The modernisation ceiling: When surface upgrades stop improving underwriting outcomes

Over the past few years, many Lloyd’s-market carriers made pragmatic technology decisions:

• Minimise disruption to underwriting, operations and finance execution
• Show visible improvement by upgrading user journeys and screens
• Add workflow layers to remove friction from day-to-day processing
• Expose APIs for specific connections, often point-to-point rather than deep interoperability

These were smart choices at the time. They protected delivery, kept programmes on track, and created perceived momentum. They improved what people could see. They did not change the foundations that govern how fast you can change. This is reflected in recent market sentiments, where more than half of London Market leaders report their workbenches and workflows are still not fit for purpose, despite several years of incremental upgrades (Insurance Business UK).

But the market has changed in ways that matter.

The London Matters 2026 report reinforces this shift, highlighting sustained growth in complex specialty risks, increased global competition, and the need for stronger market infrastructure to support scale, digitisation and operational resilience. As the market doubles in size, the underlying systems that support underwriting need to evolve at the same pace.

PwC also highlights several structural drivers of underwriting change – growing product complexity, digital trading, rising oversight expectations and the adoption of smart-follow models. Analysis of the future London Market reinforces the same themes: tightening data standards, pressures from market initiatives, and a rapid increase in digital distribution exposing the fragility of legacy systems.

• Insurance products are increasingly bespoke and client-driven
• The operating model is shifting. Smart follow is now part of the mix in many portfolios
• Digital channels are more common, and they are less forgiving of manual work
• Regulatory and oversight expectations are tightening, especially around evidence, change control, and operational resilience
• M&A and portfolio evolution expose data definition gaps and data model constraints that were previously hidden
• The next wave of automation depends on consistent data. It also depends on decisions being expressed in a form you can test, with an audit trail. Without that, adopting new capability slows down.

London Matters 2026 signals that London’s continued growth will depend on the market’s ability to modernise its operations and data foundations - surface improvements alone will not support the level of scale and complexity now expected.

Independent research on legacy modernisation also shows a clear pattern: the first 1-2 years of surface upgrades deliver visible progress; by years 3-5 complexity rises sharply; beyond year 5, ROI drops and operational risk increases. This 3-6 year window is typically where surface-modernised platforms hit foundational limits.

UI upgrades and more APIs can keep delivering incremental gains today. Over the next two to three years, surface modernisation will stop being a sensible compromise and start being a constraint. If your foundations cannot support continuous change, It becomes harder to switch on capability when the business demands it and you will not be able to adopt the capabilities that set the pace in the market. That is how the modernisation ceiling turns from an inconvenience into a competitive disadvantage.

The LMA's recent work on enhanced underwriting also underscores how quickly the bar is rising. Historically, a carrier could operate as a lead for a decade or more with only incremental change. That is no longer the case. The capabilities required to run a disciplined lead portfolio now depend on modern, adaptable technology, and the same is increasingly true for follows. The modernisation ceiling applies regardless of role or scale - ambitions are higher, expectations are sharper, and the underlying technology must be flexible enough to match that pace.

Most organisations reach a point where surface upgrades stop paying back.

Screens get refreshed. Workflows get added. More APIs appear. The effort still rises, and delivery starts to feel heavier than it should. Release governance grows, and confidence drops. PwC’s legacy systems analysis points to the root cause: many platforms still rely on decades-old code that is difficult to integrate and increases operational and compliance risk. It is also noted that outdated systems now create direct commercial disadvantage as market participants struggle to adopt new capabilities at pace.

This is not about teams failing It is a consequence of how the foundations are built. You are at the modernisation ceiling when:

• Routine changes feel like a release event.
• Short-term fixes quietly become “how we do things”
• Progress depends on scarce external delivery capacity
• Work still relies on knowledge outside the system.
• Each new requirement triggers questions about evidence and audit readiness

More surface modernisation will not remove the constraint. It may hide it for a while.

1) Strategic drift
The business changes faster than the technology can absorb. The London Matters 2026 report notes a clear acceleration in complex risk classes - including cyber, AI and energy transition - which raises the bar on underwriting capability and the supporting technology.
Over time, underwriting ambition starts to outpace what the organisation can deliver consistently.

2) Operational drag
"Small iterations turn into multi-week events, or they never get switched on.” ¹
Response times slow. Improvement becomes harder to sustain.

3) Operational resilience is harder than it needs to be
If change requires too much coordination and confidence is low, organisations slow down to stay safe. That safety comes at a price: longer lead times, heavier release governance, and more operational noise. Research warns that outdated core systems increasingly expose firms to competitive and resilience risks.

4) Avoidable future cost and a compressed timetable
This is the part many teams underestimate. Hit the ceiling and you get forced into another major decision sooner than planned. It rarely arrives on your timetable. PwC emphasises that modernising legacy systems typically happens earlier, and at higher cost, when foundations are not addressed in time. Guidewire similarly warns that firms delaying foundational change risk commercial disadvantage as the market standard moves ahead.

If you want a modern pre-bind capability live in around 18 months, the work starts now. Leave it until the pain is obvious and the timeline becomes the problem. Cost rises and complexity stacks up.

The organisations that start early will be ready to switch on capability, while others are still deciding how to begin.

Are we confident our current approach is fit for 2026, and importantly still fit for 2029; can we change quickly, and release safely, as often as we need to? The London Matters 2026 report highlights rising market complexity, increasing pressure to digitise, and intensifying global competition reinforcing that complexity across underwriting is accelerating faster than most modernisation cycles can absorb.

If you cannot answer that with confidence, you may already be approaching the modernisation ceiling.

The London Matters 2026 report highlights rising complexity, increasing pressure to digitise, and intensifying global competition - all trends that will stretch modernisation cycles further unless foundations change.

This is the right moment to step back and assess whether your technology foundations can support what is coming next. Look beyond another round of surface improvements. Focus on how quickly you can change, and how safely you can release.

¹ Insurance Business UK — 54% say workbenches: NOT fit; 58% portfolio tools not working.