Legacy core systems still hold back too many carriers. They slow down product launches, keep IT costs stubbornly high and make it tough to keep pace with what customers and regulators now expect. In 2026, though, forward-thinking insurers are flipping the script. They push modernization hard, but the smart ones put business continuity first. Phased approaches, cloud-native setups and agentic AI let them replace outdated policy, claims and billing engines without freezing operations or leaving policyholders in the dark. The payoff? Sharper agility, real cost relief and noticeably better experiences, all without the old nightmare of extended outages or inconsistent service.
A P&C leadership team right now might watch their dashboards while policy administration modules quietly shift to newer infrastructure. Claims keep moving. Agents see clean, consistent data. Policyholders feel only subtle improvements, like faster responses or smoother interactions. The days of betting the farm on a big-bang overhaul are fading fast. Instead, carriers lean into careful, incremental moves that protect what works and open doors to what’s next. That change alone is reshaping how the industry thinks about technology risk.
Key Takeaways
- Legacy core systems hinder carriers by increasing costs and slowing innovation.
- Insurers are modernizing through modular unbundling, allowing phased technology upgrades without service disruption.
- Cloud coexistence enables insurers to run old and new systems together, improving operational control.
- Agentic AI enhances productivity by simplifying legacy code migration, reducing reliance on scarce experts.
- Practical examples show successful modernization leads to better service and increased revenue without disrupting policyholder experience.
Table of contents
- Modular Unbundling Accelerates Safe Core Replacements
- Cloud Coexistence Dominates Low-Risk Modernization Paths
- Agentic AI Tightens Timelines and Reduces Dependency
- Proven Cases Demonstrate Continuity in Action
- Insurtech Advances Bolster Seamless Backend Upgrades
- Secure Your Carrier’s Path in 2026’s Modernization Landscape
Modular Unbundling Accelerates Safe Core Replacements
Breaking legacy monoliths into smaller, upgradable pieces has become a go-to tactic. It sidesteps the massive price tag and disruption risk that full replacements usually bring, yet still delivers steady progress. Insights from McKinsey show carriers peeling off value chain by chain, often landing on configurable SaaS platforms running on cloud foundations. Those setups typically wrap up in three to five years, a fraction of what custom builds once demanded.
IT maintenance drops. Connections to partners and ecosystems tighten. Policyholders never notice the work happening behind the curtain. When business and tech teams share ownership from day one, real-time analytics stay live the whole way through. It’s practical, not flashy, and it works.
Cloud Coexistence Dominates Low-Risk Modernization Paths
Why force a complete tear-out when running old and new systems side by side gives you far more control? Insurers keep legacy environments humming while gradually handing off tasks like policy binding or claims handling. BCG lays out the playbook: centralized, federal, or hybrid routes, each starting with zero-based thinking and breaking work into manageable chunks to keep surprises at bay.
Plenty of carriers now lean on configurable insurance carrier software built with flexible integration layers that make those handoffs smooth and keep core processing steady. North America is pouring $10.5 billion into core IT modernization from 2024 through 2026. EMEA is close behind at $6.5 billion over the same stretch, according to BCG projections. Modern cores deliver 25% revenue uplift and slash new-product timelines by three to four times. You get those advantages without policyholders ever facing delays or mismatched experiences.
Agentic AI Tightens Timelines and Reduces Dependency
Agentic AI changes the game when it comes to the hardest parts: digging through legacy code, pulling out business rules and writing migration scripts. BCG points out that generative tools can lift development productivity by 40-50% in live projects. That kind of boost cuts heavy dependence on scarce experts and lets carriers move faster and safer, even across complicated, multi-country footprints.
Capital spending falls by up to 0.5-1% of gross written premium once AI streamlines the workflows. You skip the long, expert-heavy slogs that used to threaten stability. Teams spend less time on grunt work and more on strategy. The backend renewal happens out of sight, exactly where it belongs.
Proven Cases Demonstrate Continuity in Action
Look at MSIG USA. They pulled data from more than 15 legacy systems into one cloud-native Enterprise Data Platform before tackling the broader core swap. That move earned Celent’s 2025 Model Insurer Award for Legacy and Ecosystem Transformation. Real-time analytics kicked in, AI strengthened underwriting and growth scaled up without silos or service breaks. Policyholders saw nothing out of the ordinary.
Deloitte keeps legacy modernization high on the priority list, noting how carriers use multi-year cloud journeys and API strategies to phase out old tech bit by bit. AI-powered fraud detection in real time could save P&C carriers up to $160 billion by 2032. Cases like these prove the point: thoughtful backend work strengthens the front end instead of shaking it.
Insurtech Advances Bolster Seamless Backend Upgrades
Insurtech keeps pushing claims forward with AI-driven first notice of loss, computer vision for damage checks, telematics insights and automated fraud screening. Trends covered in 6 Insurtech Trends Redefining Auto Claims in 2025 show these tools breathing new life into legacy claims engines through automation and instant data flows. Faster settlements become routine. Disputes drop. Mobile experiences feel intuitive. Policyholders get reliable touchpoints without realizing the plumbing underneath just got upgraded.
PwC’s executive survey puts it plainly: 93% of leaders see interconnected risks outrunning old planning methods. Mess up the migration with clunky interfaces or unclear terms and you lose trust fast. Feedback loops woven into the process protect customer experience and turn modernization into something that actually builds loyalty.
Secure Your Carrier’s Path in 2026’s Modernization Landscape
Modular unbundling, cloud coexistence, agentic AI and real-world successes now line up to make disruption-free core replacement of legacy core systems a realistic goal in 2026. Carriers that pull these pieces together see revenue growth, tighter costs and quicker responses to market shifts, all without putting policyholder confidence at risk. Low friction during change creates loyalty that lasts in a world that demands both speed and dependability.
For more on how these shifts play out, check Coruzant interviews with insurtech executives and transformation leaders. Focus on continuity-first modernization and your organization stays ahead this year and well beyond.
