Business rules are the backbone of decision-making in the insurance industry, guiding everything from claims processing to policy pricing and compliance. However, updating and managing these rules is often cumbersome and time-consuming, leaving many insurers struggling to keep up with market demands and regulatory changes.
This is where business rules engines (BREs) come into play. These systems streamline the management and execution of business rules, enabling insurance companies to adapt swiftly and efficiently. By introducing automation and flexibility into their core operations, insurers can respond to market shifts, regulatory changes, and customer needs with unprecedented speed and accuracy.
Let’s dive deeper into what a business rules engine is, how it works, and why it's becoming an indispensable tool for insurance companies.
See also: Automated Underwriting: A New Era of Work
Traditional Approach to Business Rules Updates
The traditional approach to managing business rules relies on embedding the logic directly within the application code. This means that even the simplest change requires the IT department to locate the relevant section of code to implement updates. This method comes with significant risks:
- Dependency on IT – Every change requires IT intervention, slowing the process and leading to potential bottlenecks.
- Lack of Centralization – Business rules are scattered across the codebase, making it difficult to maintain a single source of truth.
- High Risk of Errors – The absence of a centralized rule repository means different versions of the same rule can exist, raising the likelihood of mistakes.
- Time-Consuming Updates – Implementing changes is a lengthy process, which hampers a company’s ability to respond quickly to market.
The Benefits of a Business Rules Engines
A BRE can be thought of as a product configurator, allowing non-technical users to manage and modify business logic without needing to know how to code. This makes it especially valuable for insurance companies, where business rules must be updated regularly due to changes in regulatory policies, market conditions, or customer needs. By using a BRE, insurers can respond quickly and efficiently to these changes without depending on IT.
There are many different BREs on the market, including our Higson solution, which provides an intuitive, modern studio interface and reflects the client's business structure, giving nontechnical users easy access to the rules they need to manage.
Using a business rules engine drastically reduces the time to market. Instead of waiting weeks or even months for IT to locate, update, and test rules embedded in application code, business users can make necessary adjustments directly in the BRE.
Use Cases for Insurance
Tariff Adjustments
Traditionally, updating insurance tariffs involves multiple teams and IT intervention and can take weeks. With a BRE, business users can update premiums in hours.
Underwriting Automation
A BRE can partially automate underwriting decisions for standard policies, leaving underwriters to focus on more complex cases. For instance, rules engines can automatically approve life insurance applications that meet predefined risk criteria, while flagging higher-risk cases for manual review.
Product Offer Adjustments
For one of the major insurance companies in Poland, managing the introduction and adjustment of complex insurance products across various channels was a challenge. The process involved manual updates to product configurations and pricing models and regulatory compliance checks, making it slow and prone to errors.
By leveraging a BRE, the insurer was able to automate and centralize product offer management. The BRE enabled business users to quickly configure new insurance products, adjust existing offers, and ensure regulatory compliance without IT intervention.
See also: Business Models, Product, Value-Added Services
Conclusion
BREs provide a highly efficient solution for insurance companies, offering a way to significantly reduce the time required to introduce products. They empower business users by allowing them to manage and adjust business logic. Moreover, the flexibility of a modern BRE means it can seamlessly integrate with existing systems.
BREs shift the approach managers and analysts take when dealing with complex business logic. Instead of relying on rigid, generalized rules, BREs allow companies to experiment with different scenarios and implement changes in real time without high costs or dependencies on IT teams. Developing new tariffs or product updates need no longer be a lengthy, IT-heavy process. With a rules engine, you can quickly adjust and test market behavior, pulling back changes that don’t work and moving forward with those that do.
