Business rules are ubiquitous to the insurance enterprise, serving an essential role in expediting processes and ensuring compliance. The advent of modern IT infrastructures has led to a proliferation of rules throughout the IT environment that manage both the policy and claims lifecycles. While the creation of automated rules improves process efficiency, managing burgeoning sets of rules creates new challenges and complexities for insurers.
Today, many P&C insurers are seeking to manage business rules efficiently and support unique workflows. Often, business rules are scattered across the IT infrastructure in multiple systems, leading to multiple versions of the same rule. The best location for a specific rule is often clear-a rule that governs how a document should be formatted should reside within the document automation system. For other rules, the answer is not as obvious and can vary depending on an insurer's unique needs. Effective navigation of these gray areas is essential to maintaining consistency, avoiding unnecessary complexity and optimizing the power of business rules.
Simple is Best
As sets of business rules grow and become more gray, insurers need to be certain that their rules continue to work for them rather than constrain the very processes they intend to automate. Insurers can start by getting back to the basics:
Automate whenever possible. Automation via business rules drives speed, agility and consistency, which are essential in a highly regulated industry.
Build a rule once and share it-when appropriate. Reflecting on the proliferation of Web services and the "build it once, use it many times" approach to IT infrastructure, this concept optimizes efficiency by avoiding the need to "re-invent the wheel" and promotes consistency across the enterprise.
Avoid duplication. Unnecessary duplication of rules across systems creates a new level of complexity and eliminates unnecessary resources in creating and maintaining rules in multiple locations.
When potential conflicts emerge, rules should reside in the location/system that best enables speed, straight-through processing, simplicity and compliance.
A centralized rules engine, which serves as a hub for creating, applying and managing business rules, may be the best location for business rules when:
Multiple systems need to use the same rule or information. For example, an insurer might have rules regarding product pricing in the CRM system, the client-facing Web application and the underwriting system. Leveraging the build-it-once-and-deploy-it-often approach, a centralized rules engine can provide a convenient hub for ensuring consistency across all systems and reducing the chance of error.
The rules are very complex. A centralized rules engine can help to expedite the creation and management of complex rules, such as those governing subrogation and fraud. Similarly, insurers can use a centralized rules engine to deliver an expanded decision support capability to augment an aging CRM solution, extending the life of the insurer's investments.
The process requires a complex decision report or lengthy audit trail related to the rule. Centralized rules engines can automate decision reports and audit trails related to the application of specific rules, such as those governing the creation of cancellation notices.
Application of the rule requires time-based reasoning. Centralized rules engines facilitate this by providing both date triggers and time-based reasoning. This is especially important for implementing regulations with time-based constraints or underwriting/pricing changes with end dates. This can also be leveraged for more nuanced applications, such as fraud detection related to specific events in a given region.
The rule requires "what if" analysis. Centralized rules engines provide an ideal environment for this process as it allows the insurer to quickly create many scenarios and play them out before deploying them.
Business rules automation delivers tremendous value. However, insurers' rules need to optimize their processes while not becoming too overwhelming to manage. Insurers should keep these tenets at the forefront as they decide where to create and maintain their business rules. Careful consideration can yield powerful and lasting benefits.
Thomas King is VP, Oracle Insurance.
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