Competing on customer experience is the new norm for all businesses, in all industries. For the insurance industry, which has already struggled to find its footing in a digitally enabled world, the pressure to improve customer experience has reached a boiling point, and the industry must not only act fast, but smart. Along with visionary planning and forward thinking interface and service design, the capabilities and quality of an insurance carrier’s software is one of the primary drivers of their ability to deliver a good customer experience.

In an industry where only 2% of of large IT projects are considered successful, strategically planning software development that improves a carrier’s ability to manage their policies and delivers real value to customers and to the business involves many complex decisions, one of the most critical being “should I buy an off-the-shelf software solution or custom build it with my internal team?”

Over the past few decades, both third-party software vendors and internal IT teams have dramatically grown in their sophistication and ability to deliver great products for P&C insurers. This, alongside the mounting pressure insurers are facing to digitally transform and improve customer experience, makes the question of whether insurers should buy external software or build their own ever more acute.

When making this decision, insurers must be confident that the technology solution they go with delivers on a host of complex requirements. Fostering agent connectivity, enabling product configuration, creating a satisfactory rules engine for underwriting, allowing for updates in workflow design with management and measurement, and connecting to external data via web services–their solution must to all of this, and fall within both time and budgetary constraints.

Considering carefully the pros and cons of both options is crucial to the decision-making process, and could make the difference between becoming the insurance company of the future or that of the past. Below are a few questions you should ask yourself when deciding whether to buy commercial software or build it yourself.

1. What will be the cost and speed to market?

Initial cost savings and immediate availability are the most commonly cited reasons for electing an off-the-shelf software solution over custom built software. Rarely is a custom solution faster and cheaper to develop than leveraging off-the-shelf software. In fact, according to a 2014 report by the Standish Group, only 9% of software projects come in on time and on budget. Custom built solutions take additional time to tweak, test, and implement and could mean the difference of months, or even years when it comes to getting software to market–if it goes to market at all, considering 31% of projects will be cancelled before they ever get completed.

Third party vendors offer complete, configurable suites of products that can be customized to any insurer environment, making it less expensive and less intimidating to get started, potentially helping insurers get products to market faster–key for companies trying to respond more quickly to changes in the market and compete more on customer experience.

And while going with a third party vendor may be less expensive, there may still be good reasons to build your own solution. You may require a level of flexibility unavailable with off-the-shelf products, or find that maintaining complete control of your product roadmap is your top priority.

2. Will the software be consistent with your current processes, systems, and user experience?

The biggest strength of custom built software is that it is specific to you. You’re (hopefully!) not developing unnecessary features or missing the critical features needed for a successful system. When building the software internally, you have complete control for software that is tailor made to your specific requirements and the unique structure of your technology environment and internal processes. Custom built applications are rarely developed out of the blue. Typically, there are existing processes, designs, templates, or components in place that can be configured or expanded upon to fit your new requirements.

Integration compatibility is becoming less of a win for the custom-built approach over time though, as API driven development is increasingly a priority for tech leadership looking to design and launch new products faster, creating a more straightforward environment for off-the-shelf software to connect with.

Additionally, partnering with a customer experience agency like Cake & Arrow can help you ensure sure that any to product you are launching, regardless of software, is delivering a user experience that is consistent with your customer expectations across channels.

3. How scalable is the software?

Concerns over how a system grows over time has long been a criticism against the BUY option –as having no ownership over the way your software evolves can be very intimidating. The truth is, however, that commercial software providers live and breath system compatibility and develop products with a focus on their upgradeability path. Top flight IT organizations can replicate this, but ensuring that your system is compatible with future technology can be a shortcoming for many internal teams.

To assuage scalability concerns for off-the-shelf options, examine how a potential vendor has grown over the years, talk to their current and past customers, and pick someone with a good track record for developing new products and winning on smart, thoughtful acquisitions

4. How would you rank your capability as software developers?

This answer is unique from carrier to carrier; it really depends on you, as the best internal IT resources can now rival software vendors in terms of talent, structure, process and tools. If you’re still catching up, the software vendor’s inherent specialization and competency will be a significant benefit to any project.

If you do elect to buy, make sure the software provider has demonstrated expertise in technology, risk and insurance, and has the resources to successfully complete your project and support its evolution following its launch.

Two vendors in the current marketplace stand out to us: Guidewire and Duck Creek. Both vendors offer a suite of products to streamline claims, billing, and policy administration. They have strong product development and have built robust data and analytics capabilities through smart acquisition.

Guidewire gets our first place vote for their holistic approach to the customer experience for carriers and their end customers, as evidenced by the call outs to user journeys and design, even in corporate communications materials.

5. What is best for your business and your customer?

Considering that superior customer experience is the biggest growth engine for insurers, it is critical to consider the holistic impact on the customer experience when establishing a direction for software development. The quick and dirty solution that helps you get to market more quickly and rapidly respond to customer needs may be more impactful in the long run than the more processed approach that fulfills each and every requirement but demands endless customizations. There is no one size fits all answer–judge a vendor and your IT resources on solution availability, integration required, staff capability, and your appetite to invest in future technology.


To buy or to build? Ask ten different carriers and you’ll get 11 different answers–your unique requirements and capabilities determine which option is best. Before answering this question, ask yourself the five questions above. These answers should lead you to the decision that is best for you, your organization, and your customer. These are the kinds of considerations you'll have to balance as you determine the best approach for moving your projects along. And remember, there is no one size fits all answer–judge a vendor and your IT resources on solution availability, integration required, staff capability, and your appetite to invest in future technology.