Insurers could be sacrificing years of commercial gains by tying pricing modernisation to large-scale core system replacements, according to Earnix, which argues that a phased approach could help providers reduce transformation risks and deliver value sooner.
Insurance modernisation programmes are often judged by their technology milestones and long-term promises of greater agility. However, Earnix principal solutions consultant for agentic and predictive AI Brian Shipley warns that some of the biggest costs are less visible, including delayed returns, pressure on internal teams and the risks associated with replacing multiple systems at once.
As core technology becomes increasingly standardised, insurers have more reason to focus on the capabilities that differentiate their businesses, including product development, pricing strategies and decision-making. Shipley argues that modernisation should therefore begin with the operating model insurers want to achieve, rather than simply replacing existing systems with newer versions.
Replacing a policy administration system (PAS) without rethinking the processes around it can carry legacy limitations into a new environment. By contrast, introducing a dedicated pricing and rating engine ahead of a wider transformation could allow insurers to update rates more quickly, run advanced simulations and streamline regulatory filings without waiting for an entire core replacement programme to finish.
Data migration presents another challenge. Insurers may hold substantial proprietary pricing data and embedded business logic within legacy systems, with dependencies that are not always apparent until migration begins. Moving information into platforms such as Snowflake or Databricks does not automatically resolve inconsistent field definitions or undocumented data lineage.
These issues can surface during reconciliation, when outputs from a new system fail to match those produced by the legacy environment. Shipley also cautions that data models designed around current products may not be flexible enough to accommodate future requirements, particularly as AI advances risk segmentation, price elasticity modelling and pricing optimisation.
The opportunity cost of transformation can be equally significant. Resources allocated to a complete core replacement cannot be used for other initiatives, while large-scale programmes may delay the introduction of capabilities that could generate value earlier.
According to Shipley, a full policy administration migration that includes pricing and rating can take three times as long, or longer, to bring the first line of business live at a large insurer compared with a more targeted approach. Connecting a dedicated pricing engine to an existing PAS through APIs can enable incremental progress, while allowing the pricing capabilities to remain in place when the insurer eventually replaces its core system.
The impact also extends to employees. Large transformation programmes can leave teams responsible for maintaining legacy operations while simultaneously developing replacement systems over several years. This can affect morale, retention of institutional knowledge and the organisation’s ability to maintain momentum on other priorities.
Research cited by Tokio Marine Group group deputy chief information technology officer Robert Pick in Carrier Management in March 2026, 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 executives assessing technology investments, Shipley recommends asking vendors how much ongoing configuration and change management can be handled directly by the insurer. A proof of concept can also help expose practical limitations before a business commits to a wider deployment.
Ultimately, the decision facing insurers is not simply whether they can afford to replace their core systems. It is whether the cost, time and resources required could prevent them from pursuing more immediate opportunities to improve pricing, underwriting and business performance.
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