Is Building Insurance Software In-House Holding the Industry Back?
Frustration drives insurers, MGAs, and brokerages to attempt building insurance software in-house. They’re often only doing so because they feel the market doesn’t offer a platform that meets their needs – or it’s not at the right price point. But whether they’re building a full policy administration system or focusing on software specifically for underwriting, rating, claims, or direct-to-consumer sales, this investment inevitably holds your insurance business back.
The cost isn’t just the millions and years it can take to ship a minimum viable product; it’s the opportunity cost of every dollar and hour spent building software takes you aware from the core business of selling insurance and servicing clients. That’s why building insurance software in-house is holding the insurance industry back.
Reasons Insurance Organizations Choose to Build In-House
Insurers, MGAs, and brokerages rely on technology throughout the policy lifecycle. Common issues these businesses struggle with are:
- Administrative burden due to manual work and duplicate entry
- Multiple fragmented systems, disconnected with a lack of integration
- Lack of automation
- Missing functionalities
- Changes require coding and/or external vendors, making them slow and expensive
- Poor data quality and/or inaccessible data
- Unable to offer a broker portal or the portal offers a poor user experience
- Unable to offer direct-to-consumer sales or it offers a poor user experience
These businesses may be on legacy systems, using entirely manual workflows based on Excel and Word, or be disappointed with their supposedly modern platform. They may have a failed implementation or be struggling with evaluating software (a time-consuming process). Leaders may feel their company’s specific needs are not met by existing software on the market. Alternatively, they may believe it is more affordable to build something in-house that is tailored to their business specifically.
Types of Software Insurers, MGAs, and Brokers Consider Building
There are a few types of software that insurers, MGAs, and brokerages commonly consider building:
- Rating software
- Direct-to-consumer sales software
- Claims management software
There are also businesses that may be experimenting with AI and other technology to enhance their existing tech stacks and workflows.
What does building software in-house mean?
Building software in-house means the organization develops, owns, and maintains its own custom software using internal employees. In practice, this involves hiring (or reassigning) a team that’s responsible for everything: defining requirements, choosing the technology, designing the architecture, writing the code, testing, deploying, security, and the ongoing maintenance and upgrades.
An important thing to note that building software in-house isn’t completed once the project is done. It’s an ongoing program where you own everything, including the risk.
You may choose to blend building in-house with outsourcing: this is hiring an external company to build software for you or help support it.
Either way, you will essentially be operating a software company alongisde the core insurance business.
For a detailed look on what building software in-house entails, please check out our Build vs Buy case study.
The Real Cost of Building Insurance Software In-House
When an organization is building insurance software, they own every piece of it – the code, the infrastructure, the security posture, compliance requirements, and every decision made along the way. That ownership is often framed as control, but in practice, it’s a long-term operating commitment. Most insurance organizations underestimate this until they’re already in it.
These numbers tell part of the real cost of building insurance software in-house:
- $2 million to $3 million to launch a production-grade platform
- 18 to 36 months to ship a minimum viable product, with full builds taking up to 5 to 10 years
- 15 to 20 full time employees to build the system, with 8 to 12 full time employees needed to maintain it
Each of these figures assumes things go reasonably well. They don’t account for rework that follows when requirements shift mid-build or issues with hiring or lack of capacity from existing employees.
The harder cost to quantify – and the one that is most often underestimated – is opportunity cost. It doesn’t show up as a line item on the budget, but it’s incredibly important. Every employee assigned to the build is an employee who is not focusing on underwriting, supporting brokers, or improving customer experience. Every quarter spent on development and making software decisions is a quarter not spent on the insurance business. Every dollar invested in the platform is a dollar not spent elsewhere.
This is how an in-house software build can absolutely hold an insurance organization back.
Risks of Building Insurance Software In-House
In addition to the real costs of building insurance software in-house, there are a number of risks that can hold back individual companies and the industry as a whole:
- Project delays or failures: Custom software often runs over budget and behind schedule.
- Talent acquisition and retention: Hiring can be a challenge and keeping people can be hard, too. Turnover stalls progress and creates knowledge gaps.
- Scalability limitations: Architecture is not always equipped for growth.
- Security and compliance gaps: In-house systems may be vulnerable.
- Technical debt: Relying on shortcuts or making choices that need fixing in the future
- Long-term sustainability: Maintenance, updates and security require dedicated long-term resources
- Misalignment with the business: Requirements evolve and sometimes the technical team and the business team are not on the same page
- High costs and complexity: significant upfront and ongoing expenses
- Slow to market: Software development takes time, especially for a full platform
- Resource constraints: Diverting resources strains operations on the insurance side
- Lack of integration: Your team will need to build custom API integrations to connect your systems – if it’s possible
- Change management: Training can be a challenge and adoption can struggle with new systems
- Accountability and risk ownership: You own every bug, breach, and failure
We know the real cost and the risks of building insurance software in-house because we did it. 10 years ago, we were a brokerage that was incredibly frustrated by the broker management systems available. So we decided to build our own.
It took years and a lot of real money. We had a major failure. We pivoted and started from scratch before we got it right. We learned what most leadership teams don’t understand until it’s too late: insurance software is harder than it looks, and the maintenance burden never ends.
That experience is the reason our platform works – and the reason others don’t have to go through what we did. We built a platform that can handle the complexity and solve the challenges the industry faces. It incorporates automation, connectivity, and AI to reduce manual work, eliminate duplicate entry, and improve data quality. It doesn’t require any coding to make changes to products, programs, and workflows. It offers exceptional broker portal and direct-to-consumer experiences. With our insurance knowledge, technical expertise, and industry experience, we built a platform that doesn’t hold the industry back: it empowers it.
Why Buying Software Finally Works for Insurance Organizations (When It Didn’t Before)
There’s a reason insurance leaders have historically been skeptical of vendor platforms. Off-the-shelf insurance software has a long track record of falling short: rigid systems that can’t accommodate how a real insurance business actually operates, expensive customization cycles, slow vendor roadmaps, and “configurable” platforms that turn out to require a developer for every change. For many organizations, building in-house felt less like the better option and more like the only option.
That’s changed.
Modern insurance platforms are designed differently. Configurability is built into the foundation, not bolted on. Updates ship continuously rather than in multi-year release cycles. Pricing is subscription-based and predictable. And the best platforms are built by insurance professionals who’ve actually run the workflows they’re now designing software for.
That’s the gap Modular Solutions set out to close. Our vision is to enable the best possible insurance experience in the world — and that starts with a modern, scalable, configurable platform built on solid foundations. The platform is purpose-built to be flexible enough to support brokerages running programs, MGAs, and carriers, across every line of business and level of complexity.
The result is software that does what insurance leaders always wanted vendor software to do: support the way you actually work, adapt as the business evolves, and stay out of the way of the people running it.
Build Vs Buy: Holding the Industry Back
Build vs. buy isn’t really a build vs. buy decision. It’s a decision about where you want your best people spending their time — on insurance, or on shipping software.
For years, the answer wasn’t obvious. Vendor platforms couldn’t keep up with how insurance actually works, so building in-house felt like the responsible choice. The cost was high, but at least you’d own something that fit. That trade-off is what’s quietly held the industry back: thousands of talented insurance people pulled into multi-year software projects instead of doing the work only they can do.
The trade-off no longer holds. Purpose-built, configurable platforms now exist for insurance. The leaders pulling ahead are the ones who’ve stopped trying to become software companies and started focusing on becoming better insurance brokerages, MGAs, and carriers.
That’s the shift Modular Solutions was built to enable. If you’re weighing the decision — or already living with the cost of an in-house build — we’d be glad to talk.
Read the Full Build vs Buy Case Study