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3 minute read
In today's digital-first insurance landscape, carriers face a critical decision: should they build custom software solutions in-house or purchase existing platforms? This choice impacts everything from market responsiveness to operational efficiency, yet many carriers often struggle to understand the financial and resource implications of each option.
The Complex Reality of Health Insurance Software
Health insurance carriers operate in an intricate ecosystem where many departments and partners need seamless access to interconnected systems. Carriers rely on many outside partners, including FMOs, IMOs, brokers, agencies, and agents to manage the distribution of products to policyholders. To operate effectively, everyone in the distribution management value chain needs access to timely, accurate data.
Furthermore, health insurance tends to have more levels of downline agents than other types of insurance, which means software designed for property and casualty (P&C) or liability insurance is not going to have the full features and functionality required by health insurance carriers.
Building In-House
Some carriers are drawn to building custom solutions, believing they can create software that perfectly matches their unique processes. The ability to maintain complete control over the development roadmap and incorporate carrier-specific business rules is compelling, particularly with the unique needs of health insurance carriers relative to software designed for the general insurance industry. In-house development also means direct access to the development team, which can provide some advantages for carrier-specific updates and modifications as business needs evolve.
However, the reality of building insurance software is almost always far more complex than anticipated. Carriers have spent years of scarce IT resources and millions of dollars to develop systems that were never implemented. Beyond technology development, change management with the system implementation effort is constant and consistently underestimated. Maintaining in-house expertise and off-shore teams across all necessary technologies can be increasingly difficult in today's competitive tech labor market.
The Case for Buying Solutions
Purchasing existing software solutions offer carriers speed to market and more predictable, scalable costs. Modern insurance platforms come with pre-built integrations, standardized APIs, and regular updates that keep pace with new products and industry regulations. While not all off-the-shelf insurance solutions may not work for health insurance carriers, there are health insurance-specific platforms, like e123, that have features like unlimited hierarchies for downline commission management.
Buying can have several significant benefits, including:
- Rapid Implemenation: Existing solutions that are configured to an organization’s requirements dramatically decrease the project timeline. Modern SaaS software with APIs streamlines integration relative to on-premise solutions and can help carriers eliminate reliance on disparate, legacy systems.
- Reduced IT resource strain: Domestic programmers are difficult and expensive to hire, train, and retain. Offshore talent is risky and requires constant ma Undertaking a massive systems build diverts scarce tech resources from day-to-day operations and other projects. If a programmer leaves in the middle of a multi-year build, it will cause delays in the project timeline until new resources can be found and brought up to speed. Buying allows IT resources to focus on integration and implementation rather than development.
- Ongoing updates and compliance: Regulations change in the health insurance market. Carriers with in-house systems will constantly be deploying IT resources to implement and test solutions to meet changing market and regulatory requirements. With a SaaS solution, the software provider automatically provides these updates and ensures compliance. New features and functionality are rolled out by software experts allowing carriers to focus on their core competencies – creating and distributing insurance plans.
- New financial models: While purchasing software traditionally required a very significant upfront investment, SaaS solutions enable carriers to spread the majority of the costs out with monthly or annual payments that cover all licenses, updates, and support.
Buying can enable carriers to take advantage of technology expertise and leverage best practices and innovations from across the industry.
Making the Right Choice
The decision between buying and building should align with a carrier's strategic objectives, available resources, and technical capabilities. Carriers should consider:
- Time to market requirements
- Available internal technical expertise
- Unique business requirements
- Total cost of ownership
- Integration needs with existing systems
- Change management and training requirements with users and partners
- Long-term maintenance and support capabilities
Carriers need to carefully evaluate each of these factors with a clear understanding of how the choice will impact both short-term operations and long-term growth strategies.
The Path Forward
Whether building or buying, carriers must prioritize scalability, data security, and regulatory compliance. The solution should support future growth while maintaining operational efficiency. Most importantly, it should enable carriers to focus on their core business: providing valuable health insurance products to members. To learn more about how e123 can help you configure a solution to meet your unique needs, contact us.
