By implementing a next-generation new business process, a typical life insurer that issues 40,000 policies a year could save more than $1.3 million annually.This was one dramatic finding of a report entitled "The Evolution of Rule-Based Life Insurance Underwriting Systems," recently released by Boston-based consulting and advisory firm Celent Communications Inc.

"Rule-based processing definitely has a place in life underwriting, but carriers need to create next-generation systems if they want a good return on investment," comments Craig Weber, an analyst with Celent. "That means tight integration, component-based architecture, and high levels of automation and control over data, plus the ability to deliver rule-based intelligence all the way back to the point of sale."

Concord, N.H.-based Jefferson Pilot, the life insurance unit of Greensboro, N.C.-based Jefferson Pilot Financial, believes automated rules have to be established for a life product portfolio, to enable applications to flow through the system based quickly, explains Patty Creedon, vice president, underwriting administration for Jefferson Pilot's life unit. "Once the system recognizes these characteristics, it builds assumptions to help an underwriterís workflow. There are an array of checks and balances built in that enable the system to catch red flags."

One of the challenges about the new tools and technologies that support better new-business processing is convincing underwriters to go along with the program.

MFXchange Holdings Inc., based in Toronto, developed a term life program that eliminates the need for fluid testing during the underwriting process. The Web-based program, Write Now, enables an underwriter to zero in on two or three variables in an application that needs to be reviewed, rather than having to examine the entire file. "They only review the criteria for referral. The system breaks out these areas through rule-based development," states Brad Worth, vice president of business development, MFX.

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