It's easy to get caught in a trap you don't see coming, especially when it's baited with promises of transformation. That's what's happening right now across the insurance industry. Every month, another conference, another demo, another article touts the next big thing: AI that promises to process a claim instantly, chatbots that claim to solve service backlogs or analytics tools that can predict every move your customer will make. It all sounds impressive.
But after four decades in this business, I've learned something: if it sounds too good to be true, it usually is. And yet, the insurance industry keeps falling into the same pattern. According to a 2023 McKinsey study, only
We chase shiny tools without fully understanding them, sinking millions into systems that don't integrate. We call something "transformational" before we've even trained our people to use it. We're in a tech trap, and it's time to break out of it.
The trap is real, and it's expensive
Technology spending in insurance has soared over the past five years. A 2024 Gartner report showed insurers spent more than
Some carriers are seeing real returns. Others are quietly writing off investments, sunsetting tools that never delivered or scrambling to retrofit systems that don't play nicely together. Carriers spend millions integrating a new policy system, only to discover that the connection with their billing platform is clunky or dysfunctional and doesn't deliver what is needed. At the same time, smaller MGAs often try to patch together point solutions, then watch as staff revert to manual workarounds.
Despite all the money and effort poured into modernization, most carriers just aren't making the leap to platforms that move the needle. In my experience, it's almost never a shortage of technology holding companies back. It's choosing the wrong tools or failing to connect the new system to real business needs. The real trap isn't technology. It's believing that tech alone will fix problems that haven't even been clearly defined.
We need tech, but we need to be smarter about it
Let's be clear: technology is not the enemy. In fact, it's more important than ever. Consumer expectations have permanently changed. Agents and brokers want digital convenience. Regulations are more complex, and manual systems can't keep up.
But technology isn't a magic wand. It's no replacement for strategy. It's no substitute for process design. And it won't deliver results without the right people behind it.
Choose tools that solve your problems. That means researching and defining pain points in your system. Though it's important to remember that incorporating these systems doesn't need to happen overnight. Starting small and scaling up can prove to be a sustainable way to implement new tech into your business. And remember, if your frontline employees don't understand or trust a system, it's not going to move the needle no matter how much training you set up for your team.
The illusion of innovation is part of the trap
Another snare in the trap is what's called "innovation theater." Companies feel pressured to show off new tech, even if it doesn't improve business. Maybe it's a sleek app that almost no one uses, or a chatbot that frustrates more than it helps. I've seen dashboards that look impressive in boardroom meetings but never connect to the data you truly need.
We've all seen the press releases. But real transformation is measured in better workflows, cleaner integrations and smarter user training. It doesn't come from flashy announcements. If you're leading an insurance business, dig deeper. Does this tool actually address a bottleneck? Will it meaningly improve the customer's journey? Is it worth the operational lift?
Beware the cost of complexity
Complexity is another common mistake. Companies roll out tech so powerful, it's impossible for staff or customers to use it. The result is longer onboarding, more errors and lower adoption.
A 2023 report from Accenture notes that
Reframing success
To break out of the trap, we need to reframe what success looks like. It's not about "digital transformation" for its own sake. It's about measurable results, however that's defined for your business.
Maybe that's cutting billing errors in half. Maybe its getting policies issued faster. Maybe it's giving your call center reps tools that actually help them help customers. Tech can (and should) do these things. But only when it serves your actual strategy.
And sometimes, the best thing you can do isn't to add something new. It's to streamline what you already have.
This isn't a call to pull back technology. Quite the opposite. The future of insurance depends on smart, well-executed innovation. But we have to move past the hype, and focus on what really works.
Say no to tools that don't align with your goals. Budget for training, not just new software. Involve the people who will actually use these systems before buying them. Do less but do it better.
If we want to thrive in this new era, we can't keep stepping into the same trap. It's time to stop chasing tech for tech's sake and start building strategies where technology is a partner, not a distraction.
Insurance still needs tech. Just make sure you pick tech that's best for your employees, your customers and your business.
