Runoff M&A Means Learning to Deal with Legacy Systems

Insurance companies in runoff are big business. Every year, more and more runoff companies are becoming targets for mergers and acquisition. But often these mergers can be abrupt like jumping a truck onto the highway rather than smooth and orderly. Larger insurance companies with an appetite for runoff based M&A must be prepared to deal with a lot of legacy systems. These legacy systems come in many forms, often developed by different departments over time. This cobbling together of several different systems can make for a very complex changing of the guard.

Many companies are reluctant to change the system currently in place at an acquired company due to the potential risk of data loss and the complexity of cleaning its cobwebs. However, this tendency must be overcome due to the fact that the cost of not modernizing acquired companies may result in a reduction in a company's willingness for more M&A. If a company can acquire and transition another company quickly without the fear of data loss while eliminating the complexity and expense of it's legacy systems, this will free up significant time for additional M&A activity. 

Because the key to success within the rental business is cost-reduction through increased efficiency, there should be little hesitation in modernizing legacy systems.  Sometimes the grass is greener. Modern systems not only improve ROI by reducing IT costs, but they can gain additional process efficiencies by utilizing modern dashboard and business analytics that would not be possible in the case of multiple legacy systems.