All you need to know about Insurance Domain before developing IT!

First Things First- Why Domain Knowledge Matters?

Domain knowledge is essential for Creating/testing/Implementing  any software product, and it has its own benefits like

What is Insurance? Type of Insurance

Insurance is defined as the equitable transfer of the risk of a loss from one entity to another in exchange for payment.

Insurance Company, which sells the policy is referred to as INSURER while the person or company who avails the policy is called the INSURED.

Insurance policies are usually classified into two categories, and insurer buys the policies as per their requirement and budget.

What is Premium? 

Premium is defined as the amount to be charged for a certain amount of insurance coverage or policy the insured has bought.

Premium for the insurance is determined by on the basis of two factors

• The frequency of claims
• The Severity of claims (Cost of each claim)

Different process area of Insurance:

Systems which comes to play in an Insurance company.

• Policy Administration Systems
• Claim Management Systems
• Distribution Management Systems
• Investment Management Systems
• Third party Administration Systems
• Risk Management Solutions
• Regulatory and Compliance
• Actuarial Systems (Valuation & Pricing)

Have a look at  High-level Architecture of ecosystem

Elaboration

The insurance sector is a network of small units that deals directly or indirectly with processing claims.

For the smooth functioning of an insurance company, it is necessary that each of this unit is developed with precision and understanding the use case and tested rigorously before it is sync together to deliver the desired outcome. 

Call Center	IVR Integration Call routing and assignment Security and access Reflexive Questions
Policy Serving	Policy lifecycle Financial and Non-financial policy changes Policy lapse and Re-instatement Policy aging-run cycles Premium due alerts Valuation of NPV/NAV
Claims	Claims triage and assignment Claims life cycle Claims accounting/reserving Third party EDI/messaging
Direct channel	Mobile access Cross browser/cross platform accessibility Application performance Usability of application
Reports/BI	Behaving to regulatory requirements Generate quality data for reporting Create bulk data for roll-up reports Testing formula based fields in reports
Underwriting	Underwriting quality Manual and Straight through processing Complex business rules Rating efficiency Requirements Management (Vendor Interfacing)
Integration	Data integration Complex interface integration Source/Destination formats Production like interface Web service pull/push efficiency
New Business	Validate rates-factor combinations Batch job schedules and runs Commissioning calculations settlements Quick and detailed quote Benefit illustration Benefit summary validation Quick and detailed quote

Summary

Timely process of the insurance policy and managing client's data is a foremost priority for any insurance company. Their complete dependency on a software solution for handling claims, as well as customers, requires software solution to be precise and accurate. Considering all the key aspects of insurance company's requirement some of the general domain understanding  and scenarios are represented in the blog.