How Technical Debt Affects Your Insurance Company's Value in an Acquisition

Old software can be hard to change. When code isn't clear, it takes longer to add new features. This slows down your business. Also, old software often has security problems. If hackers get in, you could lose customer data. This can hurt your reputation. Regulators can punish you. In my work, I've seen teams spend weeks fixing a bug because the code was hard to read. This delay can mean lost business. Technical debt is like a loan. You save time now but pay more later. In insurance, this is very dangerous because of strict rules. So, old software problems aren't just a tech issue. They're a business risk.

When a company wants to buy your insurance company, they check your software carefully. This is called due diligence. They look for problems that will cost them money to fix. If your software has a lot of technical debt, they'll offer less money. For example, if they think it will be expensive to fix your old systems, they may reduce their offer. Due diligence teams check many things. They look at how often your system fails. They check if your code is easy to change. They see if you've good security. They also check if you rely on one or two experts who might leave. All these things affect your company's value. In 2026, buyers are more careful than ever. They don't want to take on big risks. So, technical debt directly lowers the price someone will pay for your company. This is why fixing technical debt before an acquisition is so important.

Through my work, I've found three common technical debt problems that hurt company value the most. First, poor documentation. When your software has no clear instructions, it takes a long time for new engineers to learn it. This can delay projects. If a key person leaves, you may not be able to fix problems quickly. Second, relying on experts who are near retirement. Many insurance companies use old technologies like COBOL. The people who know these systems are getting older. It's hard to find new people with these skills. If that expert leaves, your system could stop working. Third, unpatched security problems. Old systems often don't get security updates. This makes them easy targets for hackers. A data breach can hurt your reputation and cost you customers. Due diligence teams see these problems as big risks. They'll lower your company's value because of them. Fixing these three problems can protect your company's value.

The best way to fix technical debt is to do it slowly and carefully. This is called the strangler pattern. You don't rewrite everything at once. Instead, you replace old parts one by one with new technology. For example, you can wrap your old COBOL system with a modern API using Next.js and Node.js. This way, your system keeps working while you update it. A typical migration for a big insurance company takes 18 to 24 months. But you can see benefits in 6 to 9 months. Your system will fail less often. Your team can deliver new features faster. Your security gets better. All of this makes your company more valuable. When you fix technical debt, you build 'technical equity'. This means your software becomes an asset, not a liability. Buyers will see your company as a good investment. They'll be willing to pay a higher price. In 2026, companies with modern, flexible software are worth more. So, fixing technical debt isn't just a cost. It's an investment that increases your company's value. I've seen this happen. When I migrated a large e-commerce platform, features that took weeks started shipping in days after we fixed the technical debt.

Every year you wait to fix technical debt, it costs you money. First, you pay high maintenance costs. Keeping old systems running needs specialists who are expensive and hard to find. Second, your system may fail. A single outage can mean lost business and angry customers. Third, you lose opportunities. Your company can't launch new products quickly. You can't partner with new insurance technology companies. Your competitors with modern systems can move faster. They take your customers. Also, your security gets worse over time. Old systems have more vulnerabilities. A data breach can hurt your reputation. In 2026, the cost of waiting is higher than ever. New technologies like AI and data analytics are changing insurance. If you can't use them, you fall behind. So, waiting to fix technical debt is expensive. It costs you money every day. The sooner you start, the more you save.

I've seen companies turn around their technical debt problems. After that, their teams could deliver new features faster. This made the company more valuable. For insurance companies, the same approach works. Start by finding the biggest problems. Look at which systems fail most often. Check which ones are hardest to change. See which ones have security risks. Then, make a plan to fix them one by one. Use the strangler pattern to replace old parts safely. Focus on systems that handle customer data and payments. These are the most important. Also, improve your documentation. Write down how your systems work. This reduces the risk if someone leaves. Train your team on new technologies. This makes them more valuable. By doing these steps, you protect your company's value. You make your software a strength, not a weakness. In 2026, this isn't just a good idea. It's necessary for survival. Buyers will only pay top dollar for companies with modern, secure systems.