Testing Problems Persist at Small & Medium Size Insurers
By Mark Burton, 8/28/2020

Anytime carriers and MGAs introduce new products, upgrade software or make other system changes, those systems must be tested. This is called User Acceptance Testing (UAT) and is used to verify that policy, rate and claims data are all accurate. Any errors can cause costly delays and damage goodwill with your insureds and partners.

While large carriers and MGAs usually have the sophisticated, modern systems and vast resources to make sure testing is done right, this is not always true for small to mid-size companies. They face cost and time pressures that are a constant challenge to effective implementation, and often use third-party testers who lack either the domain knowledge or testing expertise.

The result can be what I call a “doom loop.” It looks like this:

Avoid the Doom Loop

First, testing is scheduled incorrectly or performed incorrectly, so any upgrade or product launch falls behind. Next, testing is performed by time-starved IT staff, resulting in delays. Finally, when testing is not done correctly, discrepancies head downstream as incorrect forms, ratings and policies, as well as bad reporting and bad claims decisions.

Let’s say an MGA is in the middle of upgrading its systems and testing is performed incorrectly. As a result, there are discrepancies in some homeowner policies between the insured’s documentation and the MGA and carrier’s documentation. A storm damages the home of a policyholder, who then files a claim only to be told the coverage doesn’t appear. It’s a devastating blow for a homeowner, a headache for the carrier and a ding to the MGA’s reputation.

Finding the Answers

While many believe the answer to preventing costly delays is to outsource testing to a third-party company, some contracted testing firms fall short in two ways. Either they lack the proper testing capabilities to perform tests correctly, or they lack the domain knowledge—in this case, an understanding of the property casualty insurance industry.

It comes down to how well a third-party company performs its testing and what they are testing. Insurers should always work with testing companies that have deep knowledge of the insurance industry, and have all the certifications that prove a demonstrated ability. And when using a large company, which offers testing as one of a number of technology solutions, make sure they are not subcontracting to a third-party tester.

The good news is there are firms that have both the expertise and domain knowledge to get the job done at lower costs than you imagine.

If you have questions about testing, want to learn about the repository of test cases and scripts that have been developed, tested and deployed by my colleagues and me, or would like to schedule a demo of our testing services, call 727-489-9190, visit www.westpointuw.com or email sales@wpisfl.net.

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