Insurance modernization stalls as talent shortages slow core system upgrades

Info-Tech Research Group said insurance modernization is being slowed less by software budgets than by the people needed to execute the work. In a blueprint published May 8, 2026, the firm argued that carriers are trying to replace core platforms while competing for scarce cloud, data, AI and cybersecurity talent, even as long-tenured legacy specialists retire and take critical system knowledge with them.

The blueprint, Rebuild Your Talent Engine: Attract and Retain IT Talent in Insurance, was aimed at insurance IT and HR leaders and laid out a framework for assessing readiness, strengthening the employee value proposition and keeping the roles needed to support digital change. Vidhi Trivedi, a senior research analyst at Info-Tech, said insurers need a workforce strategy that matches the technology roadmap so they can retain institutional knowledge while bringing in new capabilities. She said that value proposition has to speak to flexibility, growth, purpose and belonging, not just pay.

That warning lands hardest in property and casualty, where core modernization often touches policy administration, claims, billing, data integration and infrastructure at the same time. Info-Tech’s point is blunt: even when the budget is approved, those projects can stall if the carrier cannot staff implementation, integration and support with the right mix of people. For vendors and service providers, that makes adoption a labor issue as much as a platform issue.

The broader industry evidence points the same way. McKinsey said P&C carriers still rely on legacy core systems that create operational inefficiencies, push up IT maintenance costs and slow responses to customer expectations. It also said cloud-based, scalable solutions are now viable at scale, which raises the stakes for carriers that are still stuck between aging architecture and thin benches of modernization talent.

The execution gap is already visible. West Monroe’s survey of 300 insurance executives found that 20% had defined a modernization strategy but had made little progress, 12% were still in early planning and 2% had not started at all. On the hiring side, a first-quarter 2025 study by Jacobson Group and Ward, now part of Aon, found 14% of insurers said hiring had become more difficult than the year before, with technology, underwriting and claims expected to see the strongest growth over the next 12 months.

PwC said in March 2025 that the industry has a rapidly aging workforce, while claims, agent and customer service roles remain common entry points for younger professionals. The U.S. Bureau of Labor Statistics projects insurance underwriter employment will decline 3% from 2024 to 2034, but still sees about 8,200 openings a year on average, mostly from replacement needs. The median annual wage was $79,880 in May 2024. Together, those numbers show why insurance modernization is no longer just a systems upgrade. It is a workforce rebuild.