Insurtech is both a disruptive force and the source of opportunities in the insurance sector. Traditional insurance companies invest in cutting-edge technologies and partner with insurtech development vendors to catch the digitization wave. Whereas startups find the week spots on the market and come up with the solutions that meet the demands of modern customers.
McKinsey reports that 61% of the insurtechs focus on complementing the existing insurance value chain.
Clients of the insurance companies demand more advanced user-friendly solutions powered by IoT, data science, blockchain, and other innovations. Developing such a software product in-house is challenging, as there is always a lack of good engineers. Therefore, many companies decide to outsource financial and insurance software development. Although there is a wide choice of IT vendors of different size and with various expertise, finding a reliable partner is never easy.
So let’s start with answering three essential questions before choosing an IT provider for insurtech development:
- Where to look for Insurtech developers?
- What are the criteria for choosing an Insurtech development vendor?
- What skill set should developers have to build a quality Insurtech solution?
How to find the best insurtech development vendor: Eastern Europe vs India
Apparently, India is one of the most popular IT outsourcing destinations with thousands of developers and a lot of software development companies. Besides, Indian developers offer low-cost software development services, which can be tempting for many businesses. On the other hand, cultural differences and sometimes poor quality of engineering services steer clients away from this offshoring destination.
India ranks third among global start-up ecosystems with around 4.200 startups in various tech domains. Also, there are quite a few successful Insurtech startups in India, such as Coverfox, PolicyBazaar, Acko, and others, which demonstrates the development of insurtech expertise in the country.
Despite the vast availability of resources, India shows slow adoption of digital technologies. Whereas, the countries of Eastern Europe occupy high positions in the Bloomberg Innovation Index.
Eastern Europe has become India’s primary competitor on the IT outsourcing market. Like India, it has plenty of resources and expertise in many business domains. In addition, it offers a high quality of engineering services, specialists with excellent tech education, great business culture, geographic proximity to Western European countries, and more.
HackerRank demonstrates that developers from many EE countries leave Indian specialists far behind. Poland (#3), Hungary (#5), the Czech Republic (#9), Ukraine (#11), Bulgaria (#12), and Romania (#20) have some of the best-qualified engineers.
Read our report on the software development destinations in Eastern Europe.
For instance, Ukraine has over 160,000 engineers working in the IT industry. The country was named an Outsourcing Destination of the Year 2017 by GSA UK as it offers an optimal price to quality ratio and a good tech education system. Also, the Ukrainian developers are ranked #5 in the global list by TopCoder.
A lot of fintech and insurtech companies outsource software development to Ukraine including Currencycloud, RateSetter, Backed Inc., Yapital, Kyriba, etc. So Ukrainian engineers have accumulated solid expertise in these domains. According to HackerRank, they are experienced in security, math, and distributed systems, which are crucial for quality Insurtech development.
Criteria for Choosing a Reliable Insurtech Development Company
1. Portfolio of Insurtech and Fintech projects.
The main criterion for choosing a vendor for an industry-specific project is the vendor’s expertise in the very industry. In case of Insurtech, it’s even more critical to have a deep understanding of business processes to build the technology of high quality and in a timely manner. To gain such domain knowledge, developers should have hands-on experience in Insurtech or Fintech software development.
The engineers who have worked on Fintech projects know how to build the software with security and regulations in mind. They are more likely to think about the scalability of the solution from the very start. Also, the specialists experienced in the field will be able to provide useful insights and helpful advice. So they can help you minimize the risks in insurtech development.
2. Security and compliance
Security is critical for any project in finance and insurance. So your potential partner must have the highest information and data security standards, as well as the certifications to prove it.
According to IBM, there has been a 29% increase in the total cost of data breaches since 2013.
For example, an outsourcing vendor should be ISO certified. This way you can be sure that the company meets all legal, statutory, regulatory, and contractual requirements.
Also, your insurtech development partner needs to have a security plan for business continuity and disaster recovery. The company’s security management system must be regularly tested and updated in accordance with new norms and potential system vulnerabilities.
Another important standard software developers need to maintain when they cooperate with insurtech companies is the quality of technical documentation. An outsourcing provider has to make sure that the team doesn’t neglect this requirement.
3. Expertise in data science and data analytics.
According to PwC report, insurance companies are investing heavily in data analytics. Indeed, data science opens the world of opportunities for the insurance companies and enables data-driven decision making. Data analytics considerably simplifies and improves the process of insurance risks arrangement, claim verification, and customer experience.
Therefore, insurtech developers should have strong mathematical skills, the knowledge of statistics, as well as experience in data science technologies and tools. The data scientist’s task in Insurtech is to make the most of the valuable data assets an insurance company has. And if your company is planning to adopt omnichannel, IoT, AI and machine learning, there is going to be even more data to organize and analyze.
4. Experience in Microservices development
A microservices architecture is gaining ground in Fintech and Insurtech development. Firstly, its decentralized structure ensures solution scalability, which is very important if you have loads of transactions and data to process. Also, it provides agility in delivering big projects as several engineering teams may work of different parts of the architecture.
For Insurtech projects, this type of software design brings the advantages of faster production and reduced system failure risk. Therefore, the developers must be good at creating and maintaining distributed structures and dealing with common issues within them, such as infrastructure complexity, database independence, separate deployment. Also, if you are planning to modernize your legacy software product, the engineers should have expertise in refactoring monoliths.
5. Building long-term partnerships.
There’s always a risk that the knowledge keepers of the project would leave the project taking valuable expertise in custom technologies, infrastructure, and product specifics. To reduce such risks, one should ensure the software development vendor is interested in building long-term partnerships and has high employee retention rate.
So, first of all, consider mature companies with over 5 years in the IT outsourcing industry and a good employer image. Check out the number of successfully delivered projects and strategic relationships the vendor has built with other clients.
Insurtech and insurance companies that decide to outsource software development often have similar reasons for this. For some of them, cost reduction is the primary motive, others are driven by the lack of resources and absence of the necessary tech expertise. They all, however, need to transform their businesses, adopt innovations, become more relevant for the modern clients, increase their efficiency, and introduce new offerings. Achieving these goals is much easier with a reliable insurtech development vendor, and we hope our article has helped you in your search.