The Growing Threat of Technical Debt in Modern Insurance Technology

Modern technology strategies—like microservices, cloud-native architectures, APIs, and advanced data platforms—offer insurance carriers flexibility and scalability. However, their complexity can lead to technical debt almost from the moment systems are deployed. If not carefully managed, this debt slows innovation, drives up costs, and undermines system reliability.

Technical debt in today’s systems isn’t just about old code or hurried deadlines. It often stems from a lack of process discipline, weak governance, or insufficient attention to how systems evolve over time. Let’s break down the most common sources of modern technical debt and practical strategies to overcome them.

Common Sources of Modern Technical Debt

1. 1. Microservices Without Governance

   Microservices architectures enable agility, but without consistent standards and governance, they can create a web of dependencies that’s difficult to untangle. A system designed for flexibility can become rigid due to redundant services or incompatible data formats.

2. 2. Cloud-Native Missteps

   Cloud strategies bring scalability but also complexity. Improper resource management, misaligned tools, or a lack of operational maturity can make systems expensive to run and difficult to troubleshoot

3. 3. Fragmented Data and Systems

   Disparate systems and siloed data prevent carriers from achieving real-time analytics or a complete customer view. Integrating these elements retroactively often adds more technical debt than it resolves.

4. 4. Hardcoding and Low Reusability

   One-off solutions, like custom integrations, might solve immediate problems but often fail to scale or adapt to future needs. These shortcuts increase the cost and effort of modernization down the road.

5. 5. Insufficient Automation

   Manual processes for testing, deployment, or monitoring introduce inefficiencies and errors. Over time, these inefficiencies compound into significant operational debt.

Strategies to Reduce and Prevent Technical Debt

Adopt a Framework for Managing Technical Debt

Martin Fowler’s technical debt quadrant categorizes debt by intent (deliberate vs. inadvertent) and competence (reckless vs. prudent). Using this framework, IT leaders can identify which debts to address and prioritize.

Action: Regularly audit your systems to classify debt and establish a repayment plan for critical items, focusing on prudent, deliberate debt that supports iterative progress.

Establish Comprehensive Governance

Establish governance by embedding robust design principles, standardized coding practices, and continuous feedback loops, while defining and monitoring standards, assigning ownership, and fostering a culture of accountability and transparency.

Action: Implement automated governance tools to enforce architectural standards, cloud policies, and data integrity, identifying deviations in real time. Foster a culture of transparency and simplify adherence with reusable assets and frameworks that make best practices intuitive and deviations difficult.

Invest in Automation, Tooling, and Observability

Automate testing, CI/CD pipelines, and monitoring to catch issues early, reduce manual intervention, and improve system reliability. Enhance observability by implementing tools that provide real-time insights into system performance, identifying potential issues before they impact operations.

Action: Deploy automated regression testing for system updates and integrate observability tools like dashboards and alerting systems to ensure consistent performance across product lines and streamline troubleshooting.

Lighthouse POCs

Scale your technical leaders' capacity and value by having them introduce and validate new technology strategies using lighthouse POCs before scaling across the engineering organization.

Action: Start with a lighthouse POC, validating new technology strategies with a small, end-to-end feature that delivers business value. Once deployed and successfully validated, the technology strategy and the best practices learned can be scaled across the team. [TIP! Dojo Team: Have team members who helped build the lighthouse attend other teams’ sprint teams to teach them the new approach.]

Centralize Data and Focus on Integration

Modernization can create fragmented data pipelines, inconsistent schemas, and integration challenges, leading to technical debt that hinders scalability and efficiency. A unified data strategy ensures consistency and reduces maintenance burdens.

Action: Deploy a centralized data hub with standardized data formats and APIs, enabling a single source of truth across policy admin, underwriting, claims, and portals. Use automated data quality checks and lineage tracking to proactively identify and resolve integration issues, minimizing long-term technical debt.

Upskill and Empower Teams

Building the right team mix is critical to avoiding technical debt. An 80/20 blend of senior engineers with hands-on experience in modern strategies and junior engineers ensures the expertise needed for implementation and scalability.

Action: Partner with providers like Praxent to bring in battle-tested senior technology experts who can provide oversight, leadership, and mentorship, enabling your engineers to upskill as they collaborate on complex modernization efforts. This approach equips your team to execute and sustain initiatives effectively.

Monitor and Measure Progress

Use metrics like sprint velocity, time to release new features, and system uptime to track technical debt and assess modernization efforts.

Action: Implement dashboards to provide real-time insights into technical debt metrics, highlighting areas for immediate improvement. This also helps educate business stakeholders on the impact of technical debt on the business.

Why It Matters

Unchecked technical debt is a silent killer for innovation. Every poorly executed project, unstandardized API, or siloed dataset adds friction to future growth. Carriers that adopt disciplined processes, enforce governance, and prioritize reusability will build systems that can adapt and scale without the weight of technical debt holding them back.

Take the First Step with Praxent’s Technical Debt Assessment

Praxent offers a focused technical debt assessment designed to identify bottlenecks and sources of growing debt in your systems. We analyze your architecture, development processes, and operational practices, then recommend a prioritized roadmap to address critical challenges. Our strategies embed best practices, reusable technology assets, and pre-configured tools to create an efficient and developer-friendly environment.

Start building a system that evolves with your business while reducing risk and complexity. Let’s talk.