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Should an insurance carrier buy, build, or outsource the development of its systems? This is a common debate that insurance IT professionals routinely face. When deciding whether to build, buy, or outsource any core system, carriers must consider the justifications, as well as the risks and concerns of each, and the overall trends in the insurance industry.

Even though neither buying nor building can be all things to all carriers, the current trend has shifted significantly in recent years. The packaged solutions market for insurance has expanded greatly in the last decade. This, in turn, has been amplified by the shift in the past three to four years towards modern solutions being offered en masse. Unfortunately, the large number of policy administration systems that have been modernized has not been matched on the claims side. Although many claims systems offered as part of a suite are being modernized, in many cases those systems are not on par with the robust functionality of packaged, stand-alone claims systems. As a result, today only a handful of modern, stand-alone claims systems are offered.

The Homegrown Solution

It isn’t rare for a carrier to use a homegrown system. In fact, a large percentage of carriers have at least one legacy system–and in most cases, a great deal more than one–where some functionality is still employed. It is rare, however, for carriers (and especially P&C carriers) to continue to build their own systems in lieu of what is available in the market. Yet, while building systems is declining in popularity, some carriers continue to do so for a variety of reasons.

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