Carriers have thousands of rules to control flows, evaluate risk, assign work, and alert users to critical tasks. As the insurance industry continues to rapidly change in the digital era, it’s important to develop a modern approach to rules in order to improve the efficiency and quality of underwriting.

The ease and usefulness of rules have made them a focus of early efforts toward automation of the underwriting process. However, many carriers have limited understanding of how advancements in technology and dynamic environments have impacted the proper use, maintenance and the very role of rules in modern policy systems.

Here are key factors to consider when developing a modern approach to rules:

Invest in Rules Taxonomy. Usually organized by function and further divided by product, taxonomy provides the flexibility to apply rules to a broad range of uses. However, when rules lack an established structure, it can be difficult to maintain their efficiency. Investing in taxonomy allows carriers to assess the performance of rules and identify gaps in the rule sets.

Establish a Rules Structure. Cost pressures have forced carriers to develop increasingly complex rules, even ones that conduct multivariate analysis. This makes it more challenging to maintain them. Successful insurers structure complex rules into mutually exclusive, but completely inclusive, rule sets or patterns, which eases the overall maintenance burden.

Create Proper Rules Governance. When rules are treated as one-time requirements, workflow solutions run into major challenges. It’s crucial for insurers to treat rules development and maintenance as an ongoing, continuous process. Carriers that set up governance structures to ensure constant evaluation report improved performance.

Use Rules Analytics. While rules accelerate the underwriting process through automation, they are limited to the pre-defined guidelines set by insurers. With the advances in data visualization and analytics, carriers can analyze the success rate of the individual rules sets and improve overall performance.

As the insurance industry continues to move away from legacy platforms and toward modern policy systems, a new approach to rules can reduce policy configurations costs; improve the maintenance and understanding of rules; and lead to improved efficiency and quality. Carriers need to ensure that they have a rules taxonomy and governance in place, and that they are using the right structure. It’s also critical to have a plan for maintaining and adapting the rules over time.

But perhaps the best option is not to use rules at all. In my next post, I’ll take a look at the latest alternatives to rules.

If you are developing rules for a new system or updating rules for a replacement solution, feel free to contact me with your questions, comments or feedback.

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