Solving Day 2 Issues in Insurance

Introduction

The insurance industry is no stranger to challenges. While the development and release of a new product can be an exciting milestone, it often comes with unforeseen hurdles. These challenges, particularly the so-called “Day 2 issues,” can be a significant problem for carriers and TPAs (Third-Party Administrators) alike. Despite rigorous testing and quality assurance (QA) processes during development, the reality is that most new products are not flawless upon launch. The “Day 2 issues” refer to the issues that arise only after a product has been released, often when the initial rush and testing cycles are over.

These problems can result in compliance breaches, customer dissatisfaction, and, in some cases, complete product failures that tarnish a carrier’s reputation. This blog post explores the causes of these issues, their impact on carriers, and how QA automation is helping to address them.

The Dreaded Day 2 Issues: A Hidden Threat

The insurance world is competitive, and carriers are under constant pressure to roll out new products quickly to maintain their market position. However, the rush to get products to market often means that not all potential issues are identified and addressed in the testing phases before launch. While the first day, or the “Day 1,” may pass without incident, it’s the subsequent days that expose deeper flaws in the system—these are the Day 2 issues.

For example, a new insurance product may have been through rigorous testing in terms of underwriting, illustrations, and new business processing. Yet, when the product is launched, issues may arise that were not captured by traditional testing. These issues could relate to policy admin, compliance, claims processing, or integrations with other systems that weren’t sufficiently tested. Even worse, they could impact customer experience, tarnishing the carrier’s reputation and potentially causing a loss of business.

The Impact of Day 2 Issues on Distributors and Policyholders

In the distribution model, particularly for small and mid-sized carriers that rely heavily on independent agents, the effects of Day 2 issues can be catastrophic. Independent agents typically represent multiple carriers, offering various products to their clients. When a new product has issues, distributors may quickly lose confidence in the product—and the carrier behind it. It only takes one negative experience for a distributor to walk away from a product. Once that happens, it’s incredibly challenging to regain their trust.

In a competitive marketplace, agents are quick to move on to other carriers whose products are working smoothly. It’s not just a loss of revenue for the carrier, but also a loss of brand equity and long-term trust. For policyholders, Day 2 issues can lead to confusion, delays, and in some cases, financial repercussions. In the worst-case scenario, if an issue is not fixed in a timely manner, it could result in lost customers or even regulatory scrutiny.

The Role of Quality Assurance in Preventing Day 2 Issues

QA is crucial for minimizing Day 2 issues, but traditional testing methods are no longer sufficient. In the past, QA was often an afterthought, primarily focused on operational processes to ensure claims and policy administration were functioning correctly. However, with digital transformation reshaping the industry, the scope of testing has expanded significantly.

Today, insurance carriers must contend with numerous applications and systems that span the product lifecycle—from the initial sale and illustrations to policy administration, underwriting, and claims management. Each of these systems needs to be tested not only individually but also in the way they interact with each other.

In an environment where speed to market is increasingly important, it’s easy for QA to fall by the wayside. New products are rushed through development, and testing may only cover the most basic functionality, often referred to as the “happy path”—the ideal path where everything works as expected. Unfortunately, this approach rarely accounts for the full spectrum of possibilities, such as errors during data transfer between systems, exceptions in underwriting rules, or issues with illustrations and E-applications.

The Challenges of Traditional QA Methods

Traditional QA testing processes, especially in insurance, are incredibly complex. Insufficient QA could lead to significant operational pain. One particularly painful example involved policy pages going out with incorrect information, which not only embarrassed the company but also created compliance issues that could have had serious consequences.

Moreover, the sheer volume of manual testing needed to ensure full coverage of a product’s lifecycle, especially in a digital-first world, is daunting. There is the underwriting system, the illustrations, and all the other points of integration in between. It is simply impossible to test all the potential scenarios within a reasonable timeframe using only manual methods. Even with extensive resources, the risk of overlooking something critical remains.

The Case for Automation in QA

How can carriers mitigate the risk of Day 2 issues without sacrificing the speed to market? The answer lies in automation. Automated QA testing can significantly reduce the time and effort required to test a new product while providing much greater test coverage. Automation enables carriers to perform comprehensive testing across the entire product lifecycle, from the initial sale and underwriting to policy administration and claims management.

Carriers can mitigate the risk of Day 2 issues without sacrificing speed to market through automation. Automated QA testing can significantly reduce the time and effort required to test a new product while providing much greater test coverage.

The Benefits of Automation for Carriers and Distributors

The benefits of automating QA testing are far-reaching. When done right, automated testing can make the product launch process a win for everyone involved. Carriers experience reduced risk, faster time to market, and improved customer satisfaction. Distributors can offer quality products quickly, enhancing their business and strengthening relationships with the carrier. Most importantly, customers—whether policyholders or distributors—receive the products they were promised, promptly and without issues.

In a world where brand reputation is everything, the ability to provide a seamless, error-free product experience is essential. Once an agent or distributor is burned by Day 2 issues, it can be nearly impossible to restore that confidence. Automation, however, can help ensure that these problems are minimized, if not eliminated altogether, before a product reaches the market.

The Importance of Speed and Quality

While speed to market is crucial in new product development, it must be balanced with quality. Carriers should recognize that delivering products quickly is only valuable if they are also reliable and of high quality. Without adequate QA, the cost of addressing issues post-launch far exceeds the cost of conducting thorough testing upfront.

The need for faster product launches has only increased with digital transformation. However, the expectation that digital processes will automatically speed up the process is a misconception. These processes can complicate things further without the right infrastructure in place for testing. This is where QA automation excels—by providing comprehensive, repeatable, and scalable opportunities for ensuring quality.

Final Thoughts

As insurance carriers and TPAs continue to evolve in a fast-paced, digitally driven world, the importance of robust and automated QA testing cannot be overstated. The consequences of Day 2 issues are far-reaching, affecting not only the financial health of the carrier but also the relationships with distributors and policyholders. By embracing automation, carriers can ensure a faster, more reliable product release, reduce the risk of costly errors, and build stronger relationships with their distribution partners.

Ultimately, the goal is to eliminate Day 2 issues entirely. With the help of software like QMT, this vision is becoming a reality, providing the insurance industry with the means to innovate quickly, scale efficiently, and deliver on the promises made to customers and distributors alike. The result is a win for everyone involved—from carriers to policyholders—and a much-needed step forward in the industry’s ongoing digital transformation.

To read more about Quality Assurance, QMT, QMT TrueXML, and technology topics, visit our blog or visit our resource center. To listen to our podcast “Eliminating Day 2 Issues for Successful Insurance Product Launches” click here. To book a demo visit our site here.