When most underwriters think of possible risks in insurance, they refer to unusual claims, shifting exposures, or risk management. Although these could all pose a threat to your operations, a hidden risk that’s silently impacting your business is your legacy system. 

Specialty underwriters deal with complex risks all the time. Underwriters depend on data and speed to price policies, assess exposures, and monitor performance.

Legacy systems have been a common struggle in underwriting for over a decade, yet many insurance companies, MGAs, and brokers still rely on them. 

On one hand, it’s understandable; nobody wants to spend weeks migrating years’ worth of files. On the other hand, the risk of relying on legacy systems is increasing, and there’s no time to wait.

In this article, we’ll explain why legacy systems in underwriting pose a hidden risk, how they show up in specialty lines, and what carriers should do to manage them.

TL;DR (Too Long; Didn’t Read)

• Legacy systems are a hidden but growing risk in specialty underwriting.
• Manual workarounds increase human error and reduce efficiency.
• Legacy systems slow product launches, limit data access, and raise compliance and security risks.
• Modernization doesn’t have to mean full system replacement.
• InsurOps 360° helps insurers modernize operations step by step, improving speed, accuracy, and collaboration.

What Is a Legacy System?

A legacy system is an old or outdated computer system or software that is still in use. Underwriting legacy systems are specifically designed for use in underwriting workflows, policy administration, risk assessment, and similar tasks.

In 2025, there will be very few benefits left from using a legacy system. Legacy systems typically lack an API, and most have already reached their limits with software updates. Built on outdated programming languages or platforms, legacy systems are far from user-friendly and functional.

Why Legacy Systems Are the Hidden Risk in Specialty Underwriting

Legacy systems may not seem like a threat to your operations. For decades, they have run daily operations, issued policies, and processed renewals. 

The old underwriting systems hide risks that grow over time. Legacy systems slow down underwriting decisions, reduce data reliability, and create blind spots that modern competitors don’t have.

In specialty underwriting, the risk of relying on legacy systems is even greater, as every risk is unique and requires detailed verification. Legacy systems slow down efficiency and limit innovation, often without many insurers even noticing the damage they cause. 

Let’s explore the hidden risks that legacy systems pose to specialty underwriting operations and discuss how to avoid them.

Slower Turn-Around Times for New Products

Specialty lines often need niche or tailored products. Legacy systems hinder the quick launch of new initiatives. Even small endorsements may require days or weeks of development and testing.

Product changes on legacy systems can take months and cost over half a million dollars to develop and test. When a competitor can bring a new product to market in weeks, your legacy systems pose a threat to your sales and client relations.

Poor Integration

Specialty underwriting often involves external data sources, such as IoT sensors, third-party risk models, or catastrophe data. Legacy systems lack support for modern data sharing and APIs, resulting in data silos.

These silos force manual data entry, causing delays in the entire policy lifecycle, which increases error risk and reduces decision speed.

Rising Maintenance Costs and IT Debt

Older systems need constant patching, vendor support, and custom fixes. Over time, it becomes increasingly difficult to find and receive support, and maintenance costs rise. Insurers spend a significant portion of their IT budgets to keep legacy systems running. 

Meanwhile, developers familiar with legacy languages are retiring, as these languages became popular in the 1970s. Finding new talent is more complex and more expensive, and very few developers still learn those languages.

Operational Risk

Legacy systems often require manual overrides of disconnected steps. With the procedure including manual overrides, human error is inevitable. Underwriting is already complicated by itself, let alone when complexity is high as it is in specialty lines.

When many legacy modules interlock, a small failure in one part might cascade; the documentation is generally weak, so you might not even detect the effects until it’s too late.

Security & Compliance

Legacy systems often run on unsupported hardware or software. They may lack modern security controls, patches, and auditing capabilities. 

Having outdated components makes them more vulnerable to cyberattacks. In regulated markets, the inability to prove compliance, data lineage, or audit trails is a severe liability.

Analytics & AI

Modern underwriting increasingly relies on analytics, machine learning, and AI. If your legacy systems can’t expose data in real time, or your data is fragmented, those tools can’t do their job.

Legacy systems “quietly undermine your success” by blocking analytics access and integrations, meaning that underwriters make decisions without analyzing all the critical data first.

Migration Risk

When insurers try to modernize legacy systems, they often underestimate the cost of migrating decades of business logic, data, and processes. Poor documentation, custom logic, and entangled dependencies make migrations risky. Loss of business logic or subtle differences post-migration can lead to financial or compliance errors.

Need help migrating your data from a legacy system? We can help with our InsurOPS 360° solution. Click here to learn more.

Why Specialty Underwriting Feels It More

While legacy systems pose a risk across insurance operations, specialty lines are particularly affected due to several factors.

Specialty lines often require more bespoke coverage forms, endorsements, and variables. Legacy systems, designed for simpler products, usually break under this pressure. High-exposure classes, such as marine, energy, cyber, or aviation, depend on external data. Legacy constraints slow or block integration.

Because specialty underwriting often deals with lower volumes but higher risks, each underwriting decision carries a bigger financial weight. Any system error or lag magnifies loss. New insurtech and niche competitors can utilize modern platforms from the outset. 

Specialty incumbents with legacy systems lose agility. Some specialty lines face specialized regulations and reporting needs that legacy systems struggle to adapt to.

Due to these factors, the hidden risk of legacy systems becomes more apparent in specialty underwriting. It affects margins, competitiveness, and risk control.

When to Start Modernizing?

If you manage or lead underwriting in a specialty line, there are several warning signs that your legacy systems may be putting your operations at risk. New product launches often experience delays or exceed their budgets. 

Underwriters rely heavily on spreadsheets and manual workarounds to accomplish their tasks. Data often needs to be pulled, cleaned, and uploaded between different systems, creating room for error. 

IT changes or patches sometimes cause unexpected side effects or system failures. Auditors or regulators may challenge your data lineage or compliance records. Security teams might flag your systems as vulnerable or outdated. Even when you try to modernize, projects often stall due to logic migration issues or cost overruns. 

If you recognize several of these symptoms, your underwriting legacy systems are likely a serious risk to your specialty operations. It’s time for a change.

How to Mitigate This Hidden Risk

You don’t need to replace everything at once to fix legacy system risks. Start by assessing what you have. First, list all modules, data flows, and weak spots, such as slow integrations or security gaps. You can’t modernize what you don’t understand. 

Next, focus on the areas that matter most, such as pricing logic, data integration, or claims processing. Many insurers bridge old and new systems with API layers, which let modern tools connect without a complete rebuild. 

From there on, modernize in small steps, one thing at a time. Test everything carefully by running old and new systems in parallel, and make sure results match. Train your underwriting teams early and manage change gradually. 

If you’re seeking a professional underwriting and tech plan for data migration, InsurOPS 360° is the ideal solution. Click here to schedule a call with us and get started.

How InsurOps 360° Helps Overcome Legacy System Risks

Modernizing underwriting involves building connected, efficient operations that enable teams to move faster and make better decisions. That’s precisely what InsurOps 360° delivers.

InsurOps 360° helps insurance teams replace fragmented, outdated workflows with a single, streamlined operational layer. It integrates underwriting, policy, and back-office functions into a single ecosystem. 

With real-time visibility, automated data handling, and end-to-end process control, underwriters can focus on risk analysis instead of manual admin work.

The Bottom Line

In specialty underwriting, legacy systems are an IT burden that slows you down, elevates costs, opens security gaps, and makes product innovation impossible.

You don’t have to go all out to modernize. Through assessment, prioritization, and incremental modernization, you can mitigate the risks associated with legacy systems. You’ll slowly but safely build underwriting operations that are safer, faster, and more adaptive.

Let’s modernize together.