Claims Transformation

Digital Innovation in Insurance: Build vs Buy

Claims Transformation | Georgina | 16 April 2019

You’re a dynamic and progressive insurer that wants to put your customers first. Your ambitious goals mean you want to be flexible, innovative and you want to accelerate past the competition. So clearly your systems need to support this, but which insurance software products reflect your unique ways of doing business? Do those systems even exist? Let’s explore digital innovation a bit closer.

The “build versus buy” decision is a significant one that many Insurers face when looking at their desired Operating Model, strategic goals and existing resources. Given the importance of having a Claims system that truly underpins your objectives, processes and efficiency drives we’ve created this paper to explore the benefits and drawbacks of each. (It’s important to note that this versus scenario is specific to Claim processing. Therefore, there is a level of complexity involved which needs to be strongly considered when comparing advantages and disadvantages of both options).

Read our white paper: Outsmarting the disruptor: How to spot and counteract the disruptor in insurance


Why should you consider investing in a custom solution? This is a big decision and one we know is tempting. The ‘build’ pathway is usually chosen after it’s been proved that there is no established solution available and/or the complexity of existing systems make integration of a ‘Bought’ solution too difficult. (But it’s not called “digital innovation” for nothing!)


  • Perfect fit’: Custom software is tailored to suit your exact needs. If done correctly then your processes are mapped and realised by the bespoke system. There should also be no ‘bloat’ of unwanted features
  • Proof of Concept, scalabity: Although custom development takes a significant amount of time, and relies on less complexity, most developers start with a PoC. Once proved, full development can commence.
  • Fewer compliance issues: Companies operating under strict regulatory requirements have the power to make sure a bespoke system operates as it should.
  • Responsive: Easily modify bespoke software  to meet changing business needs. If developed well, it should be highly responsive to new trends.


  • Significant investment. Building a custom Claims Administration System can be a substantial investment. Requiring significant energy, resources, and time dedicated to its development. The costs associated with a bespoke system may be one of the first and most logical reasons for you to avoid choosing this option.
  • Maintenance Continuity. You are dependent on the in-house skills remaining in-house for the life of the system.
  • No R&D Commitment. An in-house development will likely be subject to maintenance and support, but there would be no ‘product roadmap’ behind it or any market-led development.
  • Heavy reliance on in-house ability of the developers: Your system is only as good as its creator. This is potentially the most important and critical factor for custom-built systems. Your claims solution, which is likely to be enormously complex needs to be exceptionally well engineered.
  • Lack of technical proficiency. Current resources – if you do not have a strong enough software team with the necessary skills to build out this custom claims software, it would be wise to pass on the opportunity until you do have such a team in place (if ever).
  • Slow Speed to Market. Building proprietary software takes a great deal of time to complete successfully. If Speed to Market is an important goal, then you need to consider the development journey needed to realise this. A configurable off the shelf solution may be available, one that you are able to shape to your way of doing business.


Why should you consider buying an off the shelf solutions instead of developing your own software?

Digital Innovation: Advantages

  • Proven solutions. Selecting the right solution is paramount. It is a crowded and competitive landscape, but there are very well-established vendors with highly configurable systems.
  • Significantly less investment than bespoke development.
  • Speed to Market. An Off the Shelf Solution would result in a comparatively much swifter implementation.
  • Sophisticated and market leading. The right Off the Shelf solution should be well tested and accepted in the market.
  • Tested and built to recognised best practices standards.
  •  Visible R&D roadmap. With an Off the Shelf solution, you’re benefiting from a supplier that has an ongoing investment in innovative features/functionality, as driven by the market and its users.
  • Configurable framework-type solutions. Not all Off the Shelf solutions are created equal. There are many that act as robust frameworks upon which you can configure (not customise!) extensively.
  • Established user groups. You can have access to forums, guides and support from well-established Claims System players.
  • User support and maintenance: Higher level technical support can usually be had with an enforceable service contract. In most cases support/maintenance continues even when newer versions of the solution are available.
  • Training: Staff may already be familiar with Off the Shelf software from other positions.
  • Feature/Functionally rich. The exact number of features depends on the product, of course, but there’s often a variety of features included Off the Shelf software. Companies can use extra features to experiment with changes to their digital strategy or business model without buying another piece of software.

Digital Innovation: Cons

  • Many Off the Shelf Claims systems (but not all!!) will not allow you to modify functionality in a meaningful way. It may be difficult to add or remove functionality
  • A bought system may not be compatible with other programs. If you build your own software, you can integrate with a wider set of APIs from different software and data partners.

Our expert recommendation – Choose ‘Buy’

Going down the ‘build’ in-house route is fraught with issues – costly challenges that can lead to too great a risk. Digital innovation is available within the products of establish claims software providers. We strongly recommend a ‘buy’ solution with the caveat that you select a proven vendor with a very configurable product (and an implementation partner that has deep expertise within that product!)

Read our white paper: Digital transformation myths in insurance