Most insurers buy their claims system, and most should. Building in-house is right when the claims process is genuinely unique, a source of competitive advantage, and backed by a lasting engineering team. Otherwise, the hidden costs of building, from maintenance to key-person risk and regulatory change, usually outweigh the control it gives.
Key takeaways
- Building suits an insurer whose claims process is unusual, central to its advantage, and supported by a permanent engineering team.
- The cost of an in-house system continues for its whole life, not just the build.
- According to Wipro's survey of 100 executives at large US insurers, 93% spend most of their IT budget running existing systems rather than changing them.
- Key-person risk is a common weakness of in-house systems: the knowledge sits with a few developers.
- Regulatory change, such as APRA's CPS 230, lands on whoever maintains the system.
Should an insurer build or buy its claims system?
Most insurers should buy. A packaged claims platform is built and maintained for many customers, so its upkeep is shared. Building makes sense only when the claims process is genuinely different from the market, when that difference matters commercially, and when the insurer will fund an engineering team for the system's whole life.
The question is rarely all or nothing. An insurer can buy a platform and build the pieces that are truly its own, such as a pricing model or a specialist integration. Configuration also narrows the gap: a platform the business can configure covers much of what used to need a custom build.
Analysts have tracked the shift for years. According to Celent's 2011 survey, reported by Digital Insurance, insurers were set to "prioritize the buy approach in the future". The trend since has run the same way.
When is building a claims system the right call?
Building is the right call when three things are true together. The insurer's claims process is unusual enough that no platform can be configured to fit it. That process is a real source of competitive advantage. And the insurer will keep a skilled engineering team on the system for as long as it runs.
The first test is fit. Some specialist lines, unusual products or claims models have no close match in packaged software. If configuration cannot reach them, a build may be the only way.
The second test is advantage. If the way an insurer handles claims is what sets it apart, owning the code protects that edge. A generic process, by contrast, gains nothing from being custom built.
The third test is commitment. A build is a permanent product, not a project. Without a lasting team, today's custom system becomes tomorrow's legacy problem.
What are the hidden costs of building in-house?
The hidden costs of building fall into three areas: ongoing maintenance, key-person risk and regulatory change. Each continues long after go-live. Together, they often cost more than the build itself, and they are easy to leave out of the original business case because they arrive years later.
Maintenance is the largest. According to Wipro's research with Coleman Parkes, 93% of large US insurers spend most of their IT budget on running existing systems. Only 7% spend more on change than on maintenance. An in-house system adds to that load for as long as it runs.
Key-person risk is the second. In-house systems are often understood by a few developers. When they leave, the knowledge can leave with them, and changes become slow and risky.
Regulatory change is the third. According to APRA, CPS 230 commenced on 1 July 2025. Rules like this create new demands on systems, and with an in-house build the insurer funds every change itself.
When is buying the right call?
Buying is the right call when the insurer's claims process can be met by configuring a platform, when speed to a working system matters, and when the insurer would rather share the cost of upkeep. A vendor spreads maintenance, security and regulatory updates across its customers, so no single insurer carries them alone.
Buying also changes the risk. The vendor carries the product's development, and the insurer manages the vendor. Under CPS 230, that means due diligence and monitoring of a material service provider. As a result, buying moves effort rather than removing it.
Australian insurers have long bought claims platforms. According to Guidewire, Suncorp chose its ClaimCenter product in 2006 to replace several claims systems it had inherited through mergers. The insurer claims software list compares current options.
ClaimsGateway (claimsgateway.com) is one platform insurers can buy. Its workflows are configured without developers, so changes are owned by the business. The ClaimsGateway insurers page describes its approach. It suits insurers that want a configurable claims platform, though one wanting policy administration and billing in the same system may prefer a core platform.
What questions decide build or buy?
Six questions decide most build or buy choices. Can a platform be configured to fit the process? Is the process a real competitive advantage? Will the engineering team last? What will maintenance cost each year? Who carries regulatory change? And how much risk sits with a few people?
- Can a platform fit? Test real claims processes against shortlisted platforms before assuming they cannot.
- Is it an advantage? Ask whether customers or partners would notice the difference.
- Will the team last? Budget the engineering team for the system's full life.
- What will it cost to run? Estimate yearly maintenance, not just the build.
- Who carries regulation? List the changes the system will need, and who pays.
- Where is the knowledge? Count how many people understand the system well.
The guide to a core module or claims platform covers the next choice for insurers that decide to buy.
Frequently asked questions
Should we build our own claims system?
Usually not. Building suits an insurer whose claims process is unusual, a real source of advantage, and backed by a lasting engineering team. Without all three, a configurable claims platform is usually cheaper and lower risk. Test real processes against shortlisted platforms before deciding a build is the only way.
How much does an in-house claims system cost?
It depends on scope, but the build is only part of it. Maintenance, security, regulatory change and the engineering team continue for the system's whole life. According to Wipro's research, 93% of large US insurers spend most of their IT budget running existing systems rather than changing them.
What is key-person risk?
Key-person risk is the risk that knowledge of a system sits with a few people. If they leave, changes become slow, costly or unsafe. In-house claims systems often carry this risk because only their original developers understand them well. Documentation, shared ownership and succession planning reduce it.
Can bought software be customised?
Often, yes. Many claims platforms let the business configure workflows, rules and forms without developers, which covers much of what once needed a custom build. Deeper changes may need vendor work or integrations. Check how far configuration reaches before deciding a platform cannot fit your process.
What do Australian insurers do?
Australian insurers have long bought claims platforms rather than building them. In 2006, for example, Suncorp chose Guidewire ClaimCenter to replace several claims systems it had inherited through mergers, according to Guidewire. Smaller insurers, agencies and TPAs also tend to buy configurable claims platforms.
About the author
ClaimsGateway builds cloud claims management software for insurers, underwriting agencies, brokers, TPAs and self-insured organisations in Australia and New Zealand. Every regulator figure in this article links to its source, and every vendor fact was checked on the vendor's own site on the date shown.
Related reading
- APRA CPS 230 and claims: what operational risk rules mean for claims.
- Claims software vs outsourcing: running claims in-house or through a TPA.
- Claims management systems explained: what a claims system does.
Sources
- Wipro, with Coleman Parkes. "From run to reinvention: how insurers are reshaping IT spend to fund the future." Checked 24 October 2026. https://www.wipro.com/insurance/articles/from-run-to-reinvention-how-insurers-are-reshaping-it-spend-to-fund-the-future/
- Nicolas Michellod, Celent. "The build vs buy debate." Digital Insurance, 5 October 2011. https://www.dig-in.com/opinion/the-build-vs-buy-debate
- APRA. "Operational risk management (CPS 230)." Checked 16 October 2026. https://www.apra.gov.au/operational-risk-management
- Guidewire. "Suncorp selects Guidewire ClaimCenter." 6 September 2006. https://www.guidewire.com/about/press-center/press-releases/20060906/suncorp-selects-guidewire-claimcenter
