In the dynamic and highly complex landscape of the American insurance sector, the key to competitive advantage is not solely found in launching new innovations. True financial stability and agility for growth hinge on something far more fundamental, yet critical: long-term insurance system maintenance.
There is growing pressure on many insurance companies to modernize their existing infrastructure, comply with evolving regulatory requirements, and meet rising customer expectations for enhanced customer experience. This pressure drives the adoption of scalable solutions and advanced insurance software to streamline operations across the industry.
For most U.S. carriers, IT-platform upkeep is still treated as a cost centre rather than a strategic investment. Research from PwC indicates that legacy-system maintenance can absorb as much as 70 %-75 % of IT budgets, leaving only a small portion available to drive operational improvements and business innovation.
The proper, long-term role of a software provider, however, extends far beyond routine bug fixes.
An expert vendor, like Decerto, acts as a Strategic Partner who transforms maintenance from a burden into a mechanism for:
- Proactive Technical Debt Reduction: Instead of waiting for a system failure, the architecture is continuously modernized, eliminating the risk of system obsolescence (Legacy Systems) and reducing manual processes.
- Guaranteed Regulatory Compliance: Ensures immediate adaptation to complex and constantly shifting state-by-state regulations, a critical requirement in the U.S. market, helping insurers maintain control and manage risk effectively.
- Flexible Scalability Support: Enables the rapid integration of new functionalities and products, significantly shortening the time-to-market and supporting policy issuance, policy renewals, and claims processing.
- Operating Cost Optimization (TCO): Shifts the system from a high-cost/low-innovation model to an automated, efficient, and future-proof operation. Operational efficiency is a key outcome of effective insurance system maintenance, streamlining business processes and reducing costs for insurance companies. This strategic approach delivers significant value by enhancing business impact and supporting long-term growth.
The Legacy System Crisis - The Core Problem Providers Must Solve
Insurance systems, often operating for a decade or more, are burdened by technical debt. These monolithic structures struggle to communicate with modern tools (like AI analytics), are expensive to integrate with third party systems, and pose a constant data security risk. Many insurers continue to struggle with outdated processes and existing systems, making modernization a significant challenge.
The provider’s primary task is not to replace the old system immediately, but to strategically manage its lifecycle. This is achieved through phased refactoring and a microservices architecture that allows critical components to be exchanged without shutting down the entire ecosystem. Modernizing business processes and overcoming these challenges requires significant effort and coordinated efforts from all stakeholders. The vendor, possessing deep knowledge of the source code and business logic, can precisely allocate resources to combat the most costly and high-risk technical debt while improving overall efficiency.
Role I: The Constant Guardian of U.S. Regulatory Compliance
The American insurance market is defined by vast regulatory fragmentation - rules differ significantly from state to state. Insurance systems must be continuously adapted to hundreds of requirements concerning pricing, claims handling, and data privacy (e.g., California’s CPRA). It is crucial to assess existing systems to ensure they meet regulatory requirements and minimize risks associated with non-compliance.
The software provider performs the function of “Compliance as a Service”:
- Legal Monitoring: Tracks upcoming regulatory changes before they take effect.
- Rapid Deployment: Utilizes tools and a team of experts to implement necessary system adjustments (rating engines, policy forms, claims procedures) on a priority basis, ensuring faster implementation.
- Auditing: Conducts regular code and process audits to ensure compliance with regulatory requirements and minimize the risk of financial penalties, which can be severe in the insurance industry.
This level of specialized expertise is virtually impossible to maintain within internal teams, making external expertise, such as that offered by Decerto, absolutely essential for long-term operational security and data security.
Role II: The Catalyst for Business Innovation
Long-term insurance system maintenance is inherently linked to new functionality. The team that can effectively maintain a system is the same team that is best equipped to evolve it.
Thanks to a clean and well-maintained architecture, the provider enables carriers to respond quickly to market needs:
- Flagship Solution Integration: Maintenance ensures seamless connectivity with frontend systems, such as our Agent Portal - a modern CRM that supports agents in sales and customer service. A well-maintained core system guarantees that the Agent Portal operates at maximum efficiency, delivering real-time insurance data and supporting underwriting and claims processing capabilities.
- Faster Time-to-Market: Instead of spending months adjusting outdated code, the provider uses optimized, ready-to-deploy modules for the rapid introduction of new insurance products or variants, which is crucial for client acquisition in the competitive U.S. market.
- M&A Support: In cases of mergers and acquisitions, only a maintenance expert can quickly integrate (or carve out) blocks of policies and large volumes of insurance data from acquired systems, minimizing operational disruption.
Conclusion: Maintenance Providers as Strategic Partners in Insurance System Success
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