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Legacy Thinking: The Future Depends on a Mindset Shift

Author

Lisa Stevens
Director of Executive Development
LIMRA and LOMA
lstevens@loma.org

June 2026

For decades, the financial services industry has been defined by stability, reliability and financial strength. This recognition has been foundational to building trust with policyholders who expect insurers to deliver in moments of uncertainty. However, recognition that historically defined industry success can become a vulnerability if internal mindsets remain unchanged.

Research by Sutherland Global Services, and reinforced by Deloitte and PwC analysis, indicates that “three‑quarters of insurers acknowledge challenges caused by legacy ways of operating, though fewer than one‑third have taken decisive enterprise‑level action — a gap widely attributed to legacy leadership mindsets and organizational inertia.”

Is Legacy Thinking Overrated?

  • Legacy thinking is underaddressed, not overrated.

  • Legacy thinking is not a buzzword, but an outcome of historical systems, cultures and leadership patterns that can slow the industry’s ability to transform.

  • The opportunity lies in shifting legacy thinking into aligned, sustained, cross-enterprise transformational mindsets.

Long product cycles, predictable profits and regulatory requirements have rewarded caution and operational controls. These historical mindsets have served the industry well: building trust, resilience, and scale. As the industry evolves, mindsets that once inspired long-term success may derail future transformation.

Industry leaders are confronted with ongoing challenges of legacy thinking — ingrained mindsets, decision-making habits, and operating norms shaped by decades of work in slower and less digitized environments. While legacy systems remain a common roadblock, research and day-to-day experience consistently show that legacy thinking — not technology issues alone — is the most challenging barrier to transformational change. The industry’s ability to modernize, adopt artificial intelligence (AI), improve customer experience, attract talent, and respond to disruption depends on whether leaders can shift beyond legacy thinking.

Legacy Thinking in Practice

Legacy thinking is rarely intentional, and it is not a reluctance to innovate. Instead, legacy thinking is the cumulative effect of industry success built under historical mindsets. In many organizations, legacy thinking is evidenced by:

  • Reliance on long‑standing processes focused on manual workflows, documentation, and multiple handoffs
  • Dependence on decades‑old systems and hesitation to embrace automation or digital transformation
  • Risk‑averse cultures in which avoiding failure is valued over learning and experimentation
  • Product‑centric operating models that prioritize internal structures over customer needs

Legacy thinking is often viewed as demonstrating compliance and accountability. Yet when applied broadly, a legacy mindset can frustrate customers, slow enterprise decision making, and squash an organization’s ability to be resilient.

Why Legacy Thinking Continues

Legacy thinking often continues in organizations because of reinforcement of cultural and operational realities common in the industry. McKinsey & Company research suggests that “organizations that fail to address cultural and behavioral shifts see persistently low transformation success and weaker employee sentiment.” Examples include:

  • Regulatory adherence driving caution and lengthy executive timelines
  • Long profit cycles reducing urgency to reimagine core operations
  • Technology investments making modernization seem risky, expensive and disruptive
  • Workforce dynamics, including an aging talent pool and digital skill gaps, causing change to feel threatening rather than empowering
  • Leadership incentives and governance models rewarding predictability, cost control and short‑term stability over enterprisewide transformation

These examples do not invalidate the need for change, but rather explain why transformation can be challenging, and why addressing legacy mindset is as critical as upgrading legacy systems.

The Business Impact

Legacy thinking affects more than internal efficiencies, with consequences appearing across the entire enterprise value chain. Earnix research shows that “74% of insurance companies use outdated, legacy technology/thinking for pricing, rating, underwriting, and other vital insurance processes.”  For example,

  • Underwriting: Legacy thinking can lead to slower decision-making processes, limited use of real‑time data, and pricing models that may not reflect emerging risks.
  • Claims: Manual processes and fragmented systems can increase cycle times, raise costs, and heighten customer frustration.
  • Distribution: Agents and customers increasingly value digital tools, transparency, and immediacy — expectations that legacy models often struggle to meet.

Overall enterprise impact can be significant . . . shrinking profit margins, declining customer trust, reduced agility, and growing competitive blind spots as InsurTechs and digital players define new ways of working.

Leading Differently

Leading insurers are demonstrating that progress is possible. Their success does not come from technology alone, but from intentional leadership choices to challenge legacy thinking as follows:

  1. Modernize Strategically
    Insurance operating model research by McKinsey & Company suggests that modernization succeeds when it is treated as an enterprise strategy that aligns business, technology, and operations. Rather than positioning transformation as an IT initiative, leading organizations align business, technology, risk, and operations around shared outcomes.

  2. Modernize the Core
    Modern organizations regularly assess culture, technology and processes to encourage new ways of working.

  3. Embed Human‑Centered Design
    Customer experience is redesigned around transparency, simplicity, empathy, and speed, shifting insurers from policy‑ to people‑centric thinking.

  4. Shift Cultural Norms
    Cross‑functional teamwork and empowered decision‑making processes replace rigid mindsets. Learning, experimentation, co-creation, and iteration become expected ways of working.

  5. Leverage Partnerships
    Rather than building all solutions internally, modern insurers continually collaborate with InsurTechs and data providers to accelerate transformation and reduce risk. These organizations recognize transformational thinking as a core operating principle.

The Differentiator

Research consistently suggests leadership behavior as a powerful lever to overcome legacy thinking.

Leaders unintentionally reinforce legacy mindsets by:

  • Practicing hierarchical decision‑making instead of leveraging deeper organizational influence
  • Requiring certainty before experimentation
  • Positioning compliance as a conversation ender rather than as an opportunity to imagine possibilities
  • Delegating transformation to technology teams, limiting shared enterprise partnerships

Conversely, leaders shift legacy mindset by:

  • Framing modernization as a business enabler rather than a threat
  • Demonstrating curiosity and adaptability
  • Creating safe environments for learning and reasonable risk‑taking
  • Communicating a clear enterprisewide transformation narrative with which others can align

Legacy thinking is rarely overcome through pressure and rigidity. Mindsets change when leaders reframe success, which means changing one’s language from legacy to transformation.

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Vulnerability Versus a Flaw

Most leaders recognize the existence of legacy thinking, but few translate that awareness into new ways of working. Future industry transformation requires a shift from legacy thinking to a purposeful transformational mindset. This shift builds on the foundation that has made the industry strong — discipline, compliance, trust, and risk management — while also creating space for transformational mindsets.

Legacy thinking is not evidence of failure; it is a natural byproduct of past success. The risk lies in allowing legacy thinking to define the future. As industry disruption increases, customer expectations rise, and AI reshapes ways of working. Organizations that thrive will combine a strong foundation with a transformational mindset. The industry’s future will not be determined solely by technology or regulatory changes. It will be shaped by leaders who challenge legacy thinking, align organizations with enterprise outcomes, and guide transformation with clarity, courage, and inspiration.

 

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