Failure is not an Option: P&C Core System Modernization
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Primary Reasons P&C Insurance Core System Modernization Projects Fail
Property and Casualty insurers face mounting pressure to overhaul legacy systems in a digital-first world. Yet despite the urgency, most modernization efforts fall short. Only 30% of core system implementations succeed, and a staggering 75% of insurance tech deployments miss their mark. With average timelines stretching 25 months and budgets routinely blown, the industry’s transformation track record is sobering.
The research below dives into the root causes of failure—from misaligned stakeholder expectations to vendor overreach—and offers actionable insights for insurers and solution providers alike. If you're navigating a modernization journey, understanding what derails these initiatives is the first step toward getting it right.
Vendor Selection and Management Failures
Vendor selection in insurance transformation initiatives demands more than compelling presentations and sales assurances. Without rigorous evaluation of delivery capabilities and disciplined relationship management, insurers risk critical setbacks. Many core platform vendors overpromise during the sales cycle, only to underdeliver in implementation—resulting in budget overruns, missed deadlines, and compromised outcomes. Effective vendor governance is not optional; it is a strategic imperative.
Inadequate Project Planning
Poor upfront planning combined with uncontrolled expansion of project requirements creates a foundation for failure that undermines all subsequent project activities. This includes poor requirement definition, unrealistic timelines, inadequate risk assessment, and lack of comprehensive stakeholder analysis.
Scope Creep - The Best of Intentions
Everyone is working with the best of intentions to deliver the ideal implementation, only to find that the scope has expanded beyond the original estimates for both cost and project planning. Additional scope can come from the carrier project team, the carrier executive team, the core solution vendor, system integration partner (SI), or a combination of all interested parties. Scope creep starts with poor requirement definition and vendor selection. Then, the budget overruns lead to missed deadlines, resulting in missed milestones and jeopardizing the go-live date. The new business capabilities that drove the system replacement initiative now have to be put on hold or delivered in phases.