Testing Policy Administration Systems

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Insurance is a policy guided, product specific, service oriented and inclusive vertical. Hence the business processes consolidate frequent updates, interactions, transactions and communication among groups of stakeholders ranging from agents, customers, marketing professionals and IT teams.

The increasing sophistication of the vertical, coupled with its reliance on IT has given rise to different versions of PASs (Policy Administration Systems). A PAS is an application which enables an insurer to manage End-to-End life cycle of insurance policies, from issuance of Quote till renewal, suspension or lapse of the policy. Validation of PAS includes Policy holder’s details like address, age and additional policy holder’s eligibility rules, verification of additional factors according to LOBs (Line of Business) like Property & Casualty, Catastrophe Coverage and Speciality Lines Policies. Its key function is to perform the complete policy life cycle, from inactive state till Renewal

The PAS ecosystem

The demands on the IT system are enormous because the applications include portals for the insurance carriers, agents, policy holders, potential customers and customer relationship executives. While it is evident that the application ecosystem is complicated, the requirements of underwriting profitability, estimate generation and rating engine make it even more challenging for an organization.

Since insurance is often mandated by governments and institutions, there exists an enormous population of bulk policy holders in addition to the individual customers. Ensuring connection among such a gigantic ecosystem of institutional insurance plans, individual policy holders and claims processing presents a formidable challenge much bigger than what can be imagined. A lot depends on the robustness of the software to handle millions of policies, plan sponsors, federal and state legislations, plan details and claim rules, concurrently, real-time.

The scope and impact of defects tends to increase with the coverage and expanse of the application. The defects can have negative impact in terms of flawed transactions, reduced customer base, miscommunicated policy information and compromised data integrity. A single decimal point shift can either mean ten times the payment during claim settlement. Considering tens of thousands of claims being processed in a day, the business loss for a seemingly small defect can run into millions of dollars.

That is why Software Testing holds a high position in the PAS priority list.

A successful PAS demands Testing that incorporates business logic and encompasses the external interfaces as well as the most intricate parts of the IT system. To ensure comprehensive coverage and reduce defect density, it is crucial to incorporate the following components into the test strategy:

  • Portals: Producer, Prospect and Policy holder
  • Underwriting profitability – Underwriting and Rating engine
  • Servers: Product Server and Policy Server
  • Forms Management – Document Management – Access Control – Identity Management
  • UI Generator – Policy Admin UI – Product Admin UI
  • Service – Rating, Underwriting, Access Control, Policy, Form definition and selection
  • API – Authorization and Authentication for Access Control and Identity Management components, Rule execution and Document Access
  • Claim process, retention and cross sell opportunities
Testing Cloud based PASs

Testing a PAS in the context of a Cloud is important and equally challenging because it also includes the compliance of security and continuity to the financial institutions and regulatory authorities. Irrespective of the scope and extent of the coverage, it is crucial for a cloud based PAS to undergo the following:

  • Quote Validations
  • Binding Validations
  • Endorsements/Mid-Term Change Validations
  • Renewals Validations
  • Interfaces Validations
  • Validation of Daily Events and Quote Eligibility Rules
  • Inclusion criteria and Premium value for Catastrophe Coverage
  • Brokers, agents and distributor database
  • Quote-Bind-Issue workflow for multiple products for Speciality line Policies
  • Additional drivers, Vehicle Information, Driver and Vehicle history for P&C Policies
  • Custom over rides in Rating and Risk evaluation
  • Report extractions in MSWORD and MS-EXCEL Formats

At a time when intuitive user interfaces are being deployed to ensure greater service with automated underwriting to ensure quote and bind in solo sessions, the health of the PAS depends on the security, performance and utility. When a single application can connect stakeholders, consolidate transactions and create an insurance cover for a geographically diverse user base, isn’t it important to ensure that the quality of the PAS is visible, measurable and actionable?