Insurance runs on business rules that frame decisions in a multitude of daily operations in Underwriting, Pricing, Claims, Verification, Customer Engagement, Up-selling, Cross-selling, Product Launch and Configuration, Audit, Policy Administration, etc. But managing business rules is challenging.

These rules are embedded into IT systems and business processes across the insurer's organization and their partners. You can't avoid changing them and the IT systems that they run on as you need to consider the following:

  • New data points
  • New edge cases
  • New products and policies to be offered, customized and personalized
  • New customer segments to be tested
  • New risk categories

And the list goes on.

The high demand to create new rules and update existing ones across many processes and systems requires IT and development time. Specific skills and experience are needed to make these changes, too, and the frequency of change requests from different parts of the business results in delays in delivery. You often see teams fall back on manual administration and operation, which is inefficient and causes inconsistencies and inaccuracies that affect the customer experience.

Personalization is a critical strategy for insurers to ensure they can increase customer satisfaction by improving risk assessment and, enhancing customers' engagement based on every individual's circumstances, and mitigating the risk of bad reviews like the one above. Personalization becomes a key differentiator in a competitive market. However, the more personalization the provider offers, the more challenges related to modifying and introducing new business rules are exacerbated.

Creating and Modifying Business Rules is Hard

In the insurance industry, business rules have been automated and delivered by custom solutions hard-coded into IT systems. They are embedded into business process models and workflows (BPM) and even coded into RPA bots – layers of rules built over the years. In best-case scenarios, due to the nature of their implementation, business rules are hard-coded across many different IT systems or embedded into business process models (BPM). Changing business rules requires identifying where the specific rules are embedded or coded in the first place, which is a tough call.

Secondly, you can only modify them if you possess a technical background – creating or changing new rules is IT-driven. You rely on software developers, QAs, Project Managers, and of course, domain experts. A change request that looks small on paper becomes a big, time-consuming, and costly IT and software project. Because of the frequency and quantity of changes across different groups and teams, it becomes a catch-up game.

The manual approach is not for free either

Alternatively, there are scenarios when business rules are not built into IT systems, workflows, and process models. They are sitting in PDF documents and Excel files for manual calculation and shaping of judgments. The challenge is that only some use the latest version of those documents. Even if they do, the decision is based on personal interpretation of the rules. Manual tasks are prone to errors and inconsistencies, making managing business rules even harder.

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Ensuring Quality

Quality is particularly important for insurance providers. The bad quality of business rules results in customer dissatisfaction, complaints, regulatory issues, fines, bad reputation in a competitive market, and loss of market shares. Ensuring what is changed and how it is changed should be looked at very carefully. Business Rule changes should be tracked. Understanding the required changes and applying them should be carried out by the business.

Additionally, understanding and measuring the impact of change is critical. What policyholders are impacted and how? What line of revenue increases or decreases? What portfolios are affected because of a potential change?

Operationalizing Change

Once the IT systems are changed, and new rules are embedded into process models, workflows, and RPA bots, it becomes very hard to put all these changes back into the business operation. DevOps tasks are not easy; operationalizing rules across all business operations for all related use-cases and ongoing and new processes is not an overnight rollout nor a risk-free exercise. This is a concern for operational leaders managing business rules. Part of the issue is many times pushing changes and deploying them as services supporting multiple versions are DevOps manual tasks but it does not need to be.

Transparency is Key

Once everything is up and running and systems are in place and serving customers and consumers well, business transparency is key for all stakeholders. At any given time, it should be very clear how a decision is made. Decisions should be auditable and explainable.

For instance, how is the pricing of a product formulated, and what are the contributing factors? Why and under what circumstances is a discount applied? Why is a claim rejected? What are the eligible products of a potential client? What are the risks and rates for a specific individual, and why?

This transparency serves both internal stakeholders as well as the clients and partners. It brings explainability and the ability to track and understand why exactly an outcome of a decision is what has been made.


As a result of the necessity of business rules in running an insurance organization, getting them right is a critical factor. However, making the changes available across the organization within all use cases and processes is as important – if not more important. This simple problem has a deep and far-reaching implication.

When changing and updating them becomes a catch-up game for IT and software development teams, the other teams, such as operations, underwriters, adjusters, and other business groups and SMEs, start using the latest version of rules – as they should but manually. Therefore, it introduces more complex workflows that are error-prone and slow, resulting in inconsistent outcomes. Consequently, there are unexpected delays in the process while increasing the operation cost makes customers and partners unhappy.

Last updated January 23rd, 2024 at 09:55 am, Published November 17th, 2023 at 09:55 am