Most insurers don’t wake up planning to rebuild their core systems. Yet many find themselves doing exactly that. Not because it’s strategic, but because legacy platforms can’t keep pace with product complexity, regulatory change, or the speed the market now demands.
In this environment, the vendor vs. buy decision isn’t a technical debate. It’s a bet on speed, risk, and the organization’s ability to sustain long-term change.
Why Build vs. Buy Has Become a Business-Critical Decision
Insurers face relentless pressure to launch new products faster, modernize distribution channels, and keep pace with changing regulations—all while tightly controlling cost. As a result, the build vs. buy decision has become one of the most consequential decisions an insurer can make. Whether a carrier builds a homegrown core system or buys a vendor solution directly shapes speed to market, total cost of ownership (TCO), operational risk, and the organization’s ability to innovate over time.
Industry research and market signals show many carriers are leaning toward cloud-native SaaS platforms to reduce long-term maintenance burdens and sustain continuous innovation. But the right answer depends on clear-eyed tradeoffs, not assumptions. (McKinsey & Company, How P&C insurers can successfully modernize core systems, May 2025.)
The build vs. buy decision rarely fails because of features. It fails when leaders underestimate the tradeoffs that affect speed, cost, risk, and the ability to evolve.
The considerations below help you evaluate those tradeoffs deliberately for your own organization—and distinguish sustainable modernization from future constraints.
How Quickly Do You Need to Go to Market?
Building a core system often takes years. Custom development requires discovery, design, coding, testing, and integration—and market needs can shift during that time. Buying a pre-built solution dramatically reduces launch time and enables faster product experimentation.
What Will It Really Cost to Build—and to Maintain?
Homegrown systems can appear cost-effective at first, but they often become expensive to sustain over time. Ongoing updates, security patches, and platform upgrades consume budget and scarce technical talent, creating technical debt that pulls investment away from innovation.
Just as importantly, custom-built solutions typically lack the maturity and parity of third-party platforms—especially those that enable non-developers to configure and maintain insurance product changes at significantly lower cost. The result is higher long-term expense, slower change, and greater reliance on specialized development resources.
Where Does True Differentiation Actually Belong?
If your business model depends on a truly unique capability, building retains full control and intellectual property. But remember: many differentiators are better delivered on top of a reliable core than buried in bespoke plumbing.
How Much Compliance and Regulatory Burden Can You Sustain?
Vendor solutions designed for insurance often include product versioning, regulated rates and rules handling, and support for filings—functions that would otherwise require heavy manual effort to maintain in-house.
How Easily Can Your Systems Integrate and Scale?
Modern insurance systems must connect to third-party data, distribution channels, and partner ecosystems. Pre-built platforms typically include standardized APIs and integrations that accelerate partner enablement and maintain data fidelity.
Taken together, these tradeoffs make one thing clear: building insurance core systems can be the right choice—but only in very specific circumstances, and with clear eyes about the commitments involved.
When to Seriously Consider Building in P&C Insurance
Building a core capability from scratch is rarely about saving money or moving faster, and insurers who approach it that way tend to be disappointed. In practice, building makes sense only when the business has a clear strategic rationale, the organizational maturity to sustain long-term engineering ownership, and the patience to absorb ongoing change.
The scenarios below outline when building can be a deliberate advantage rather than a liability.
- Your desired capability is a core source of competitive advantage and cannot be realistically delivered through configuration, extension, or integration on existing vendor platforms.
- You have stable, in-house, and sizable engineering capacity at scale and are prepared to commit the talent over a multi-year horizon for development, support, and continuous maintenance.
- You are prepared to fund continuous upgrades indefinitely, including regulatory change, security, performance, and evolving cloud standards—without slowing the rest of the business.
For insurers that can’t meet all these conditions, building often adds risk faster than advantages, and buying becomes the more pragmatic option.
When Buying and Configuring a Platform Is the Better Choice
For many insurers, the build criteria outlined above sets a bar that is intentionally high. When speed, predictability, and sustained execution matter more than owning every line of code, buying and configuring a modern platform becomes the more practical choice.
The scenarios below reflect where decision-makers consistently find greater momentum—and fewer long-term constraints.
Buying usually wins when:
- You need speed to market and predictable total cost of ownership and can’t afford multi-year build cycles or escalating maintenance overhead.
- You want proven, out-of-the-box capabilities for transactional processing, rating, and compliance workflows rather than designing and maintaining those foundations.
- You prefer a shared roadmap, where continual vendor investment spreads R&D, regulatory updates, and platform evolution across many carriers instead of concentrating that burden internally.
For many decision-makers, the advantage lies not just in buying, but in buying platforms flexible enough to evolve as needs change.
A Pragmatic Middle Ground: Buy the Core, Configure for Differentiation
For many insurers, it isn’t strictly a build or buy decision. It’s how to combine the strengths of both without inheriting their downsides. Configurable SaaS core systems offer a pragmatic middle ground: the stability, speed, and shared investment of a vendor platform, paired with the low-code flexibility to tailor products and behaviors where differentiation matters most.
Industry analysts have observed that best-in-class insurers are moving past binary build-or-buy debates and instead favor platforms that combine robust core capabilities with configurability to achieve speed and stability at scale.
We see this in practice. One global insurer reduced product launch cycles by 75% and accelerated claims decisions by embedding low-code configuration within a cloud-based core, allowing the organization to iterate and adapt without disruption—a real example of combining a modern core with configurability to achieve measurable business impact.
A Final Perspective for Decision-Makers
There’s no universal right answer—but there is a right discipline. The build vs. buy decision depends on business strategy, risk appetite, and whether the organization can sustain long-term engineering ownership. Leaders who make progress don’t debate hypotheticals: they quantify speed to market, total cost of ownership (including maintenance and security), and how much control truly drives differentiation. That clarity collapses complexity, aligns stakeholders, and makes the right path evident.
Continue the conversation: How to modernize core systems without introducing new risk.
