To Build or To Buy? 3 Keys for Insurance CIOs

Unfortunately, there is no algorithm or actuarial model that will give us the “right” answer and predict success, but insurers should consider The Three Pillars of prudent allocation of technology resources.


To build or not to build? That is the question for Insurance CIOs. While some may not agree that the buy-versus-build decision is as serious as the contemplation of life or death that Hamlet was debating in Shakespeare’s famous play, it is definitely in the running for a close second.  It is a topic that has been examined and debated within the four walls of every insurance company at some time – probably multiple times.  Unfortunately, there is no algorithm or actuarial model that will give us the “right” answer and predict the success of that decision in next 3-5 years.  Yes, we have to rely on “other” factors, not the normal number crunching and statistical risk analysis, to help us with our decisions – and for both the insurance business professional and the technologists, this can be a surreal experience.

Don’t get me wrong – the costs and time estimates for both options will produce an objective start, but will not give you the solid algorithm and probability of success that everyone is looking for.  Instead, you need to look at several other factors, The Three Pillars, which include:  skill sets and culture of personnel, existing architecture, and finally, how you envision your business in the future.

1)      Skill Sets and Culture:  Let’s face it – most insurers have a mix of solutions that are vendor-bought and internally-developed.  For those core Insurance solutions (especially underwriting workstation and policy administration), you will want to assess your personnel – both IT and business professionals.  If your IT department does not have experience and skill sets necessary to build applications, (or a solid insurance background), it may be hard to attract that talent in a short timeframe.  Having dedicated and committed business resources who are willing to challenge the status quo are a must, regardless of whether you build or buy.

2)      Existing Architecture:  Unless you are a brand new insurance company, you will also have to clear the hurdle of how the new systems will fit into an already existing architecture (whether legacy or modernized).  The ease of integration with your new solutions may not offer the ultimate end user experience you want to provide for your customers.

3)      Future of your Business:  Perhaps most importantly is what your business looks like today and how it will evolve.  Will you be able to achieve the agility, flexibility and control over the products you want to offer?  Can multiple products be offered together in a desirable distribution method?  Can your organization adhere to a vendor-based offering without extensive customization?

There are many great vendors and products in the market today, and technology continues to advance to offer more flexibility and speed-to-delivery for both vendor and in-house technical personnel to capitalize on.  None of this makes the decision any easier, but by examining The Three Pillars  within the context of your own organizations, you may end up with a more insightful, forward-thinking, and perhaps less painful, answer than Hamlet.

Jane Bracken // Jane Bracken, Divisional Senior VP, at GAIG leads the Business Unit Enablement team within IT Services.  She is responsible for the Development of Underwriting Desktop applications, Policy Administration systems, Agency Portal, and Mobile Apps.

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