By R. Christopher Haines, President and CEO
With many things in our lives, we have to take a leap of faith. These are usually minor things for which you prepare as well as you can but still just have to see what happens. This might be trying a new recipe, getting a new hairstyle, or traveling to a new location. But do you really want to take a leap of faith with the software that runs your insurance company?
There are more than a few people out there who actually ask what the worst that can happen might be if they don’t test their software. After all, it’s just a computer system. It’s not like it’s solely responsible for the success of their companies. That comes from proper pricing and having the right people to understand the coverages they’re writing, right? It comes from proper claims handling and making sure they have the right amount of reinsurance, doesn’t it? These are the things that really matter to successful insurance companies, aren’t they? The system is just a small piece that works behind the scenes in all of this, isn’t it?
What’s the worst that can happen? What about a policy form that excludes coverage for a certain type of event the untested system leaves off the policy declaration when it’s printed and mailed to 1,000 policyholders? And then someone has a $1,000,000 claim which should have been excluded. That seems pretty bad.
What if an untested system overcharges 500 policyholders, requiring a letter be sent to all of them explaining what happened, at least implying that the company screwed up, having to print and mail updated policy documents to all of them, and sending them refund checks. That’s probably not so good.
What if the agency and customer portals have issues and errors that make them difficult to use, requiring double the time it should to do things or precluding some tasks from being completed at all? Do you think agents and policyholders will like the company well enough to stick around? Those don’t seem like dice worth rolling.
It’s naïve to think none of these things can happen if systems aren’t properly tested. You can’t assume systems just work, that the nuances of your business can be explained accurately to your software vendor every time you want something updated or added, or that the vendor will have the time, inclination, or resources to take care of it. Someone has to be responsible for knowing and continually testing your system to ensure it’s doing what it needs to do as your business evolves.
All those considerations circle back to a question I ask frequently: What’s the cost of saving money? Do you spend the money to have your system thoroughly tested? Or do you take the leap of faith?
The choice (and the outcome) is ultimately yours.