Does insurance need a business rules engine?
Translation of my story oryginally published at Gazeta Ubezpieczeniowa
Insurance is a world of products, offers, and processes. This is a continuous race between sales and profitability. It is a constant search for the golden mean, which seemed perfect yesterday and requires change today. It is building complex products that are simple and understandable for the client.
Anyone who has dealt with customer service design knows that the most difficult thing is to build a process that is intuitive, fast, and even automatic while complying with the law.
Let’s make room for risk
It seems that in the conditions of offers refined and battling for every customer there is no room for mistakes and missed products. Awareness of this state of affairs is often paralyzing and blocks bold but risky initiatives. Does it have to be this way? Not necessarily.
How often do we meet the answers: “It can’t be”, “It requires too many changes”, “At least three months”, “It has always been this way with us”, “Let’s not complicate it”? Time to change it.
The same product or process seen through the customer’s eyes can be built in a very different way on the back office side. Success depends on whether our offers and processes are structured flexibly and allow for easy changes. With their proper construction, mistakes are not painful, and wrong directions and decisions can be quickly reversed.
The customer offer and business processes consist of rules
Each product and its handling process is a structure made of rules. These rules specify:
- what is available and for whom;
- in which periods it applies;
- what is the price: single and in the package;
- detailed underwriting rules;
- GTC conditions, limits, fees, periods;
- commission price lists, damage parameters; decisions about automatic or manual processing;
- dozens of procedural rules and exceptions.
Where is this knowledge located? In the heads of specialists and analysts, in Excel and Word files, in notes and emails, finally stitched in the application code and heads of programmers.
In the case of flagship property or life products, over 500 different rules controlling the sale and operation of each of them. Can anyone control it? Who will tell or quickly check what the consequences of a particular change will be? Is there anyone who will ensure that all rules work the same in every channel, department, and application?
Separating business from IT is no longer just a theory
The answer to these issues is the business rules engine, which collects all business rules in one place, structures them and presents them in an accessible way. It is a tool that allows the operator to quickly search, view, and edit individual rules. Without having to ask programmers for help. These rules are made available online to any sales or service system.
Implementing the rules engine relieves programmers of the burden of coding business policies and delegates this task to the right people in the organization. It is the implementation of the long-awaited separation of business from IT, mainly functioning in theory.
A good and well-used rules engine will allow their proper cataloging, e.g. product, tariff rules, defining the rules of sales, commissions, and service. Its proper configuration will give read and write access to competent people, and the senior management will provide access to review the whole.
Change of mentality and new perspectives
Having such a tool changes the thinking of managers and analysts. If you need to make decisions about which you are unsure, the engine allows you to build the right rule at a low cost and go further. Instead of creating general and rigid rules, you can easily construct a more sophisticated algorithm, which in any case will behave as it should and does not exclude any customer important to us.
The development and implementation of a new tariff no longer have to mean a project that lasts for months and is dependent on IT relations. Thanks to the rules based on the tariff, you can even change it online, testing customer and market behavior. In case of unsatisfactory results, you can quickly withdraw from any change.
In the case of new implementations, during the stabilization period, many irregularities and error reports concern business rules that can be verified on the rules engine screen instead of in the logs or application code. The patch can be made online without involving developers or releasing new versions of the application.
The rules engine resembles a sound engineer’s console, which has all the necessary switches and knobs in front of it, and from a central place, constantly adjusts the quality of music at a concert. With the right configuration, everything tunes and sounds great.
Synergy means simplification so much needed in insurance
Having all the rules in one place allows you to structure them and catch relationships between them. Practice shows that many rules have a common business denominator and several rules can be closed into one.
Besides, there are similar rules in many processes and systems that can be unified and centrally managed. This allows you to introduce order and consistency.
Unlimited possibilities are always a risk
Thanks to the fact that business changes can be made online using the engine, we gain a very short time-to-market. The issue of introducing change becomes a matter of time to decide, not the time needed for an IT initiative. And this, in turn, gives you a lot of possibilities, which I need a separate article to describe.
Saying that the rules engine offers unlimited possibilities is not an exaggeration. However, this requires great awareness and control in its implementation. In particular, all rights should be audited, because anyone who can operate the rules has an impact on real business, insurance offers, and processes.
