By Peggy Bresnick Kendler
THIS MONTH'S EXPERTS
Senior VP and CTO, AXA Financial (New York)
VP/Senior Actuary, Individual Business, MetLife (New York)
AVP, IT, MetLife, (New York)
Sales Manager, PegaRULES, Pegasystems Inc., (Cambridge, MA)
Senior Manager, Quantitative Services, Deloitte & Touche (Hartford)
Director of Strategic Marketing, Fair Isaac Corp., (San Rafael, CA)
Q: How can business rules technology help insurers transform business processes to gain more efficiency?
A: Don Buskard, AXA Financial: Business rules technology allows you to automate standardized decision processes, which should generally result in efficiencies gained through an overall compressing or shortening of a process. Perhaps more significantly, in the creation and utilization of business rules technology, you will need to analyze work streams. This will likely result in uncovering redundant or unnecessary steps that can be eliminated or modified to significantly improve a process.
A: Peter Renna, MetLife: Business rules technology increases time efficiency-only problems are flagged for further examination. Automating tasks increases the amount of value added, since underwriters can spend additional time on more complex cases and decision making. It also provides the ability to increase quality assurance and customer service. Overall, business rules technology improves the relationship between producers and underwriters, and documents decision-making.
A: John Lucker, Deloitte & Touche: The level of efficiencies an insurer can achieve partly depends on the degree to which business rules technology is leveraged and the capabilities of the products utilized. Some products facilitate workflow automation more extensively with real-time rules control, while other, more sophisticated, products allow the incorporation of intelligent inference models and monitoring tools. These techniques enable the consolidation of processes.
A: Ken Molay, Fair Isaac: Business rules give insurers more visibility into, and control over, the decision processes that determine the actions they take in any business process. The ability to change action guidelines to react to new business conditions and to make sure they are applied consistently keeps processes current and efficient.
A: Mark Ryan, Pegasystems: Business rules technology provides an easier way to build and maintain logic that historically has been buried in legacy code. Building and managing rules in their own layer allows for the flexibility to change what rules are executed and when the execution takes place. Exposing business rules to business users for maintenance provides companies with improvedtime-to-market by putting rules management in the hands of subject matter experts.
Q: Where do you see the greatest potential for business rules technology in insurance? Are there quantifiable results that it has brought to insurers and their underwriting?
A: Buskard, AXA Financial: Underwriting is one area in which a rules engine can be put to relatively effective use. It allows us to be more efficient because we can determine the appropriate level at which the risk and cost of rules technology are offset by the benefit. A periodic manual review, particularly of cases not underwritten, can help you determine whether you can upgrade the rules, the technology, or both.
A: Vinod Kachroo, MetLife: Business rules technology can reduce errors, simplify workflow, improve quality assurance, and reduce the time a new business request is approved. It also allows sharing of rules across applications, decreasing IT costs and time-to-market. The ability to share requirements data and status data on cases between those who need to know-agencies and underwriting-reduces cycle time and costs for introducing new products.
A: Lucker, Deloitte & Touche: I see most current insurance rules pro-cesses as static sets of hard coded "if-then-else" statements within disparate legacy systems. A small number of insurers have implemented business rules engines for claims, underwriting, and new business workflow, but overall the technology within insurance is just beginning its evolution. For those using the new technology, I see most of the immediate emphasis on converting traditional business rules and workflow to facilitate more efficient Web-based processing. The creation of new complex inference rules processes with embedded models has not yet become mainstream, but early adopters can achieve 75 to 90 percent low-touch/no-touch processing.
Q: How can business rules technology be used to determine risk and ensure consistent underwriting?
A: Renna, MetLife: Underwriting tasks can be analyzed, and the standard tasks that are performed with the highest frequency can be automated by building rules-based analyzers. When information is entered into the system, only those cases that fall outside of the acceptable range of the automated tasks will be flagged as problems and needing additional examination. Since the same rules are being applied in the same manner, documenting underwriting practice consistency is a positive byproduct.
A: Lucker, Deloitte & Touche: I do not believe business rules technology alone can determine risk; rather it interprets and acts on the instructions provided by underwriters. By consistently coupling such multi-variate analytics with a company's most optimal and intelligent decision processes, dynamic enterprise-wide automated rules engines can be used to perform processes that truly control the "action" and decide on the pricing of risk.
A: Molay, Fair Isaac: Rules can segment customers for preferential processing or pricing, standardizing ways to identify and lessen risks in particular customer situations or types of business. Insurers can analyze reasoning used to offer or decline policy coverages, comparing it to total book of business and exposure. Because rules can be defined and centrally stored for different functions, different areas of logic can be called upon from various systems.
A: Ryan, Pegasystems: A rules engine interprets the rules that govern the policies and procedures that define how your company assesses risk. An object-oriented rules-based technology that is maintained in a single enterprise rules database ensures that business logic can be easily re-used across lines of business. Using rules and business process management to automate exception processing in underwriting can ensure consistent treatment of customers.