Insurers could delay the benefits of better pricing and underwriting by making them dependent on lengthy core system replacements, with Earnix advocating a more incremental approach to technology modernisation.
Large-scale transformation projects are often designed around replacing legacy infrastructure and delivering a more flexible technology environment. However, Earnix principal solutions consultant for agentic and predictive AI Brian Shipley warns that these programmes can carry less visible costs, from delayed commercial returns to pressure on employees and the risks of migrating multiple systems simultaneously.
As insurance technology becomes more widely available, providers increasingly need to differentiate themselves through their products, pricing and ability to make effective decisions. Shipley argues that insurers should consider how their operating models need to evolve, rather than focusing exclusively on replacing existing technology.
Upgrading a policy administration system (PAS) without reconsidering the processes it supports can leave longstanding inefficiencies intact. Introducing a separate pricing and rating engine earlier in the transformation process, by comparison, could allow insurers to adjust rates, test pricing scenarios and manage regulatory filings without waiting for an entire core replacement to be completed.
Data migration can create further complications. Insurers may have years of pricing information and business rules embedded in legacy platforms, with dependencies that are difficult to identify before a migration begins. Transferring data to modern platforms such as Snowflake or Databricks does not necessarily resolve inconsistent definitions or gaps in documentation about where information originated and how it has changed.
These shortcomings can become apparent when insurers compare results from new systems with their existing platforms and discover that the outputs do not match. Shipley also warns that data structures built around current insurance products may struggle to accommodate future requirements as AI creates new opportunities in risk segmentation, price elasticity modelling and pricing optimisation.
The financial implications extend beyond the direct cost of a transformation. Resources committed to replacing core systems cannot be allocated to other projects, while lengthy implementation timelines can postpone improvements that might otherwise deliver commercial value.
Shipley estimates that, at a large insurer, a full policy administration migration incorporating pricing and rating can take at least three times as long to launch the first line of business as a more targeted implementation. Connecting a dedicated pricing engine to an existing PAS through application programming interfaces (APIs) can allow insurers to introduce changes in stages, with the pricing capability remaining in place when a replacement core system eventually arrives.
There are also organisational considerations. During lengthy migration programmes, employees may need to maintain existing systems while developing and implementing their replacements. Sustaining this dual workload over several years can affect staff morale, institutional knowledge and progress on other strategic initiatives.
The scale of the challenge is reflected in research cited by Tokio Marine Group group deputy chief information technology officer Robert Pick in Carrier Management in March 2026. The research, attributed to McKinsey and BCG, suggests that more than 70% of large-scale core transformations fail. Separate Gartner research cited by Oracle and LumenData found that 83% of data migration projects fail or overrun.
For insurers evaluating potential technology partners, Shipley recommends examining how much routine configuration and ongoing change can be managed internally rather than relying on vendors. Running a proof of concept can also help reveal practical limitations before committing to a larger implementation.
The central issue for insurers is therefore not simply the expense of replacing legacy technology. It is whether the time, investment and organisational effort required could hold back improvements to pricing, underwriting and other capabilities that influence competitiveness.
By separating pricing modernisation from broader core replacement programmes, insurers may be able to make progress sooner while retaining flexibility for longer-term transformation.
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