ROI Optimization For Insurance: A Playbook

Insurers today face intensifying pressure on multiple fronts. Operating margins have compressed by as much as 3 percent over the past five years, driven by deteriorating loss ratios, sustained inflation, and escalating competition from insurtech challengers. At the same time, legacy infrastructure and fragmented delivery models continue to hinder responsiveness, with product development cycles still exceeding 12 months for many carriers.

In this context, traditional ROI levers focused solely on cost containment are no longer sufficient. Forward-looking insurers are shifting from reactive optimization to structural reinvention. The next frontier of ROI will be unlocked through automation, agility, and QA embedded holistically across the operating model.

Step 1: Start with Agile culture transformation

For many insurers, launching new products remains a drawn-out, fragmented process.

Many processes take place across six or more departments: actuarial, IT, marketing, operations, compliance, and PMO, which can extend cycle times to several months. This function-based structure was designed for stability, not speed, and is increasingly out of sync with today’s fast-moving, digital-first insurance landscape.

The alternative is clear: enterprise-wide agility, where lean, cross-functional teams own outcomes end-to-end and operate with full accountability. Instead of passing work through silos, agile teams can collaborate continuously to develop, launch, and iterate on new offerings.

The ROI from sheer cultural change is compelling. One Asian insurer improved customer satisfaction by 20 points and boosted employee engagement by over 20 points within a year of adopting Agile.

There are four essential shifts for this to happen:

1. Form cross-functional tribes and squads: Tribes are essentially mission-based groups (e.g., “Product Launch,” “Claims Automation”) that align on customer outcomes. Within each tribe, squads are agile teams accountable for delivery, from pricing and design to execution and iteration.

2. Delayer the organization and simplify governance: Agile structures reduce middle management layers, minimize shadow committees, and cut alignment overhead. One insurer reduced hierarchy from seven layers to three, eliminated 30% of internal committees, and realized a 20% efficiency gain.

3. Embed agility in operations, not just change initiatives: While tribes drive transformation, self-managing teams run core operations such as claims, sales, and underwriting with full autonomy. Combining operations and customer support into unified squads boosts accountability and reduces handoffs.

4. Invest in talent and culture early: Agile requires new skills: product thinking, data fluency, and servant leadership. Successful insurers launch leadership learning journeys, upskill roles like product owners and agile coaches, and bring in outside talent to inject new ways of working.

Step 2: Implement RPA Center of Excellence

Once your organization has laid the cultural groundwork, the next step is to scale automation systematically—starting with a Robotic Process Automation (RPA) Center of Excellence. This dedicated team drives enterprise-wide intelligent process automation (IPA), turning isolated wins into sustainable ROI.

RPA already delivers impressive results: 60–70% task automation, 30%+ cost efficiencies, and up to 80% processing cost reduction. But to maximize value, insurers need to connect RPA with AI, workflow redesign, and business goals, not treat it as a standalone tool.

In insurance, automation creates impact in:

• Claims: FNOL, fraud checks, payout validation

• Underwriting: Risk scoring, document collection

• Policy service: Chatbots, billing, renewals

• Compliance: Reporting, audit trail automation

To scale automation with ROI in mind, follow these six steps:

1. Align with strategy: clarify how automation supports key outcomes (faster claims, leaner policy ops, or agent support).

2. Think end-to-end: don’t automate in silos. Redesign journeys like quote-to-bind or claim-to-pay to integrate automation across all functions.

3. Start small, move fast: launch quick wins with minimal viable automations in weeks. Build momentum through visible impact.

4. Map the roadmap: prioritize high-volume, rules-based tasks (e.g. billing, claims intake) before expanding into complex flows.

5. Set up a CoE: use a central team to manage tools, vendors, and bot standards—while execution stays in the business.

6. Invest in people: train staff in automation, redesign roles, and shift ownership to frontline teams with new agile skills.

Step 3: Embed enterprise-wide test automation

As insurers digitize, testing can’t remain manual, fragmented, or reactive. Testing must accelerate along with digital transformation, and test automation is the first-and-foremost action to achieve that.

To optimize ROI, insurers must evolve from fragmented, tool-based automation efforts toward a strategic, enterprise-wide approach that embeds quality engineering across the delivery lifecycle.

Legacy test practices (manual execution, siloed scripts, environment bottlenecks) introduce high costs and risks. In contrast, unified test automation drives measurable impact across:

• Speed: Faster product launches through parallel execution and CI/CD alignment

• Cost: Reduced reliance on manual testers and physical infrastructure

• Risk: Early defect detection across integrations and policy scenarios

• Scalability: Consistent assurance across lines of business and geographies

For insurers to standardize testing across the entire organization, there are four major stages:

1. Standardize Test Creation Across Teams

Insurers should unify test development under shared libraries, frameworks, and automation standards. In a low-code automation testing platform, even non-technical team members can engage in QA. That means even underwriters, product owners, and operations SMEs can co-author business-flow test cases (e.g., claims FNOL to payment, multi-product quote flows) without needing deep technical skills.

2. Enable scalable, cross-environment execution

Testing must mirror real-world complexity. However, consider the vast number of browser/device/operating systems to be tested on, insurers face unnecessary dependence on physical machines.

Instead, insurers should invest into device farms, known as TestCloud. With thousands of readily available environments, insurers can schedule and run tests at scale to ensure quality across regulatory variants, geographies, and partner portals, all without hardware overhead.

3. Integrate Testing with Planning and Reporting

To ensure quality aligns with business outcomes, test orchestration must connect with test planning, coverage analytics, and defect reporting. This allows QA leaders to prioritize by business risk, monitor velocity vs. stability, and provide stakeholders with actionable insights.

This is known as TestOps. Traditionally, test planning, management, and reporting happens within spreadsheets. However, as organizations scale, spreadsheets prove inefficient to meet to ever-growing, more nuanced demands of QA teams.

Cristiano Caetano, founder of Zephyr Scale, explains this with a CRM analogy:

If you're a small startup or an early-stage company with just a few people, you don't need a CRM tool yet. You don’t need it to manage leads, build relationships, or track renewals because you might only have 10 to 15 customers. But as you grow, bring on more people, and deal with longer sales cycles, suddenly having a tool to manage your sales becomes a must-have. It’s no longer optional. You can’t rely on spreadsheets or people’s memory.

Cristiano Caetano

VP of Product

He believes same principle applies to testing. If you're a small startup building a simple app in the early days, you probably don't need test management tools. It's just a few people hacking things together. Test management is too bureaucratic.

But as you scale, the complexity changes. You move from one or two testers to 15, then 100 or more. How do you manage that? At that point, test management becomes necessary.

With a TestOps system, QA teams can scale more easily with:

• Automating test scheduling, execution, and reporting.
• Integrating with CI/CD tools for continuous feedback.
• Providing unified, real-time dashboards and analytics.
• Ensuring effective resource allocation and prioritization of tests.

4. Scale Through Federated Quality Ownership

As insurers embed test automation into every squad and integrating it with CI/CD pipelines, they establish continuous validation across every code commit, system update, and user journey. That means product teams can ship pricing algorithm changes with confidence by running test suites nightly, linked to actuarial assumptions, customer flows, and compliance thresholds.

Katalon is a unified test automation platform built to help QA, DevOps, and digital teams deliver at speed and scale. Designed for enterprise agility, Katalon empowers insurance carriers to shift testing left, catch issues earlier, and ensure customer trust, without overburdening engineering.

With a Katalon license, you can:

• Design UI and API test cases for web, mobile, and desktop apps using low-code frameworks, enabling cross-functional teams to contribute even without deep technical skills --> Testing is democratized.

• Execute tests across 3,000+ environment combinations: locally, remotely, on-cloud, using simulators/emulators, or your private lab --> More test scenarios are covered, without the need to invest into extensive physical machines.

• Run tests in parallel from the CLI using Katalon Runtime Engine --> Execution time is significantly accelerated.

• Integrate seamlessly with your CI/CD pipelines (GitHub Actions, Jenkins, Azure DevOps, and more) to trigger tests automatically as code ships --> This creates a continuous feedback loop for the dev team.

• Manage test scheduling, monitor results, and generate rich reporting (videos, screenshots, email reports) from a centralized dashboard --> This is especially necessary for QA managers to communicate testing results with business stakeholders and keep everyone aligned on the same page.

📝 If you want a more customized automation testing tool specific for your insurance application, you can request a demo from Katalon in this form.

Source: 

1. https://www.mckinsey.com/industries/financial-services/our-insights/scaling-agility-a-new-operating-model-for-insurers

2. https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/the-next-acronym-you-need-to-know-about-rpa