Product Economics for InsurTech
Insurance technology carries the heaviest legacy system burden of any industry. 75% of IT budgets go to maintaining 30+ year old systems. AI underwriting is promising but introduces new cost structures most InsurTech companies don't model.
Legacy Core System Debt
Most insurers run on 30-40 year old COBOL/mainframe policy administration systems. Modernization costs $50M-$500M+ and takes 3-7 years. The maintenance burden on legacy systems consumes 70-85% of IT budgets.
75% of IT budget on legacy maintenanceRegulatory Compliance Overhead
Insurance operates under state-by-state regulation (50+ jurisdictions in the US alone). Every product change requires filing review. Compliance debt accumulates when systems can't adapt to new regulations without manual workarounds.
$2M-$10M/yr compliance engineering costAI Underwriting Economics
AI-powered underwriting promises speed and accuracy but introduces variable costs: model inference, data enrichment APIs, and continuous model retraining. The Cost of Predictivity applies directly — higher accuracy underwriting costs exponentially more.
$0.50-$5.00 per AI underwriting decisionClaims Processing Debt
Claims systems accumulate the worst technical debt: every edge case becomes a hardcoded exception. Over time, claims adjudication logic becomes a labyrinth of business rules that nobody fully understands.
40-60% of claims code is undocumented business rulesInsurTech Advisory
Richard Ewing advises InsurTech companies on legacy modernization economics, AI underwriting unit costs, and regulatory compliance debt. R&D Capital Audits for insurance technology.
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