How to Build an ERP for Insurance?

Are you interested in developing an ERP for insurance?

The global ERP software market is expected to reach $117.68 billion by 2030. The BFSI sector (banking, financial services, and insurance sector) dominates the ERP market through features like financial accounting, financial management, cash flow management, investment management, etc.

Develop an ERP for Insurance Companies

Insurance provider companies use an ERP solution as a useful management tool to gain administrative and operational benefits like reduced operating costs, improved data visibility, and better future insurance policy planning.

You should take the following steps to build an ERP for the insurance industry.

Decide the Project Scope and ERP Product Functionalities

You would start the ERP development project with a project plan that includes the project scope and goals. You will assess the insurance business’s requirements for an ERP solution. What does an insurance company want to achieve via an enterprise resource planning system?

The end goals, such as improvement in reporting capabilities, fast transaction processing, enhanced customer service, etc., will help you decide the features of your ERP solution for insurance firms.

Some key features of insurance ERP software are the following: 

Finance and Accounting Management: It helps organize the overall budgeting process, gives control over the whole cash flow, improves accounting transaction management, and helps with financial reporting and planning. In North America, the finance ERP market is the largest, with a market value of $4.5 billion.

Revenue Recognition: The revenue recognition principle means that revenue must be recognized as it is earned. A revenue recognition module helps record contracts for all products and services, such as service contracts, and streamline earned revenue when cash is received.

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The revenue management market is expected to reach $37.86 billion by 2030 due to the provision of benefits like reduced collection costs, faster resolution of customer inquiries, etc.

Accounts Receivable and Credit Management: The global credit insurance market will be $14.2 billion by 2028. A credit management module helps organize data of debtors and creditors, including their contact details, past interactions with the company, accounts payable, etc. 

You would finalize the functionalities of your ERP system and include them in a systems requirements specification document that would guide your development team.

Form an ERP Development Team

If you plan to build a custom ERP for insurance providers that meet their specific business need, you need professionals to undertake the development process successfully. You would hire for the following roles:

• Project Manager: A project manager helps to adopt the right product development methodology, devises a development plan, assigns development tasks, manages the product team, gives cost and time estimates, etc.
• Business Analyst: A business analyst with experience in the insurance industry researches the insurance market, analyzes the end-user requirements, incorporates the market demands into the end product and works with the project manager in the product planning process.
• UI/UX Designers: A UI/UX designer helps to design an intuitive and appealing user interface following the user experience principles.
• Frontend and Backend Developers: A frontend developer codes the software frontend layout, and backend developers develop the core ERP functionalities, manage API integrations, build database models, deploy ERP software features, etc.
• Software Testers: A QA engineer or a tester tests the ERP software application and ensures it meets the functional and non-functional requirements without any bugs.

Provide Development Infrastructure for Insurance ERP 

After forming an ERP development team, you need to provide the required software development infrastructure and tools to your designers and developers.

Cloud infrastructure is popular today for software development due to its numerous benefits to businesses. In a research survey, 48% of businesses indicated that increased efficiency is the biggest cloud computing benefit, 42% claimed cloud resources to be more secure, and 37% of business users found them easier to maintain.

Cloud service providers host and manage computing and development resources like servers, database technologies, networking resources, etc., and your development team focuses on product design and development.

For example, IBM Cloud offers you the following services that can accelerate your ERP development process:

• Your developers can use IBM Cloud Code Engine and run ERP applications on a serverless hosting platform-as-a-service without any need to manage the underlying infrastructure.
• You can use IBM Cloud File Storage where you can increase storage capacity to meet workload requirements.
• IBM Cloud Pak offers an AI-based automation service that you can use to analyze workflows, assign tasks to bots, monitor performance, etc.

You can read our article on cloud development tools for more information.

ERP for Insurance Design and Development

You can start the ERP development process with minimum viable product (MVP) development. An MVP contains only the essential features of a software application and continuously improves through user feedback.

ERP Application Design

Your application designers would create design wireframes and prototypes that explain the interface layout, color theme, interaction of application components, etc.

Your application designers will use tools like Microsoft Visio to develop low-fidelity mockups and high-fidelity prototypes.

Your UI/UX designers can use the Visio wireframe template to design wireframes for desktop, mobile, and tablet applications. Designers can also integrate Visio with other Microsoft tools, such as Office. 

Frontend Development

Front-end developers develop the front-end of the ERP application according to the prototypes provided by the UI/UX designers. 

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Your front-end developers would use programming languages like CSS and JavaScript and frameworks like Ember.js to develop a dynamic user interface. Ember.js offers developers the following advantages:

• It is an open-source and modern JS framework that assists developers in making engaging user interfaces for web, mobile, and cross-platform applications.
• Ember.js allows developers to follow MVVM architecture that separates the business and presentation logic from the UI. Also, it follows a widget-based approach to better handle the data logic with the UI components.
• It has consistent documentation and a reliable developers’ community for support and guidance.

Backend Development

Your backend developers would code the core functionalities of your ERP system. Software developers usually use general-purpose programming languages like C#, Ruby, etc., to develop enterprise-level applications. 

These programming languages offer easy scalability, robust security, and support of a range of development frameworks and tools.  For example, Ruby programming language offers the following features for ERP development:

• It has a user-friendly syntax as compared to languages like C and Java which makes it a favorable choice for developers.
• Ruby comes with native multi-threading support that makes it easier for developers to run programs simultaneously without compromising on speed.
• It is also an extremely portable language and runs smoothly on all platforms without much dependence on external factors such as an operating system.
• Your developers can use supporting frameworks like Ruby on Rails to create high-performance ERP web application that offers standard coding structures, an extensive testing framework, etc.

Database Development 

This includes designing and developing a data model for efficient business data storage and retrieval. You developers would use database technologies after analysis of the ERP data requirements. For example, your developers can use MySQL as a relational database management system with SQL compliance. It offers the following features:

It offers extensive features for every application type and development need. It offers support for stored procedures, triggers, indexes, functions, etc., for easy data storage and retrieval.

As secure transactional processing and data support mean greatly to insurance businesses, MySQL is the best database management option due to its high security and dependability through data encryption, password policies, etc.

MySQL also offers on-demand scalability with automatic sharding of tables across nodes, enabling low-cost horizontal scalability.

Similarly, your developers can use Cassandra as a NoSQL database program to get the following benefits:

• Cassandra offers real-time performance as it allows multiple data writes for an efficient retrieval process in contrast to an SQL database.
• It is a decentralized database to handle vast volumes of data across multiple servers that offer you high data availability without any point of failure.

Machine Learning and Data Analytics

Your software developers need to work with the latest technologies to build advanced features in your ERP software for insurance, such as big data analytics for fraud detection, automation of claim processing, efficient underwriting process, etc. 

Companies have seen a 14% median increase in sales value within two years after the launch of a streamlined underwriting program. Machine learning algorithms have reached a 75% accuracy rate in fraudulent insurance claims detection. Moreover, 10 to 55% of insurance work, like claims, underwriting, finance, etc., could be automated in the next decade.

You would need highly skilled developers proficient in machine learning algorithms and data science techniques. These ML developers can use tools to accelerate the process of machine learning model implementation. For example, your developers can use IBM Watson Studio and take advantage of the following:

• Your developers can clean, process, and visualize insurance business data using Waston Studio.
• You can implement and optimize AI models for natural language processing, visual recognition, etc., on the cloud.
• Your developers can easily integrate other open-source frameworks, like PyTorch, TensorFlow, etc., for machine learning.

Test your ERP System for the Insurance industry

Test routines ensure that your ERP solution is bug-free. Software developers play their role and ensure code quality through unit testing, integration testing, etc.

Your QA engineer should conduct more comprehensive testing procedures like performance testing, regression testing, usability testing, security testing, etc., and ensure that your ERP software meets all the planned requirements.

Your software testers can use test automation tools like IBM Rational Functional Tester to automate test cases for GUI, data-driven testing, functional testing, etc. It supports a range of applications, including desktop, web, and mobile. 84% of companies in the insurance industry are already using IBM Rational Functional Tester, with 60% of the total product customers in the United States.

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Deploy the ERP Product for Insurance Businesses

Now that you have developed and tested your ERP application, you can start to plan for its deployment. Your development team would build the deployment pipeline. They should use DevOps practices where the development and operations teams work together on software deployment.

A DevOps-based continuous integration/continuous deployment pipeline ensures task automation and frequent testing. Your team can use DevOps tools like Git for version control, Jenkins for continuous integration, Ansible for configuration management, etc. 77% of organizations state that they rely on DevOps or plan to use it for software deployment.

According to your deployment plan, your project team needs to ensure the ERP solution integrates seamlessly with the existing system and there is no discrepancy in the migrated data, such as duplicate data values.

Monitor and Maintain

Once your end-users begin to use the new ERP software for insurance procedures, you need to monitor KPIs to measure the overall system performance. The five main KPIs for successful ERP implementation include downtime, demand forecast accuracy, schedule adherence, IT spending, and customer experience. These KPIs would indicate if you have met the ERP project’s goals outlined in the beginning.

You also need to maintain the ERP system. ERP Maintenance is an ongoing process. You need to keep up with the end-user requirements, upgrades in software development technologies, etc.

Ready to Build an ERP for Insurance?

There are multiple ready-made ERP solutions available in the market, but not all integrate seamlessly with every business operation. Custom ERP development helps to build a software product that meets specific business management needs. However, this is a complex project.

You will require a competent team of software developers and managers to undertake ERP implementation for insurance brokers. If you, as a business CTO or CEO, do not have the required ERP developers, we would advise you to partner with a credible software development company.

Why not take a look at the field-expert software developers community at DevTeam.Space? All the software developers and designers at DevTeamSpace are vetted for their skills in the latest technologies. Moreover, they follow an AI-powered agile development process that ensures collaboration between team members and managers and timely delivery of the end product.

If you wish to partner with these skilled software developers to develop your enterprise resource planning software, you can send us your project specifications via this quick form. One of our account managers will get in touch with you to discuss further details on team building, project planning, etc.

FAQs on ERP for Insurance Sector