A McKinsey study noted that products released six months late could earn 33% less profit over five years.
What's more, a report by Accenture indicates that industrial enterprises have reduced their TTM from 56 weeks to 42 weeks, marking a decrease of 14 weeks or approximately 25%. Furthermore, these companies anticipate further reductions to 29 weeks over the next five years.
And some changes need to happen even faster. How do you implement these changes with your business users not having extensive coding knowledge? How to modify decision logic without breaking it?
Enter Business Rules Engines.
Static policies challenges
Static policies tie insurance companies to fixed rules and pre-defined configurations. These constraints mean insurers have to stick to rigid product structures and miss market opportunities and revenue. A survey indicated that over 90% of commercial lines insurers believe their current technology will not support future product development needs effectively.
It becomes even more apparent in the times of dynamic events affecting risk assessment and underwriting loss. In 2019, the pandemic disrupted basically every market. In 2023, there were 142 insured-loss inducing catastrophes, with the economic losses from natural disasters estimated at $357 billion, of which only 35% were insured.
What's more, there is no room for one-size-fits-all policies anymore. Clients want personalization. Research from McKinsey indicates that 71% of consumers expect personalized services, and 76% feel frustrated when these expectations are not met. Meanwhile, implementing personalized services can increase revenue by 10-15%.
Business Rules Engines change this approach by partially automating real-time business decisions.
Business Rules Engine as Product Configurator
Higson BRE executes predefined configuration rules and logic to process product configurations. The engine applies user-defined business rules to analyze variables such as customer data and market conditions, configuring personalized insurance products in milliseconds. Users maintain full control over configuration rules - Higson simply executes these rules consistently and rapidly, validating inputs according to established parameters.
The execution-based pricing model is what sets Higson apart from traditional Business Rules Management System implementations. Instead of paying for unused capacity, insurers only pay for actual rule executions. This means costs are aligned to business value and sophisticated product configuration is available to all insurers, not just the big ones.
The configurator component handles:
- Policy parameter combinations
- Premium calculations
- Risk assessment rules
- Regulatory compliance checks
- Cross-product dependencies.
Integration is via RESTful APIs so can connect to policy administration systems, customer relationship management tools and claims processing platforms. The stateless architecture means it performs well under varying loads and built-in versioning means there’s an audit trail of all rule changes.
BRE for Real-Time Product Configuration Benefits
Real-time product configuration with Higson BRE means measurable business benefits. Insurance companies can get new products to market in days not months. Automated rule processing and executing business rules remove manual review steps, reducing operational costs and human error.
The execution-based model is most valuable in market volatility. Insurers can change their product offerings instantly in response to competitor activity or changing risk profiles. This applies to individual policy level too, so personalized products based on customer characteristics.
Technical benefits:
- Millisecond response times.
- Unlimited rule complexity.
- Automatic version control.
- Full audit capability.
- Zero downtime updates.
The system can be deployed in cloud or on-premises so you have flexibility in your implementation approach. Real-time monitoring tools track rule execution patterns so you can optimize business logic and resource usage.
Use Cases: Insurance Dynamic Pricing and Offers
Property and casualty insurers use Higson BRE to implement complex pricing strategies. The engine processes location data, claims history and risk factors in real-time and generates personalized premium calculations.
Personalized loyalty rewards
This dynamic pricing extends to multi-policy discounts and loyalty rewards and applies the optimal combination for each customer. Additionally, the engine can manage complex business rules for personalized premium calculations and multi-policy discounts, ensuring precise and adaptable pricing strategies.
Life insurance underwriting made simple
Life insurers use the engine to implement complex underwriting rules. Medical history, lifestyle factors and demographic data flows through custom rule sets and produces instant policy decisions. The system adjusts underwriting criteria based on mortality tables and claims experience to maintain profitability and maximize acceptance rates.
Scalability
Commercial insurance applications show off the engine’s scalability. Multiple coverage types, each with different risk factors and pricing models, combine in real-time to create business packages. The engine handles interdependencies between coverage types so prices are consistent across the entire policy book.
Automated treaty application
Reinsurance benefits from automated treaty application. The engine processes incoming policies against treaty terms and determines the best risk placement across multiple reinsurers. Real-time capacity monitoring prevents treaty breaches and maximizes premium income.
Next Steps
The combination of Higson’s execution engine means insurers can innovate further. Machine learning will enable rule refinement based on claims outcomes and customer behavior patterns. Natural language processing will simplify rule creation so business users can express complex logic in plain English.
With centralized rule repository, Business Rules Engine (BRE) can act as a central hub for sharing certain business rules across organizations with multiple systems or lines of business, which helps prevent redundancies, inconsistencies, and errors.
Real-time connectivity to external data sources opens up new configuration possibilities.
- Weather data feeds impact property insurance pricing instantly.
- Vehicle telematics updates auto policy changes.
- Financial market movements trigger updates to investment linked product parameters.
Regulatory compliance becomes more dynamic. The system updates rules automatically. Audit trails provide full visibility of all changes to meet requirements after regulatory changes.
The roadmap:
- Predictive analytics integration.
- More external data sources.
- Natural language rule creation.
- Real-time compliance monitoring.
- Rule optimization.
Results and ROI
Processing costs go down, decision-making goes up. Complex decision-making becomes faster and more agile fitting market demands, allowing your company to meet business objectives easier. Non-technical users can manage rules without relying on IT teams.
By effectively managing business rules, the execution-based pricing model ensures that costs are directly tied to business value, leading to significant cost savings and operational efficiency.
ROI is calculated across multiple areas:
- Reduced IT overhead costs.
- Faster product revenue.
- Improved underwriting accuracy.
- Less manual processing time.
- Better customer satisfaction.
The platform supports multiple insurance products:
- Term life policies.
- Property coverage.
- Auto insurance.
- Commercial packages.
- Investment products.
- Health insurance plans.
