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Rules Gone Wild: The Growing Need to Get Business Rules Under Control

A world of rules-driven automation and decision-making requires more robust, and perhaps more insurance industry-specific rules governance discipline and technology.

Rules-based core systems have been a boon to the insurance industry but they on a life of their own and can create downstream problems if they are not properly governed and vetted for consistency. That point came up during multiple conversations held during the ACORD LOMA Systems Forum in Orlando, Fla., last week with I&T's editors and various industry participants.

Chris Doggett, co-founder of AdminServer was at the conference to talk about his new company, Philadelphia-based Adminovate, which offers both consulting services and a new rules-and-tools policy administration system called forwardPAS, written in .NET and Java. Doggett, who is Adminovate's CEO, stressed the new system's capability to govern the creation of rules to prevent what he calls "rule overload."

"A powerful rules engine is a bigger gun to shoot yourself in the foot," Doggett comments. "Rules can take on a life of their own and become cumbersome and dangerous."

Doggett has suggested (see link below) that, while rules enabled the configuration of systems without code, they can proliferate to such an extent that they become almost like another kind of code to be managed. Furthermore, improperly governed rules can create problems of consistency that could result in undesirable outcomes. For example, Doggett offers, one bad rule could result in three commission checks being sent out instead of one. Even worse outcomes are not hard to imagine for a highly regulated industry operating within a litigious society.

[For more on Chris Doggett's views on controlling proliferating business rules see: Of Worms and Monkey Wrenches: The Need to Standardize Policy Admin System Business Rules.]

The rules-governance issue showed up from a different angle in a conversation with Osnat Segev-Harel, Sapiens' (Rehovot, Israel) chief marketing officer and VP of business development. Sapiens recently developed a new product called Decision, which Segev-Harel describes as a business decision management system, on a bespoke basis for one of the largest financial institutions in the U.S. Decision can abstract rules from all the rules engines within an enterprise and provide a central location for their management.

Decision went live at Sapiens' financial institution customer in in Oct. 2011 and should be available for the insurance industry before the end of 2012, according to Segev-Harel.

In the absence of some kind of discipline applied to rules management, users of rules-based core systems can run into trouble, affirms Neil Betteridge, VP, strategy, Guidewire (San Mateo, Calif.).

"This is one of the reasons we try to encourage a blend of business analysts and IT in agile development and maintenance," Betteridge asserts.

Betteridge cautions that insurers should be alert both to pandering to the idea that it can all be put in the business' hands" but also that rules management requires industry-specific structure, especially with regard to regulatory compliance requirements.

"Some of the most challenged insurers are ones who used generic rules engine because they weren’t aligned to the kinds of problems insurers need to solve," Betteridge says.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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