Insurance operations are similar to the rescue operations that are done by all the Marvel superheroes: complex yet pivotal processes. That’s how the insurance core operational processes looked a decade back. Volumes of manual spreadsheets, email chasing approvals and workflows requiring human intervention.  

While the industry has taken digitization initiatives, the processes haven’t fully transformed. Despite the significant investments in core modernization and insurtech, operational inefficiencies will continue to persist. This is exactly where the approach for core insurance needs to be changed.  

Where are core operations still breaking? 

Across the multiple insurance functions—underwriting, policy administration, and claims —there are similar friction points which are continuing to surface.  

These essentially include the underwriters still toggling between multiple systems to complete a single assessment and policy issuance that will often be dependent upon the sequential approvals instead of the parallel workflows. Additionally, claims processing, while partially automated, still requires manual validation at critical checkpoints.  

These are not the edge cases; instead, they are the everyday realities.  

Agility is needed to back up stability 

The core insurance systems are still the backbone of the insurance operations, yet these systems are also the biggest operational constraint. Most of the insurers today still essentially rely upon the systems that were built over a decade ago. These systems are quite stable, deeply embedded, and also increasingly business-critical. Replacing them will be coming at an expense, and also, it’s quite risky.  

This will be essentially leading to the layered architectures that come with multiple integration points, increasing the technical debt over time and also a much-limited flexibility to adapt to the new products or the regulations.  

Process Inheritance does more harm than good. 

The insurance operations are being shaped by not just the design but also the history. 

Over time, the processes will be evolving and accommodating the regulatory changes, new product lines, exception handling, and the distribution complexity. However, rarely do these processes get simplified or reset. 

This is the phenomenon that is often referred to as “process inheritance”; this simply means that the current operations will be a mix of original workflows, incremental fixes and workarounds that will be layered over time. Ultimately, this will lead to operational complexity that even experienced teams often overlook.  

Understanding the automation misconception 

Automation is everywhere today. However, one common misconception that’s rapidly gripping the insurers is that automation equals efficiency.  

In practice, this is much more nuanced. When the automation is applied to an already complex or inefficient process, it does not eliminate the problem but accelerates it. The reality is much more different today, where rule-heavy automation is becoming increasingly difficult to modify. Semi-automated workflows are still dependent upon human intervention, followed by the increased maintenance effort for managing the automated rules.  

How data is becoming operationally underutilized 

The insurance industry thrives on data, yet there is much of the data in the back end that remains underutilized. The challenge here essentially lies in the way data is structured and is used within the questions.  

The common gaps are something that lies hidden in plain sight. These include the data spread across disconnected systems, lack of real-time accessibility, and the inconsistent data definitions across multiple departments. For the operational teams, this will be translating into the reconciliation efforts, duplication of data entry, and delayed decision-making.  

Trust still remains non-negotiable 

Trust is going nowhere from the insurance operations. Both internal and external operational inefficiencies will have a ripple effect.  Internally, the teams develop workarounds because they don’t fully trust the systems for handling the edge cases. In addition to this, externally, the customers experience delays, inconsistencies or the lack of transparency, which will be especially in claims. 

Over time, there will be a cycle created where the systems will be bypassed, and manual processes will increase, followed by the operational inefficiencies deepening. Additionally, breaking this cycle essentially requires more than technology, and it requires confidence in how operations are designed and are executed.  

What’s ahead? 

Operational stagnancy in 2026 will not be because of the lack of tools, platforms, or innovation. This persists because transformation always focuses upon adding the layers instead of simplifying them, followed by the digitization of the processes instead of redesigning them.