The insurance industry has spent years talking about modernization. Strategies drafted, budgets allocated, and pilot programs launched. But after early progress, momentum is slowing—and for many carriers, stalling altogether. The result is an industry caught between ambition and execution, where the cost of standing still grows with each passing quarter.
Recent data from West Monroe's survey of 300 insurance executives reveals a distinct pattern: while nearly every carrier has modernization plans in motion, few are making meaningful progress. 20% have defined strategies but haven't advanced execution. Another 12% remain in early planning stages. The most jarring: two-thirds of insurers expect it will take another three to seven years just to move core systems to the cloud, with 14% having no timeline at all.
This goes beyond technology. It's a business risk that's compounding with each passing quarter.
The Legacy Tax Is Draining Innovation Capacity
The clearest evidence of stalled momentum shows up in budget allocation. More than half of insurers now spend 51-75% of their IT budgets simply keeping existing systems operational. This "legacy tax" creates a self-reinforcing cycle: aging systems require more maintenance, leaving less capital for transformation, which in turn allows those systems to age further.
The impact is measurable. In the past 12 months alone, 52% of organizations delayed or canceled two to three strategic technology programs due to budget constraints. These programs include data governance improvements, AI capabilities, and customer experience enhancements that would position carriers for future competition.
Many insurers are still running core operations on COBOL, a language older than most of their customers. More than half report between six and 15 mission-critical COBOL modules still in production, revealing how deeply legacy code runs through their systems. This dependency exposes a major contradiction: organizations may have modern customer-facing experiences, yet their back-end processes remain anchored to aging infrastructure that limits scalability, agility, and speed.
Closing that gap requires more than new tools—it takes a clear modernization strategy that balances innovation with operational stability.
Speed Matters, And It's Slipping
The operational consequences of stalled modernization are impossible to ignore. 41% of executives say their critical data is only available when needed, not in real time. That lag translates directly into competitive disadvantage.
Consider the pace of basic operations: 48% report it takes 16 to 30 days to complete a rate indication assessment. Nearly half say it takes nine to 16 weeks to launch even a minor product endorsement. In a market where competitors can respond to emerging risks in days, not months, this kind of delay erodes competitive positioning.
In a market defined by speed, the ability to act in real time is becoming a key differentiator—separating those who capture growth from those still optimizing for stability.
The AI Paradox: Investing in Tools Without Foundations
Perhaps nowhere is the momentum problem more evident than in artificial intelligence adoption. Nearly 60% of insurers report being past the pilot stage with generative AI, yet most deployments remain small-scale and fragmented. Claims leads slightly with 30% actively piloting tools, while underwriting shows 27% still in proof-of-concept.
The stall is structural, not technical. Organizations that haven't invested in platform and data modernization face mounting costs and complexity. Large-scale transformations of policy administration, billing, and claims systems are creating more tech debt, pushing carriers further behind.
When asked about barriers to AI adoption, respondents pointed overwhelmingly to human factors: 24% cited resistance to change, 23% struggled with unclear value propositions, and 20% pointed to poor user experience. Only 13% identified technical issues as the primary obstacle.
This reveals the core challenge: insurers are trying to scale AI on foundations that weren't built for it. Without modern data governance, unified platforms, and streamlined processes, even sophisticated AI tools remain trapped in pilots instead of powering real underwriting and claims improvements.
Business and IT Misalignment Multiplies the Problem
Momentum stalls when priorities diverge. While 40% of organizations report "some alignment" between business and IT, that qualification signals trouble. Critical disconnects remain, and those gaps slow decision-making, blur accountability, and fragment modernization efforts across competing initiatives.
The data shows this misalignment in action. When asked about primary modernization objectives, 36% said improving customer experience, yet when budget allocation was examined, customer digital experience ranked last in funding priority. Meanwhile, 30% are betting on GenAI and advanced analytics, but 28% acknowledge their data layer and governance must mature first.
This represents an execution gap. Without shared ownership between business and IT, modernization risks solving for technology instead of solving for customers. The organizations breaking through are those that have hard-wired collaboration into their operating model, ensuring priorities and budgets move in lockstep.
Breaking the Stall Requires Strategic Focus
Momentum doesn't return through incremental adjustments. It requires strategic recalibration. Carriers gaining ground have stopped treating modernization as a technology initiative and started treating it as a business imperative tied to measurable outcomes.
That means rebalancing spend away from maintenance toward platforms that reduce future technical debt. It means building data governance that enables speed, not just compliance. And it means aligning business and IT not just in planning sessions, but in budget cycles, decision rights, and accountability structures.
Most critically, it requires accepting that modernization timelines measured in half-decades are no longer viable. When asked what would happen if modernization efforts froze for 24 months, 45% predicted significant competitive disadvantage. Yet nearly one in five believed a freeze would have minimal effect, a perception gap that signals how far some organizations still are from connecting technology strategy to business outcomes.
Those Who Move First Will Define What's Next
Momentum can't be restarted by chance—it has to be rebuilt with intent. The carriers regaining speed are the ones tackling legacy debt, modernizing data foundations, and aligning business and IT around a shared vision. With these foundations in place, AI and emerging technologies can do more than pilot—they can accelerate real performance and growth. For insurers, restoring momentum isn't just about catching up; it's about setting the pace for what comes next.
