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Making Informed Choices in Insurance Technology: Build vs. Buy

In the ever-evolving landscape of insurance technology, the choice between building your custom software solution and purchasing off-the-shelf products is a decision that can significantly impact your business. This article delves into the complexities of this decision, providing a comprehensive guide to help insurance businesses make informed choices.



The Allure of Building Your Own


One of the most compelling reasons for insurance companies to consider building their own software solution is the need for customization. Your business may have unique requirements or complex processes that off-the-shelf solutions cannot easily accommodate. In such cases, building a custom solution can be the optimal choice.

Customization allows you to tailor the software to your needs, ensuring it aligns perfectly with your business processes and objectives. However, this route requires a substantial investment of time and resources and carefully weighing the advantages against the associated challenges.

Competitive Advantage

Building your own software can provide a competitive edge if you can develop features or capabilities that outshine what's currently available. However, it's essential to exercise caution and conduct thorough market research before embarking on this journey. What seems like a gap in the market today may be filled by competitors tomorrow.

To make this approach viable, you must invest significant time and capital into developing and maintaining your custom software. Agile software providers can be valuable partners in this journey, as they may be willing to align their roadmap with your evolving needs.

Intellectual Property (IP) and Control

Building your own software offers unparalleled control over your technology stack's development, maintenance, and updates. It ensures that you own the intellectual property (IP), allowing you to adapt the software as your business evolves. The ability to retain control over your technology infrastructure can be a compelling reason to opt for a custom solution.

The Realities of Building Software

While building your own software may be enticing, it's essential to be aware of the challenges and realities that come with it.


One of the primary challenges of building custom software is the cost. Developing complex, tailored software solutions incurs significant expenses in terms of initial development and ongoing maintenance and support.

The upfront costs may be considerable, and the total cost of ownership over the software's lifetime can be substantially higher than purchasing off-the-shelf solutions. Establishing a clear budget and a strategy for managing these expenses is crucial.


Developing software from scratch is a time-consuming endeavor. Bringing your custom solution to the market may take longer than buying and configuring off-the-shelf software. Time is critical, especially in a rapidly evolving industry like insurance.

The extended development timeline can impact your ability to respond quickly to market changes. It's essential to balance the advantages of customization with the need for timely market entry.


Building successful software requires more than just a couple of backend developers. It necessitates a multidisciplinary team that includes backend developers, business analysts, UX and UI designers, front-end developers, testers, DevOps professionals, and project managers.

A crucial consideration is the availability of this team throughout the software's lifetime, not just for the initial release. The challenge lies in maintaining a consistent and skilled team, which can be complex and costly.

Continuity of Resource

It's not uncommon for a key developer or team member to become unavailable during the software development process, leaving the project in a precarious state. Ensuring the continuity of resources is a significant challenge when building custom software.

Losing a critical team member or having them become unavailable can significantly delay development, leading to potential setbacks and increased costs.

Security and Regulation

Insurance is a highly regulated industry, and information security is paramount. Developing a secure and compliant software solution requires substantial expertise and investment in security measures.

Failure to adhere to regulatory requirements can result in legal and financial repercussions. This underscores the need for rock-solid solutions in these areas, which may not always align with software development's innovative and creative aspects.

No Code/Low Code

While no-code and low-code development platforms have gained popularity, they are not a magic bullet for solving all software development challenges. You still need a diverse, extensive team to deliver robust, working software even with these platforms.

Reasons to Buy Off-the-Shelf


One of the most compelling reasons for purchasing existing software solutions is the ability to reduce time-to-market significantly. Off-the-shelf solutions are pre-built, tested, and ready for implementation, allowing you to launch quickly, test, learn, and prove a business case.

In a fast-paced industry like insurance, deploying your solution swiftly can provide a significant competitive advantage. Time is often of the essence, and the ability to enter the market promptly is a compelling argument for buying off-the-shelf.


Purchasing existing software is often more cost-effective than building from scratch. The upfront cost of acquiring a software license or subscription is generally lower than the cost of custom development.

When calculating the cost-effectiveness of off-the-shelf solutions, it's essential to consider the initial acquisition cost and the total cost of ownership, including ongoing licensing fees, maintenance, and support. A transparent and well-structured agreement with vendors can help manage these costs effectively.


Software vendors specializing in insurance technology have domain expertise and experience from numerous implementations. They understand the industry's unique challenges and requirements, enabling them to provide valuable insights and tailored solutions.

Working with reputable software vendors can expedite your progress and help you leverage their knowledge and best practices. They can be valuable partners in your journey toward digital transformation.


Agile software solutions are designed to scale with your business, allowing you to expand and adapt without significant disruption and re-platforming costs. Scalability is a crucial factor, especially in an industry where growth and change are constant.

However, it's important to note that not all software vendors offer the same level of scalability and flexibility. Conducting thorough research and evaluating vendors' capabilities in this regard is crucial.

Challenges of Buying Software

While buying off-the-shelf software offers several advantages, it's not without its challenges.

Customization Limits

Off-the-shelf software may not fully meet your unique needs, requiring some degree of compromise on certain features or processes. However, this doesn't necessarily mean sacrificing your business objectives.

In some cases, modifying your internal processes to align with the software can lead to greater efficiency and improved practices. It's essential to view this challenge as an opportunity for process optimization.

Licensing Costs

While purchasing off-the-shelf software is more cost-effective upfront, ongoing licensing fees can accumulate over time. To manage these costs effectively, seeking vendor transparency and understanding the long-term financial implications is crucial.

Some vendors offer flexible pricing models that consider your success and growth, providing more cost-effective options in the long run. Exploring these pricing models and negotiating terms with vendors can help you strike a favorable deal.

Vendor Reliance

When you buy off-the-shelf software, you depend on the vendor for updates, support, and maintenance. The stability and reliability of your chosen vendor are critical factors. If the vendor goes out of business or discontinues the software, your operations could have disastrous consequences.

It's imperative to establish clear agreements and contingency plans for such scenarios. Ensuring that your vendor can provide ongoing support and updates is vital to the long-term success of your software solution.

The Hybrid Option

In some cases, a hybrid approach can offer a balanced solution. This approach involves starting with an off-the-shelf solution, initially keeping it simple to create a Minimum Viable Product (MVP). The MVP allows you to test and prove your business case quickly.

Over time, you can build custom modules or integrations to address specific needs not met by the off-the-shelf software. Some agile vendors support long-term strategies like this, providing flexibility and adaptability.

Bottom Line: Think Twice and Seek Advice

In conclusion, deciding to build or buy insurance technology is critical and requires careful consideration. The complexities of the insurance industry, coupled with the evolving nature of technology, make this decision particularly challenging.

As you weigh the pros and cons, think twice and consider seeking advice. Engaging with experienced consultants or technology partners can provide valuable insights into your specific needs and goals. These experts can help you navigate the complexities of the insurance technology landscape and make an informed choice that aligns with your business strategy.

In an industry as dynamic as insurance, staying competitive and agile is essential. Whether you build, buy, or adopt a hybrid approach, the key to success lies in informed decision-making and strategic execution.

If you'd like to explore the best technology strategy for your insurance business or discuss your unique requirements, don't hesitate to contact our consultancy team. We are here to help you navigate the digital transformation journey effectively.