Greater customer satisfaction is also a benefit
Market pressures are forcing all types of insurers to enhance their ability to quickly change the way they do business. The speed with which they can react to dynamic market conditions and customer requirements is a make-or-break critical success factor. The pressure for flexibility makes elimination of bottlenecks that thwart rapid modification of business processes a high priority.
Unfortunately, for most insurers, making even simple business changes to their IT systems can take weeks or months. The policy rules governing critical business processes are often “hard-coded,” embedded deep within multiple applications. From applicant screening and underwriting to claims processing, the task to maintain these rules consistently has become very complex and daunting for IT organizations. The lack of a centralized policy rule repository often results in inconsistent representation and outcomes across the many disciplines. Ultimately, this can lead to fines–or even worse, the loss of business to a competitor.
To address this problem, insurers increasingly are turning to Business Rules Management Systems (BRMS), a.k.a. Business Rules Engines. Simply put, BRMS is software that enables other application logic to change more flexibly and quickly. It does this by externalizing business logic from underlying IT systems, representing the logic in a central BRMS repository where it can be quickly and easily viewed and changed by business and IT professionals while providing the decision support needed for the overall system to function. A BRMS can integrate with legacy applications as well as the new Web services technologies that are being increasingly adopted by insurers.
Why go through the pain and expense of a “rip and replace” approach to outmoded legacy applications when a BRMS can prolong their useful lives by rendering them much more flexible? Business rules technology is helping insurers externalize the business logic that was formerly trapped, in effect, in their legacy systems, in ways they can understand. With a BRMS, carriers can:
o Empower policy administrators, underwriters and other business users to create and maintain the rules in systems that support critical business processes themselves;
o Gain the control, speed and flexibility they need to modify business rules at the speed that their business conditions change;
o Eliminate the IT bottleneck caused by dependency on programmer intervention to create and maintain rules embedded in code, while fostering rule reuse to improve consistency and reliability; and,
o Perform scenario analysis or try new business processes in live systems with the confidence to know that improvement can be made quickly.
Why Business Rules in Insurance?
A business rule is a statement that defines some aspect of the policy and is intended to control or influence the behavior of the policy management. For insurers, underwriting rules are an obvious example. All of the terms and conditions under which a person may be issued a policy make up a set of policy rules.
A BRMS provides a central repository for both those business rules and the application logic that governs the processes and people that manage them. By extracting the policy logic from the application, application maintenance is simplified and it is easier and faster to modify policy rules. All this also allows for more consistent decision-making across all applications.
BRMS technology offers insurers a number of business benefits that stem from this enhanced IT agility. Once business rules are stored in the BRMS, compliance updates, product rollouts or underwriting changes can be implemented in a fraction of the time. Insurers can reduce IT maintenance expense while achieving the flexibility to accommodate rapid policy changes, since responsibility for making the changes is shifted from programmers to policy administrators.
A BRMS also can automate the underwriting process, enabling real-time policy generation. Rules-based, automated decision-making streamlines the process and can remove underwriter intervention for routine policy requests. For more complex policies, rules-based exception processing maximizes underwriter productivity. That’s because underwriting automation reduces administrative and manual tasks, freeing up underwriting professionals to spend more time on complex underwriting scenarios and risk management tasks.
In addition, a BRMS can help customer service representatives resolve service requests more quickly and efficiently by storing rules that minimize the need for further contact and back-office processing. The BRMS can integrate with legacy and other back-end systems, allowing carriers to simplify complex interactions that formerly required access to multiple, disparate systems. A BRMS can enable business managers to add or modify workflows, offers or customer services to accommodate shifting requirements. This flexibility helps reduce operating costs while improving customer satisfaction.
One of the ways insurers deliver customer service is through information and referral hotlines, which many health care insurers operate. With growth and diversity in the subscriber populations, increasingly complex policy and rule sets can get too expensive for IT to maintain. Business rules let them empower business analysts to capture and maintain the rules that determine which referrals and reminders nurses access when serving customers on these referral lines. The net result of adding a BRMS to this scenario is delivering value-added health consultation and advice services at a much lower cost of service delivery.
A BRMS also can extend the return on investment of the ACORD XML standard for carriers by supporting pre-loaded ACORD vocabulary enabling the system to understand insurance terms and relationships out of the box. This allows business users to more easily author decision-making rules and policies that can be standardized across the enterprise, its agents and third-party partners.
For most insurers, the question of deploying business rules technology is not a matter of “if” but rather “when.” Providing an easier way to create, change and standardize policy rules quickly across the insurance value chain is a key driver for successfully improving customer satisfaction and reducing claims leakage.
Hans Witt is CEO and President of Haley Systems, based in Sewickley, Pa.
For most insurers, the question of deploying business rules technology is not a matter of ‘if’ but rather ‘when’