Opportunity costs in the build vs. buy debate

February 3, 2022

Opportunity costs in the build vs. buy debate

Carriers planning for new technology have always faced one fundamental question: should they build a solution from scratch or buy a proven solution from a vendor?

This decision applies to many types of systems: policy, billing, and claim systems; underwriting solutions; portals; payments, you name it. In the past, it was a more straightforward question as there were not that many purpose-built solutions available for insurance.

Today, it is considerably different; proven solutions are available for almost all parts of the insurance business. So, what should you consider when deciding between build or buy?

Is it worth your time?

Speed to market

With new digital insurers coming into the marketplace like Lemonade (and possibly Google), they have built-in technology to collect data in ways that legacy carriers cannot compete with. These new digital insurers utilize social media and policy data to understand their customers better, improve underwriting, and price products more accurately.

For a legacy carrier to catch up with new digital insurers, they need a way of collecting the same data, and they need it fast. A key point for these carriers to understand as they weigh their options is their opportunity cost. If you have unlimited resources and unlimited developers, your primary consideration would be time. And that’s no minor consideration. It takes time to build, test, implement, learn, and maintain. We’re now talking months/years, not days/weeks.

Most carriers, however, do not have that luxury. Re-purposing essential IT resources from priority tasks to build out new innovations is often impractical, even if the company knows it is imperative to move forward. When bandwidth is tight, changing one crucial initiative to another is an easy way to stand still.


The level of integration between existing systems and your new solution should be another primary consideration when choosing between buy vs. build. In the past, looking at integrating with home build systems would favor a build approach so you could build custom integrations.

This is no longer the case; with most modern solutions using extensive APIs, data flow between systems is much more standardized.

Unstructured data requirements

Digital Transformation of the insurance business is not just about transactions based on structured data. The unstructured digital data in documents, e-mails, pictures, and others are just as important in the workflow.

This unstructured data must be integrated with the transactions so that the business users and customers can naturally conduct their business. Many solutions do not always manage the unstructured data and workflows well, so this is another primary consideration based on your workflow needs.

Future technology costs

Carriers need to consider the life expectancy of the solution. With a buy approach, you receive upgrades from an entire group of users. The buy solution gives you the benefit of upgrades and enhancements from a group of users outside your organization. In comparison, using the build approach requires you to modify the solution based on your specific needs.

There is also the fundamental infrastructure requirement in the case of a buy, and the solution company is responsible for the technology platform upgrades. With a build, the carrier owns the responsibility of upgrades in the technology platform.

Keep in mind; innovative software developers are constantly evolving. If you can’t keep up with needed upgrades, necessary integrations might not work, making information difficult or impossible to access.

To make the right decision, you must evaluate both hard and soft costs. Development time, cost, and resource availability are critical factors in determining a build or buy approach.

Exactuals’ PaymentHub is an outbound payment solution provider that easily integrates with

legacy platforms and offers unstructured data to flow as part of their solution.

PaymentHub helps your business meet your client and partner’s expectations of a modern payments experience. Our white-label SaaS platform provides a secure digital portal where you can quickly and easily view the status and make-up of your payments along with supporting digital documentation.

Examples include:

  • Claims payments.
  • Vendor payments.
  • Carrier payments to Managing General Agents (MGA’s) and downlines.
  • Producer payments.
  • Provider payments, and many others.

To schedule a demo or learn more about how PaymentHub can give your admin and payment platforms a modern, digital, best-in-class transformation in weeks vs. years, contact me at sandy.doughtery@exactuals.com.

Exactuals is SOC 2 Type II and HIPAA compliant, and is a wholly owned subsidiary of Royal Bank of Canada/City National Bank

Exactuals is an RBC company and subsidiary of City National Bank Member FDIC. City National Bank is a subsidiary of Royal Bank of Canada.

This article is for general information and education only. It is provided as a courtesy to the clients and friends of Exactuals. Exactuals does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of Exactuals.


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