To build or to buy: this decision has never been more important

With the onset of AI and Large language models (LLM), the whole insurance sector is in for a period of unprecedented change. Insurance companies need to act fast. Staying ahead in this new reality means embracing AI and leveraging its potential to drive innovation and efficiency. The business-critical decision between crafting a claims solution in-house or procuring an external one is more important than ever in this revolution. Below, we dive into the benefits and drawbacks of each route.

Buying a SaaS solution: The ready-made path

The ready-made route in the cloud offers quicker deployment at low risk.

With AI permeating all areas of insurance, keeping up with the pace of development across all business areas has become increasingly difficult. Insurtech solutions, designed for one but utilized by many, bring a wealth of experience and pre-tested functionalities that can speed up adoption overall. With AI permeating all areas of insurance, keeping up with the pace of development across all business areas has become increasingly difficult.

Pros:

• Quick deployment: Transition to an AI driven process is swift with pre-built functionalities.
• Proven solutions: Benefit from a solution tested and refined across many other insurers.
• Focus on core competencies: Maintain focus on managing claims and serving customers while leveraging external technical expertise. You also gain access to external support for troubleshooting and onboarding new colleagues.
• Always up to date: As delivering competitive solutions is the insurtech company's core business, rest assured it will be maintained and updated with the latest AI technology, as the supplier is laser-focused on that particular area.
• Foreseeable costs: No hidden development costs arise out of the blue.

Cons:

• Less customization: It may only solve specific challenges, where every unique step in your process may not be covered.
• Dependency on vendors: Relying on external vendors for updates, maintenance, and troubleshooting.
• Cost over time: Subscription fees or licensing costs could accumulate over time.

The truth is many insurance companies are entangled with legacy systems that are hard to untangle. Purchasing an insurtech solution can serve as an extension to these core systems, delivering modern, easy-to-integrate AI features catering to specific needs.

Building your own solution: The tailored path

Embarking on the journey of crafting an in-house IT solution gives you a tailored system to meet current business-specific needs and directly integrates with your core system. However, this path carries its own set of challenges.

Pros:

• Tailored solutions: Custom fit to your operational nuances, claims process, and customer needs.
• In-house control: Full reign over development, maintenance, and upgrades.
• Direct integration: Building as part of your core system enables direct integrations.

Cons:

• High initial costs: Significant financial, time, and resource investments are required.
• Technical expertise gap: Many insurance companies lack cutting-edge technical expertise and an innovative culture for these experts to thrive despite having large IT departments.
• Long deployment time: The stretch from conception to deployment can be lengthy and filled with risks. With new AI technology developing faster than ever seen before, there is substantial risk that a solution is already obsolete by deployment.
• In-house responsibility: Being in control over development, maintenance, and upgrades can be a tough commitment as technical advancements never end, making it challenging to set a strict finish line for an IT project.

Many insurance companies operate on old core systems, which, although reliable, are tough to maintain and develop further. Building new solutions on these aging foundations often leads to a complex, cumbersome IT landscape.

Final thoughts

While many insurance companies have already digitalized their customer interfaces for sales and FNOL, a substantial journey remains in optimizing "back-end" processes like personal injury claims management, which still heavily rely on manual tasks. This time-consuming process makes for an excellent candidate for an AI reboot.

Now more than ever, the crossroads of building or buying transcends a technical decision to a strategic one. The urgency to advance on the AI journey is real, and the route chosen now will resonate through an insurance company's operations for years to come. The blend of ready-made SaaS solutions with the potential for long-term collaborative partnerships presents a compelling case for getting the best of both worlds. Often, in these partnerships, the insurer's domain knowledge and the insurtech companies' AI expertise bloom, leading to fantastic innovations.

Building an AI based claims management system internally without external input can be problematic, especially if the system is built on existing and potentially inefficient processes. It's vital to create a well-functioning system adjustable to future developments. The system should work efficiently both now and in 20 years. Obtaining a fresh outside perspective on the problems and potential solutions can be invaluable in avoiding a short-sighted problem-fixing approach.

Please contact us for more insights or to explore how we can support your AI claims initiatives through tailored solutions and a strategic partnership.