Why More Insurance Companies Are Building Their Own Software

Insurance companies are increasingly building their own software solutions, rather than buying off-the-shelf or outsourcing to development shops. And for good reason: The cost, time, complexity, and risk barriers to producing custom business software have fallen dramatically. The advent of no-code platforms means insurance companies are able to develop working applications in spite of the growing developer shortage, by drawing from their own internal resources. Besides being able to build exactly what you need — rather than buy-in functionality you won’t use — no-code platforms are proving to be very time- and cost-efficient in practice.

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Better software with more developers

There is a growing need amongst businesses across all industries to attract more software developers to assist with their digital transformation efforts. It’s not so much because they are simply eager to digitize but rather that they have to, or they risk behind the competition. But although the demand from firms for software has risen exponentially over the last decade, a shortage of skilled software development personnel has presented a bottleneck to many firms’ digital transformation plans.

This skills shortage has compelled businesses to search for people from outside of the traditional developer space and to seek alternative approaches to software development, including methods that require little or no coding skills from developers. 

One of those alternative methods is called ‘no-code’ application development. Various vendors offer no-code (and ‘low-code’) application development platforms, including Betty Blocks. Such platforms can help firms circumnavigate the developer skills shortage while shortening time-to-market and optimizing return on investment.

No-code approaches enable organizations to build software precisely tailored to their needs without developers having to know traditional programming languages. Instead of writing code, developers use a visual modeling approach.

They select, drag, and drop desired components into a workflow. Both simple and complex business applications can be built this way. For the end-user, the result is the same. However, the trajectory to build these applications is far easier to grasp, paving the way for business users to build applications to meet their own software needs without requiring formal programming knowledge. This new type of business developer is known as the citizen developer.

According to leading research and advisory firm Gartner, “by 2024, low-code application platforms will be responsible for 65% of all application development activity.” Moreover, Gartner estimates that, “by 2020, at least 70% of the large enterprises will have established successful citizen development policies.” 

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By considerably reducing the threshold of what it takes to become a software developer, and by enabling existing programmers to also significantly speed up application development without the necessity of hand-coding, no-code is picking up steam in the insurance industry. 

Organizations are choosing to have business teams develop software themselves rather than rely on third party providers and full-stack developers. They get to decide which features will be part of their application infrastructure, avoid paying for functionality they don’t want, and can take their software far beyond the limits of closed third party systems. Furthermore, the architecture of the no-code platform allows for high scalability and reusability in business-driven solutions across enterprise infrastructures.

Insurance companies using no-code

Over the last few years, no-code development platforms have been applied to solve a wide range of challenges within the insurance industry, as well as to create new opportunities. From turning analog spreadsheets into fully responsive dataflows to allowing for the optimization of documentation and quality assurance processes, the possibilities seem limitless. 

Claims processing is one area in which automation is being employed to great effect. Processing claims manually can be a lengthy process and one that is highly prone to human error, with delays and mistakes often leading to fines and damage to the company’s reputation. But by automating this process insurance companies can reduce the amount of manual work by 80%, whilst simultaneously improving the customer experience. 

But automating and optimizing paper- and Excel-based processes is merely the tip of the iceberg. Insurance companies are prime targets for cyber-crime and must deal with a lot of regulatory compliance. Assignments have to be overseen and approved by different departments through procedures that, if you work solely from spreadsheets, can be tedious and error-prone. A no-code platform excels in setting up a proper quality assurance and control center throughout the entire organization. For organizations that have to deal with complex paperwork on a daily basis, no-code applications not only save time (and paper) but can potentially prevent regulatory disasters from occurring.

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Tech-savvy insurance companies are also increasingly leveraging the Internet of Things (IoT) to the benefit of both their business and their customers. By tracking how customers actually use a range of products from cars to toothbrushes, insurers are able to offer reduced premiums for low-risk individuals and get better at accurately predicting risk. 

One example of this is San Francisco-based insurance startup Metromile, who’s IoT-connected trackers monitor driver behavior and enable the company to provide cost-effective per-mile policies. Customers can even file entire claims form their mobile phones, making for a great user experience. 

Other organizations take the no-code approach even further and establish entire innovation centers around the technology. Dutch insurance company Univé used the Betty Blocks no-code platform as the basis for creating a whole department able to quickly develop, test, and launch new services for its customers. One outcome was a completely new line of risk prevention services for customers that immediately proved its value in practice, by helping customers to reduce the likelihood of incidents occurring. Using no-code, Univé was able to reduce claims and shorten time-to-market from 1 year to just 2.5 months.

Democratizing application development

Perhaps the most important aspect of this new approach to software development is that tech-savvy insurance employees can be given closer control of the programs they work with. They can add functionality to support corporate change, or even build in completely new components to support new requirements they might have for the application. As a safeguard, these citizen developers prototype and test their solutions from ‘sandbox environments’. 

Applications must be fully sanctioned by central IT before being considered for production. 

Besides no-code enabling insurance companies to overcome the developer shortage and keep up with the growing demand for software, no-code also holds the power to democratize application development altogether. Although the majority of organizations still very much rely on third-party software providers to assist with their daily workflows, more and more businesses are reviewing such choices and considering replacing them with applications built in house by their own citizen developers. 

There are many reasons to get on board with the no-code revolution. Certainly, insurance companies cannot allow their digital transformation efforts to be held up by skills shortages. Perhaps handing certain types of business development over to the business itself makes a great deal more sense than either burdening the busy IT department with it or buying off-the-shelf software that never quite fulfills your requirements.

Download Gartner's 2019 Magic Quadrant for Enterprise Low-Code Application Platforms