Data Migrations: The Hidden Accelerator in Insurance Run-Off Deals

This article explores how forward-thinking insurers are leveraging advanced data migration frameworks to accelerate integration timelines, enhance operational efficiency, and maximise returns in an increasingly competitive market. Drawing on insights from PwC's 2024 Global Insurance Run-off Survey and our extensive experience supporting complex migrations, we examine the technological imperative reshaping the economics of insurance run-off transactions.

Unlocking value through innovative technology adoption

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The global insurance run-off market has reached a significant milestone, with reserves exceeding US$1 trillion for the first time, according to PwC's 2024 Global Insurance Run-off Survey. As deal sizes grow and competition intensifies, successful players in this space increasingly differentiate themselves through their technological capabilities.  

However, while the survey highlights that 26% of respondents see claims processing and settlement as the most significant opportunity for technological enhancement, the critical role of data migrations in realising value from these transactions remains underappreciated.

Data migration—transferring policies and related information from an acquired insurer to the acquiring entity—represents a make-or-break element in run-off deals. Yet many organisations approach these complex transitions with outdated methodologies, creating unnecessary risk and delaying the realisation of deal value.

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The Technology imperative in run-off transactions

The run-off market has evolved significantly over the past decade from primarily focused on distressed assets to becoming a sophisticated capital management tool for insurers. As the PwC survey notes, today's market is characterised by "capital relief" deals rather than simple "finality" transactions, with this trend expected to continue through 2028.

This evolution emphasises operational efficiency, with acquirers needing to rapidly integrate and manage acquired portfolios to achieve their targeted returns. Legacy technology, however, remains a persistent challenge in the sector.

"While live insurers have significantly invested in technology and data, the legacy market has not kept pace," notes Michael Cook, Partner at PwC UK. This technological gap creates substantial risk during the migration phase of run-off deals, where data quality issues, incompatible systems, and manual processes can lead to value erosion.

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The migration challenge

Typical challenges in run-off data migrations include:

1. Fragmented, incomplete data sources: Many legacy portfolios reside in outdated systems with inconsistent data structures and quality issues that complicate extraction and transformation processes.

2. Regulatory compliance: Ensuring data privacy and security throughout migration requires robust protocols and governance frameworks that meet increasingly stringent regulatory requirements.

3. Business continuity: Maintaining claims processing capabilities during transition is essential to prevent service disruptions that could negatively impact policyholders and create additional liabilities.

4. Historical accuracy: Preserving the entire claims history while ensuring data validity is critical for accurate reserving and effective claims management in the post-migration environment.

5. Resource constraints: Managing migrations with limited specialised expertise often rely on manual processes that increase cost and risk throughout the transition period.

These challenges require an approach that goes beyond traditional, labour-intensive migration methods. Technology-enabled migrations accelerate the process and substantially reduce risk through automation, validation, and enhanced governance.

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A framework for success

The most successful run-off acquirers approach data migrations with a proven framework that emphasises:

Discovery and assessment

• Comprehensive data profiling and quality assessment enable organisations to identify issues early and develop targeted remediation strategies.

• Precise mapping of data relationships and dependencies ensures critical business logic is preserved during migration.

• Identifying business rules and claims processing workflows allows for accurate replication or enhancement of key operational processes.

Smart transformation

• Automated extraction and transformation tools significantly reduce manual effort while improving the consistency and accuracy of migrated data.

• AI-assisted data cleansing and enrichment capabilities resolve quality issues and enhance the value of historical information.

• Machine learning for pattern recognition in historical claims data unlocks insights that might remain hidden in unstructured or poorly organised information.

Controlled implementation

• Parallel processing ensures business continuity and maintains operational capabilities throughout the transition, minimising disruption to ongoing claims management.

• Automated reconciliation and validation processes confirm data integrity at each stage of the migration journey.

• Comprehensive audit trails for regulatory compliance provide evidence of proper governance and control throughout the migration process.

Organisations that embrace this technology-driven approach can complete migrations up to 60% faster than traditional methods while significantly reducing operational risk and implementation costs.

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The ROI advantage

Effective data migrations directly impact the economics of run-off deals through several key mechanisms:

Accelerated value realisation: By reducing the time to integrate acquired portfolios fully, acquirers can implement their claims management strategies faster, realising projected value sooner.

Enhanced claims management: Clean, well-structured data enables more sophisticated analysis of claims patterns, supporting proactive claims management—identified by 43% of survey respondents as the most critical value creation lever in managing non-life run-off business.

Capital efficiency: Faster, more accurate data migrations support more precise reserving and allocation, enhancing the benefits of capital relief that drive many contemporary transactions.

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Looking ahead

As the run-off market evolves, technology will play an increasingly central role. The PwC survey indicates that inflation, competition, and interest rates will significantly impact the sector in the coming years—all factors amplifying operational efficiency's importance.

Organisations investing in technology-enabled migration capabilities will be well-positioned to capitalise on these trends, creating a sustainable competitive advantage in an increasingly sophisticated market.

For run-off acquirers looking to optimise their approach to data migrations, three principles stand out:

1. Invest early: Build migration capabilities before they're needed to avoid rushed implementation and associated risks.

2. Embrace automation: Reduce manual effort and associated risks by leveraging advanced data processing technologies that enhance speed and accuracy.

3. Prioritise governance: Ensure comprehensive audit trails and validation processes that satisfy regulatory requirements and build stakeholder confidence.

By treating data migration as a strategic capability rather than a tactical challenge, run-off specialists can accelerate value creation and enhance returns in a market where operational excellence increasingly separates leaders from laggards.

This thought leadership article was developed by Digiata, a specialist in technology-enabled data migrations for the insurance sector. Our proven framework and advanced technologies have supported successful migrations across multiple run-off transactions, delivering faster integrations and enhanced value realisation for our clients. The analysis draws on findings from the PwC survey released in March 2024. We're actively monitoring for the upcoming 2025 edition and will provide an updated perspective shortly after its publication. Find out more at https://www.digiata.com/services/data-migration

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