The age old question ‘Buy vs Build’

The advent of Service-Oriented Architecture (SOA) is evolving the age-old “buy vs. build” debate due to the ease of integrating outside solutions. Other factors evolving the debate include the ever-present pressures of time, cost and globalised workforces, which are redefining terms like ‘third-party’, ‘integration’ and ‘outsource’ from dirty words, to potential saving graces. Resultantly, businesses of every size are building systems with an integrative approach rather than dogmatically adhering to a dying, “build-from-scratch” mentality.

The COVID-19 pandemic has accelerated the inevitability of changing ways of thinking about work, work practices, and business interactions. Historically, building and owning business necessities were essential, now is it a threat to competitive advantage? This makes outsourced solutions, be they ecommerce, fraud detection, automation with machine learning, or third-party providers, crucial.

Research from PWC tells us that despite CEO’s concern about the availability of digital skills, they aren’t actively seeking the start-ups and entrepreneurs which would streamline their businesses, causing slow down and at worst paralysing transformation. Essential expertise for efficacy and transformation now lie outside company walls, with ‘guru’s’ who build hardware, integrate software, manipulate and mobilise big data. According to McKinsey, 72% of organisations across industries say outsourced Business Process Automation (BPA) is dramatically improving their business. It is the insurance industries turn to pay attention and transform from caterpillar to butterfly, like banking before them.

There are five main reasons to buy instead of building:

1. Trust

The insurance industry suffers from a lack of consumer trust, like banking before it. Technology companies rarely suffer such a fate. Pew Research reported 50% of people believe technology companies have a positive impact on the country. Another survey, the Edelman Trust Barometer, found that three-quarters of people trusted the technology sector.

More than a decade ago, banking overcame the issues insurance now faces by partnering with fintech’s rather than building in-house and competing with smaller, more agile start-ups. Fintech’s went from intruders to valuable partners as they facilitated goal achievement and increased customer engagement. These connections facilitated a transference of trust from the fintech companies to the banks. Insurance can utilise the same benefits.

2. There's no need to reinvent the wheel

Whatever you need is already out there. Using your team of engineers to build functions that can be integrated is a poor use of time and money. For example, building a payment system for your SaaS rather than integrating with Stripe Billing, especially when it’s been vetted by thousands of companies.

Outsourcing frees your engineering team to develop improvements to your core product. Furthermore, integrations allow different product functions to work independently, meaning that if a bug does turn up it is less likely to disrupt the entire product system.

Integrations are the perfect example of “work smarter, not harder.”
Services like Pact are modulised, meaning you can pick and choose the blocks you want to build your tower, inserting missing pieces like Lego. For example, fraud detection and automated paperwork discovery when a claim is submitted or meeting the needs of an Electronic FNOL process removing valuable minutes from the call centre: It’s all ready to go, with quick and easy integrations.

3. Mistakes are taken care of

Future software mistakes will be taken care of by a capable development and product team, meaning you won’t have to worry about the time and expertise necessary for finding the solution. Continual development and updates are part and parcel of the service and potential product errors won’t ‘bug’ you, as these integrations run on their own without interfering with the meat of your own code.

4. Integrations amplify your value

A challenge for insurance is a lack of customer interaction. There are only two points of contact; sale/renewal and claim. Accenture reports that 59% of all claimants have a bad experience which shows why the claims process is widely perceived as difficult, time consuming, confusing and very costly. So although slae/renewal and claim both create an opportunity to build or improve a client relationship, when faced with the complexity and implications of a claim, consumers often overlook the core benefits of a product.

The increase of Application Programming Interfaces (APIs) are allowing business to personalise experiences; selecting applicable integrations that best amplify and grow their core platforms and whole business, swiftly and smartly. Integrations are delivering specific client engaging and retaining products, easing and protecting the most cumbersome and vulnerable parts of the process. End result… you and your customer and very happy.

5. You maximise your opportunities

Customers have a digital expectation now. We can manage our money, transport, even our health via our mobile phone and the web. So why not an insurance claim? Insurance Edge reported 25% of customers want to be able to use their mobile phone to report a claim with 40% wanting to use the web. That’s 65% of insurers customer base ready to go digital.
Integrations create access to a vast array of functionality across a myriad of technology stacks (code, storage, delivery platforms), which, offer expansion into new aspects and areas. For example, when integrating with Pact you get access to fraud detection, process automation for paperwork discovery for coverage, limits and schedules, supply chain automation including automatic quote and approval submission , allocation of the closest workers to jobs and much more.

Do you really have another 24 months to deliver a digital solution to your customers, when companies like Pact can deliver this in your branding, inside 4 weeks, helping to drive better customer experience, satisfaction and retention boosting your Net Promoter Scores.


So is it better to buy or build? The answer is subjective, however, it becomes clear when looking inside your organisation. Are you digital ready? Are you still using manual processes despite investing in a digital ready plan? The answers to these questions require real honesty, and shining real sunlight on to the situation. If the answers are anything other than an unequivocal no, it may be time to start talking to some Insurtechs about how to take a leap forward. By adopting a SaaS approach, internal technology resource teams can focus on delivering real innovation to your organisations now.

We at Pact deliver the full end to end services that resolves the pain points found by both the claims handler and the customer enabling a far superior journey. Here in this video we show exactly how Pact’s award winning Claims as a Service platform can do that for you. This example is a property escape of water claim, however the platform can be used for any type of claim, whether that be P&C or commercial.