Lumera warns legacy systems hold back group protection

Lumera has warned that legacy administration systems are limiting UK group protection providers as employers seek more connected workplace benefits.

The problem has become more acute after a period of market consolidation, which has left many larger providers running several administration and technology systems across different books of business. In many cases, those systems perform similar tasks, adding complexity to day-to-day operations.

That fragmentation can leave insurers reliant on manual work, while slowing product development and making administration more difficult. As a result, providers may struggle to make full use of their product knowledge and operational experience.

Group protection covers benefits such as group life, income protection and critical illness policies offered through employers. Demand is shifting towards workplace benefits that work alongside payroll, benefits platforms and other services, rather than operating as stand-alone products.

Legacy burden

Older systems can make it harder for providers to adapt products and processes without lengthy development work. By contrast, modern administration platforms allow changes to be made more easily, giving insurers more room to respond to changing needs among employers and employees.

Data management is another central problem. When member and policy records are spread across fragmented systems, insurers may find it harder to build a clear, consistent picture of the information they already hold.

Bringing policy data together on a single master platform can provide a clearer view across books of business. It can also make it easier to derive insights from data and support wider use of artificial intelligence tools.

System connectivity is becoming increasingly important. Employers want workplace benefits to connect smoothly with benefits platforms, payroll systems and other providers, so employees can see and use their benefits more easily.

Gradual shift

Providers do not need to move all policies at once to modernise. Books of business can instead be transferred gradually, including at renewal points for corporate schemes, allowing older systems to be retired over time with less disruption for employers and members.

That phased approach may appeal to insurers trying to balance operational change with service continuity. Group protection providers often manage large volumes of in-force policies, and any system change can carry risks if migration is handled too quickly.

Lumera also linked technology renewal to regulatory pressure. Modern platforms can make it easier for providers to monitor systems and maintain records, helping them meet rising expectations around technology governance and operational resilience.

These issues have drawn greater attention across financial services as firms face scrutiny over outages, weak controls and their ability to maintain services during disruption. For insurers with multiple legacy systems, oversight becomes more difficult when information sits in different places and processes depend on manual intervention.

Richard Stewart, Commercial Director of Workplace Solutions at Lumera, said the main obstacle is often not a lack of expertise inside providers, but whether their systems allow them to use it effectively.

He said: "Group protection providers have a huge amount of data and product knowledge, but outdated administration systems can restrict what they are able to do with it. The problem is often not a lack of ideas or expertise, but whether the technology allows providers to act on them.

"The direction of travel is towards integrated propositions that allow employers to connect with insurers, other workplace providers and benefits platforms to deliver greater value to their employees. Modern technology will be essential to achieving this, as well as harnessing the potential of data analytics and AI to make better use of the strategic, member-level data held by providers."