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 executes predefined pricing rules based on location data, claims history, and structured risk factors, ensuring consistent and rule-based premium calculations.
Personalized loyalty rewards
Insurers use predefined business rules to manage multi-policy discounts and loyalty rewards, ensuring that customers receive offers tailored to their eligibility. A Business Rules Engine (BRE) automates the application of these rules by consistently executing the predefined conditions set by insurers. This ensures that discounts and benefits are applied accurately and efficiently across different customer segments.
By structuring and centralizing rule execution, BRE supports adaptable pricing strategies while maintaining transparency and control over how offers are configured. Insurers can quickly adjust rules as business policies evolve, ensuring alignment with competitive market conditions.
Life insurance underwriting made simple
Life insurers leverage Business Rules Engines to apply structured underwriting rules efficiently. Medical history, lifestyle factors, and demographic data are evaluated against predefined criteria, allowing for consistent and rule-based policy assessments. The engine ensures that eligibility checks, risk classifications, and premium calculations are applied uniformly, reducing manual intervention and processing times.
When mortality tables or claims trends indicate a need for changes in underwriting policies, insurers can update the rule sets accordingly. This ensures that policy assessments remain aligned with evolving business strategies while maintaining compliance and consistency in decision-making.
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 operations require precise execution of treaty terms to ensure accurate risk allocation and compliance with agreements. A Business Rules Engine (BRE) streamlines this process by applying predefined treaty rules to evaluate incoming policies against reinsurance terms. By enforcing these structured rules consistently, the engine helps insurers manage treaty allocations more efficiently and reduce manual processing errors.
Additionally, BRE can support capacity tracking by verifying whether a policy falls within established treaty limits. By integrating with external monitoring tools, insurers gain greater visibility into available capacity, reducing the risk of treaty breaches and optimizing premium distribution across multiple reinsurers.
Next Steps
Future advancements may involve integrating machine learning models alongside Business Rules Engines, allowing businesses to refine decision rules based on claims outcomes and customer behavior patterns while maintaining direct control over rule execution. 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.
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.
Cutting Down Time-to-Market with Business Rules Engines
Reducing time-to-market is a key priority for organizations looking to maintain a competitive edge. While some companies take nine to twelve months to launch new products, others achieve this in just two to four months by leveraging modernized platforms and automation tools. A Business Rules Engine plays a crucial role in accelerating this process by enabling quick modifications to business logic without requiring extensive IT involvement.
