A survey of more than 250 P&C and specialty market insurance professionals revealed the substantial cost of legacy systems, according to a new research report commissioned by software provider INTX Insurance Software and conducted independently by RSM US LLP.

The report, “The Cost of Legacy Insurance Software Systems: Wasted Time & Money,” found that exposure for some firms can reach up to $5 million annually.

Legacy systems require internal IT support due to downtime and ticket delays that add up to nearly 900 hours or $450,000 in lost productivity, while manual intervention for policy workflows creates data latency that can cost organizations an additional $1 million or more.

The report found that 72% of insurers rely on Excel or internally built tools to manage critical insurance workflows, with over 50% of policy workflows requiring manual intervention.

Quoting, policy issuance, and claims processing were the top areas requiring manual work, according to those surveyed. This extra work creates data latency and costs organizations between $475,000–$1,100,000.

Legacy systems also constrain growth initiatives, according to the survey, requiring months of configuration and testing, delaying revenue realization.

The findings come at a time when insurers are facing increasing pressure to improve operational efficiency.

Operational inefficiencies within core systems directly impact underwriting profitability.

“For years, insurers have assumed their combined ratio reflects underwriting performance, and this research makes clear that a meaningful portion of margin erosion is actually driven by technology architecture,” said Rob Lewis, CEO of INTX Insurance Software. “Legacy systems introduce structural inefficiencies that quietly drain productivity, delay growth initiatives, and increase operating costs across the enterprise. Modern insurance organizations need infrastructure designed for today’s operating complexity.”

The study suggests that fragmented legacy systems will increasingly limit the ability to deploy advanced analytics and AI-driven decision tools.

One-third of insurers surveyed reported spending more than $500,000 to implement a single core system, with average costs nearing $1 million. Most insurers operate two to three systems, pushing total implementation costs as high as $3 million.

Nearly 45 percent of insurers reported implementation cycles exceeding 18 months. The average industry implementation rating is below 72%— a C-minus—reflecting extended timelines and operational disruptions. Respondents indicated that these delays limit their ability to respond to regulatory changes and shifting market conditions.

System integrators add additional expense as companies must pay third parties to make core insurance software systems functional.

“Legacy systems require outside help to deliver what should be included as standard capabilities,” the white paper noted.

Internal IT teams absorb high costs to maintain outdated systems, the report found. In fact, up to 888 hours and $450,000 were reportedly lost in productivity annually.

“Skilled resources that could drive innovation are instead tied up in maintenance work,” the report stated. “Organizations often overlook the cost of lost productivity during outages or while waiting for tickets to be resolved. These are areas where speed and accuracy are non-negotiable.”

A new generation of insurance platforms promises to address these limitations by eliminating costly implementation fees, reducing reliance on third-party system integrators, and accelerating time-to-value for organizations.

“A new generation of insurance platforms is emerging to address these structural limitations. These systems consolidate policy administration, billing, claims, reinsurance, and reporting into unified architectures designed to eliminate manual reconciliation, reduce implementation complexity, and provide real-time operational visibility across the enterprise,” Lewis added.