Insurance Leaders Reinvent the Operating Model as Legacy Technology and AI Disruption Redefine Competition

New Majesco research finds insurers achieving stronger growth are aligning operating model transformation with cloud- and AI-native technology foundations.

Majesco, the insurance industry’s foremost innovator in AI-native and cloud-native software, announced the release of a new research report, Leaders Reinventing Insurance: Strategic Focus on Business Operating Model and Technology Foundation, examining how insurers are reinventing their operating models and technology foundations to compete in a rapidly evolving market shaped by rising costs, new risks, and accelerating advances in AI and data.

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The report reveals a widening divide between industry Leaders, Followers, and Laggards as insurers confront the growing constraints of legacy operating models and technology foundations. While many insurers recognize the urgency of modernization, the research finds that those achieving stronger growth are taking a fundamentally different approach and aligning operating model reinvention with next-generation cloud and AI-native technology foundations.

According to the research, legacy technology debt continues to limit insurers’ ability to leverage data, deploy automation, improve productivity, and accelerate product innovation. The cost and impact of legacy debt is poisoning profit potential and dragging down every function, from customer service through product development. With increasing retirements and loss of institutional knowledge and skills, the difficulty of leveraging data for insights, decreased operational productivity due to manual work arounds, lack of speed to market for new products, and the inability to use new technologies like GenAI and Agentic AI to drive operational optimization, legacy debt creates a significant operational and strategic risk.

As a result, insurers increasingly see core modernization and operating model redesign as inseparable initiatives, enabling new levels of agility, operational efficiency, and AI-driven decision making.

Insurers reporting stronger growth are significantly more engaged in six strategic initiatives, including innovation, new product development, channel expansion, core system replacement, new business models, and resource reallocation. Together, these initiatives create a powerful engine for sustained growth rather than episodic transformation efforts.

Majesco outlines a notable shift in industry sentiment. For the first time, optimism about business model change has declined across the market, reflecting the growing complexity of transformation and the pressure created by legacy constraints. At the same time, investment in cloud and intelligent core platforms is accelerating, as insurers recognize that AI-enabled operating models require modern technology foundations.

Perhaps most striking, is that Leaders are executing operating model change and core modernization as synchronized programs, while many Followers and Laggards continue to approach them separately—often limiting the value of their transformation initiatives.

“As insurers enter the Intelligence Era, the competitive gap between Leaders and the rest of the market is widening,” said Denise Garth, Chief Strategy Officer at Majesco. “Leaders are not simply modernizing technology—they are reinventing how their businesses operate and leveraging native cloud and AI core software to unlock agility, operational efficiency, and new growth opportunities.”

The report explores insurers’ top-of-mind challenges, strategic priorities, technology investments, and the growing role of cloud, data, and AI in shaping the future operating model of insurance.

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