The Core System 'Build vs. Buy' Decision for P&C Insurers

Understand the risks and rewards of DIY versus purchasing a proven core insurance platform.

August 10, 2023

In the Property and Casualty (P&C) insurance sector, a critical strategic decision that insurers face is whether to build a proprietary core system or to purchase one from a seasoned vendor.

This pivotal choice has far-reaching implications on the insurer's technological agility, cost efficiency, and market responsiveness. For those looking for a more in-depth exploration of this topic, BriteCore has a detailed solution brief titled "The Core System 'Build vs. Buy' Decision for P&C Insurers" that dives into the details of this decision-making process.

The allure of developing an in-house system is often shadowed by the reality of escalating costs that can arise from continuous development, maintenance, and necessary updates. These can quickly add up, potentially surpassing the investment required for an established, vendor-supplied system. Insurers must carefully consider this along with the resource intensity such a project demands. A dedicated IT team focused on system maintenance diverts attention from an insurer's core operations. 

Moreover, custom-built systems frequently face integration hurdles, leading to operational inefficiencies and fragmented data ecosystems, which can degrade the customer experience. The question of scalability also looms large, as in-house systems may not grow as seamlessly with the business, possibly constraining expansion and flexibility. The "Build vs. Buy" solution brief by BriteCore further explores these pitfalls and compares them against the scalability of purchased solutions.

On the flip side, off-the-shelf solutions from specialized vendors come with a track record of reliability and are ready for rapid deployment, offering a shorter pathway to return on investment and operational continuity. These products are inherently designed to handle growth, ensuring the insurer’s system infrastructure does not become an impediment to business development.

Modern cloud-native core insurance platforms like BriteCore not only ensure their solution is up-to-date with the latest industry technologies and platform features but also provide ongoing support and training. This continuous upgrade cycle, as highlighted in the BriteCore solution brief, relieves insurers of the burden of internal development and maintenance, allowing them to focus on their primary business objectives.

In conclusion, the decision between building a customized core system or buying a tested one carries significant long-term implications for P&C insurers. While the notion of a bespoke solution might seem attractive, the benefits of a vendor-provided system like the modern BriteCore Platform present a compelling case.

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