continued shift to the cloud, and modular, highly configurable platforms.’
Prebuilt technology, like Software as a Service (SaaS), is an approach that can limit the risks and deliver the valuable outcomes needed.
Orchestrating modern insurance solutions
Simfuni addresses these customer and business challenges with its innovative solution to insurance technology. We have developed insurance management software using a ‘customer-centric’ approach, enabling a faster, easier, and more satisfying customer experience. The software integrates with legacy systems and orchestrates existing fragmented, manual insurance processes into streamlined digital workflows, making insurance easier to bill, pay, and manage.
It provides customers with a digital experience for paying insurance, offering multiple payment methods and instalment options on-screen, document creation and storage, and a 24/7 self-service portal to easily manage their payments without having to call customer support.
For insurers, the software provides an intuitive, efficient, and automated insurance operating system. It simplifies core back-office tasks such as billing, reconciliation, renewals, arrears, reporting and policy management. It features a single customer view and real-time dashboards for various functional teams within the organisation.
The ability to remove reliance on the legacy policy administration system has provided insurers with highly flexible customer-centric tools.
Future-proofing insurance operations
As customer demands and business expectations continue to evolve, insurers need tools that help them stay responsive and competitive. Simfuni’s software enables businesses to adapt seamlessly to change while minimising the risks.
By simplifying core back-office functions like reconciliation, billing, arrears management, and policy administration, Simfuni eliminates inefficiencies and streamlines operations. Moreover, its customisable interfaces give policyholders the digital-first experiences they expect, fostering trust and loyalty.
Simfuni’s scalable, ready-to-deploy software doesn’t just solve today’s problems—it prepares insurers for the future. By leveraging technology to drive efficiency and innovation, insurers can confidently face the challenges of tomorrow.
With the demand for better experiences increasing, insurers can no longer rely solely on outdated systems. Modern technology that integrates with these systems provides an opportunity to deliver improved experiences not only for customers but also for employees. Simfuni’s technology can help insurers modernise their operations, satisfy their customers, and position themselves as leaders in a rapidly changing industry.