Outsourcing Legacy Claims Can Help Increase Profitability

By: Ashley Easen

Legacy claims are not a new challenge. For years, they have been a drain on the financial reserves of insurers, using up resources to resolve. These claims are often complex and are no longer serving current business needs or contributing to overall growth.

While legacy claims and the difficulties they present may be a common challenge, they are becoming a primary focus for insurers looking to increase profitability and efficiency in a difficult market which is seeing the impact of longtail exposures compound. This is evidenced by the results in our annual whitepaper, The Carrier Perspective: 2025 Claims Insights, where 69% of UK insurers identified legacy claims as a key challenge — a sharp increase by 9 percentage points from last year.

One of the most effective and beneficial strategies that insurers can employ to minimise the impact of legacy claims without dedicating further internal resources is outsourcing legacy portfolios to a strategic partner who can provide the specialist expertise, required technology and flexible resourcing solutions needed to address the issue.

Addressing Outdated Systems and Processes

A common problem insurers face with legacy claims is that they are locked into outdated claims management systems that are time-intensive and difficult to integrate with modern claims technology. However, modern technology is also essential to settling claims more efficiently. For insurers who lack the internal expertise to streamline the integration of claims with new systems or resources to upskill staff, outsourcing is the best solution.

The advantages of modern claims technology solutions in solving complex legacy claims, include access to advanced data analytics. This data allows insurers to identify hidden patterns and recognise emerging risks that could impact future claims, contributing to both solving the current problem as well as futureproofing the business against potential pitfalls.

Leveraging technology is also essential for making informed decisions and addressing unique problems within legacy claims. This is where the support of our claims consulting team can play a valuable role by providing access to innovative technological solutions alongside the deep expertise needed to enhance the claims resolution process, and create bespoke programmes that address the pain points caused by legacy claims.

Freeing Resources and Unlocking Capital

While technology has an important role to play in reducing the burden of legacy portfolios, human expertise is vital for understanding the intricacies and broader picture of complex claims.

With higher litigation costs, the rising influence of social inflation, the ongoing talent shortage and the continuously evolving regulatory environment, insurers already have their hands full proactively managing the present situation. Meanwhile, legacy claims continue to place a continual cost-intensive strain on resources that could be better used elsewhere. It's no wonder that they have become a focal point for insurers.

Outsourcing legacy portfolios to a reputable claims management partner allows insurers to free up capital and, importantly, internal teams so that talent can concentrate on initiatives that will drive business growth.

Leveraging partners who have the resources and expertise to develop tailored solutions to complex longtail claims is a cost-effective way to open the door to greater flexibility and efficiency, while unlocking capital growth opportunities that will enable new programmes to develop, further potential for expansion and empower innovation.

Leveraging Dedicated Expertise for Growth

Legacy claims do not inherit the title without cause. They are often distinctive in their difficulty, but also rich in insights for the development of new product lines or the improvement of existing ones. Whilst many legacy claims sit under abandoned portfolios due to lack of performance, engaging the right expertise can improve the financial performance of a loss portfolio, introduce fresh strategies for more effective claims management, provide access to additional avenues for support, all while improving operational efficiency across your core-business.

When harnessed correctly, the right approach can transform a legacy portfolio from a financial burden to a competitive advantage.

Reach out to discover how our Consultancy Solutions division can support you with an effective strategy, expertise, technology solutions and resources to not only minimise the ongoing challenges associated with legacy claims and large loss portfolios but also identify new opportunities within them.