Insurance companies are risking future profits as they struggle with the cost and complexity of existing IT and legacy systems, according to the Economist Intelligence Unit.

The European-wide survey of 126 executives from the insurance industry, conducted for BT, reveals that legacy systems, poor integration and an uncoordinated view of the customer could de-rail insurer's quest for profits.

The survey says more than half of insurers have between one and 12 legacy IT systems and nearly one in 10 have more than 25.

However, there is a question mark over how to move forward - 37 per cent of executives say they will focus on upgrading legacy systems, whereas 42 per cent plan to adopt new infrastructures.

Respondents were also divided as to the impact of their existing IT infrastructure on business flexibility - 38 per cent believe their current situation hinders their agility, compared to 40 per cent who disagreed.

Another problem is achieving a single view of the customer - 40 per cent of respondents said it is a goal they have yet to achieve, while 36 per cent agreed that a close relationship with their customers is a main source of competitive advantage.

However, the industry is committed to growth - 65 per cent said the main priority for their organisation over the next two years is to increase sales to existing customers, 56 per cent want to acquire new customers in existing markets, and 47 per cent will focus on developing new channels or expanding existing ones.

Andy Nicholson, managing director of finance industry solutions at BT Global Services UK said: ‘In order to meet the combined challenges of regulation, competition and growth, the industry needs to get as close as possible to its new and existing customers.’

'Insurance companies need to make business processes more flexible in order to improve the customer experience and properly exploit new channels for products and services,’ he said.

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