Rapid technology advancements are reshaping the insurance industry. To respond, forward-looking insurance companies are focusing on continuously evolving their core systems to meet the changing market demands. The core transformation that insurers are undertaking not only changes how they adopt, deploy, and maintain their core systems, but also introduces new types of risks into any or all phases of a core systems development life cycle.
To mitigate risks and minimize associated costs, insurers must shift towards a dynamic and ongoing quality assurance (QA) strategy throughout the development life cycle; testing complex systems can no longer be considered a development afterthought.
How should an insurer proceed with core transformation and ensure the accuracy and performance of their core systems? What are the trends and best practices being adopted in their industry?
Martina Conlon, Executive Vice President at insurance analyst firm Novarica, addressed these questions in our insurance QA modernization webinar: Learn How Pekin Insurance & NJM Insurance Achieved Quality with Speed in Their Core Implementations.
Factors Driving the Seismic QA Shift
Martina reported that 60% of mid-sized P/C insurers are involved in core systems transformation. In tandem, they are also developing and modernizing their QA capabilities. Further, Conlon identified the following QA trends impacting how core systems testing and validations are implemented in recent times:
- Rising Volume and Complexity of IT Projects
Multiple competitive forces are placing pressure on traditional carriers to come up with new products/solutions and embrace new distribution channels, technology platforms, and data sources. To do so, insurers require new processes that are more streamlined, efficient, digitalized, analytics-driven, and moving forward, more AI-enabled.The increasing demand for operational efficiencies to drive business growth is resulting in more complex core systems as well as a greater volume of application rollouts s -, both of which should be considered for QA and testing. In addition, new technologies such as AI for validation techniques and machine learning algorithms for predictive modeling are making the traditional QA process of creating test cases obsolete. Instead, QA must now adopt continuous testing and validation of core systems/processes throughout the development lifecycle, leveraging AI.
- Increased Utilization of Microservices Architectures
To be successful in today’s ecosystem-driven marketplace, IT applications are being increasingly enabled by APIs and microservices. Adoption of APIs offers insurers an opportunity to participate in the digital ecosystem, forge new partnerships, and create new business channels. However, with microservices architectures that use APIs come more moving parts, innate points of failure, and potential security vulnerabilities, all of which need to be thoroughly tested and validated.
- Constrained Testing Windows Due to Modern Software Development Practices
In recent years, the process of developing and delivering applications has changed drastically. Modern software development relies on adopting Agile and DevOps practices, while combining microservices to build new solutions (rather than developing everything from the ground level) and embracing continuous integration/continuous delivery (CI/CD).
Each of these practices significantly accelerates time-to-market for new products and capabilities, helping insurers progress from the industry’s traditional twice-yearly releases to multiple releases every day. Naturally, this reduces the overall time allowed for testing and validation while making continuous testing even more vital for releasing applications that perform as intended, reducing the potential risk of failure.
QA Best Practices for Core Transformation
Successful QA modernization in insurance requires a shift in mindset. According to industry experts like Conlon, it’s obsolete to treat QA as a defect management function that’s relegated to the end of a development cycle. Rather, insurers must consider QA as a strategic function that ensures customer satisfaction, implementing the following QA best practices:
- Establish a QA Center of Excellence to create a quality-oriented culture throughout the enterprise. Critical steps of establishing a QA CoE include 1. dedicating QA resources right at the project’s inception, 2. conducting application-specific testing whenever possible, and 3. establishing feedback loops to share testing results with developers, business analysts, project owners, and any others associated with the project.
- Embrace “Shift Left” which is now SOP in the software development at large. Shift Left is a practice that initiates testing as early in the development lifecycle as possible. That’s because the longer a project progresses, the more expansive, costly, and challenging – the errors are to resolve.
- Retain the Best of Traditional Testing to maximize the QA processes and outcomes. This includes, but is not limited to, adding technical expertise to QA teams, incorporating test automation into project definitions, and building dedicated performance and security testing teams.
- Automate aggressively and systematically as test automation is now a development success factor. Prioritize test automation based on strategic goals and organizational readiness. Plan to automate all forms of testing, including build verification, smoke and regression tests, which require multiple tools. Over time, the tools-to-be-used can be standardized, but the near-term goal should be automation.
- Evaluate and Leverage Solution Providers and Partners as they might have already honed the expertise and obtained the advanced test automation tools required for QA modernization. However, the quality of tools and technologies provided by solution providers and partners needs to be assessed to learn if it matches the culture that an insurance firm wishes to build internally, as this is critical to achieving QA modernization goals. Also, insurers must make sure that solution providers and partners are rigorously measuring their own quality and can provide access to data demonstrating a continuous quality evaluation and evolution.
A dynamic QA strategy is a significant differentiator for achieving core transformation success. Insurers that are effectively gaining competitive advantage, while simultaneously reducing risk, are those implementing continuous testing, establishing testing centers of excellence, and most importantly, building a quality-driven culture with QA practices infused throughout development and production lifecycles.
To learn about how we can help you ensure a smooth transformation of core systems, visit our Core Modernization services page.