The Value Equation

People who make things for a given market have to take three things into account — cost (what does it cost to make it?), price (what should they sell it for?), and margin (how much profit do they need to continue making the product?). Similarly, people who buy things have to take two things into account — price (what are they willing to pay?) and value (what will they derive from it that exceeds what they paid?).

Since we make a core processing system for the Property & Casualty insurance industry, we’ll use that as our topic. Industry analyses and forecasts (from sources that include Datos Insights, CLARA Analytics, Celent, SPTechUSA, Capgemini, and PropertyCasualty360 indicate the most important topic for the industry in 2025 is core system modernization —the shift from legacy, siloed systems to cloud-native, AI-integrated platforms that enhance operational efficiency and scalability. Core system modernization isn’t just rhetoric. It’s combination of an opportunity and foundational challenge for insurers. Outdated technology precludes insurers from taking advantage of emerging tools like AI, machine learning, and real-time data analytics. And it prevents insurers from reducing costs, increasing efficiency, improving decision-making, and driving growth.

Why?

According to the sources cited above, about 74 percent of Property & Casualty insurers have outdated core systems or poor integrations, leading to inefficiencies in data handling, accuracy, and compliance. Modernization resolves those challenges, enabling integration with AI for predictive risk assessment and automation. Cloud-based core systems eliminate legacy inefficiencies, supporting digitalization and cost-effectiveness across global regions. Modern systems facilitate generative AI, IoT for risk monitoring, and big data analytics, allowing insurers to handle unstructured data, to improve underwriting accuracy, and to personalize policies. Perhaps most important, modern systems provide tools for transparency, real-time auditing, regulatory compliance, and scenario modeling, which is especially vital for catastrophe-prone areas like Florida or California.

Value is always defined subjectively. But if your core processing system is delivering value beyond its price — increasing efficiency, incorporating emerging technologies, integrating other systems and data sources, providing transparency, and easing audits and regulatory compliance — you’ve chosen wisely.

If your core system is not delivering those things, please talk to us.

We’ll show you what real value looks like.