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Redefining Insurance Technology Application Development Process (Part 1)

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Over the last two decades, the insurance industry has adopted innovative technological solutions from policy administration, to quoting, marketing, distribution management and front-end applications. According to research by Statista (2016), many insurance companies that adopted the growing technologies migrated to cloud-based software with machine learning and big data. Today’s applications use the data generated over decades along with predictive analytics to position the insurance industry as one of the strongest, and most technology-driven industries in the U.S.

The last two decades have also seen the increased adoption of two major software development implementation methodologies: Waterfall and Agile development cycles.

These recent parallel developments encourage us to consider the attention we give to the methods of application development for insurance technology. More importantly, we must consider how insurance technology can be deployed today given the kinds of applications in the industry and the traditional structure of the older systems.

The Agile methodology is beneficial because it is largely user driven. In Agile methodology, individuals interact with the system, enforce collaboration over the traditional documentation, and examine how quickly change responses can be delivered during development. Scrum masters ensure the sprint delivery of user-based functionalities as applications are delivered in working chunks.

The waterfall approach traditional to many industries implores a different approach. One in which complete system requirements is defined, use cases for user-system interaction reported and process flows developed where required for state diagrams.
Which methodology is the best approach today? Considering that the most important aspect of a project and software implementation is the understanding and appreciation of the user’s requirements, both development methodologies offer benefits and constraints.

Agile comes with the constraints of gathering required functionality solely from the perspective of user actions or task goals with the user story template having defined parameters. The Waterfall approach offers the business requirements document, which allows for the capture of required functions, configurations essential for goals and actions, as well as non-functional system specifications with no restricted template parameters. The agile approach offers periodic sprint deliveries that ensure there is constant completion of user stories that can support the defined epics or themes for the sprint in development. On the other hand, Waterfall presents a project-long development approach that can be high risk and offers no working version until completely configured. Lower user acceptance increases the chances of functional failing on a large scale, versus fewer chances of functional failing in a quick sprint.

The current debate is whether a specific methodology can be used in implementing insurance distribution and producer management solutions. It is difficult to determine which one is more effective based on factors such as technical training and exposure, insurance IT departments staff and implementation experience, the success rate of Agile over Waterfall (42% vs 14%), the overall quality of delivery, and the development approach to the desired system. We hope to find a balance of application where the strengths of both can be fostered to provide insurance technology solutions which are complete, user defined, acceptable and balance “an agile way of thinking and development” with a “controlled solution waterfall’ for easy acceptance and implementation.



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