Automated underwriting systems have become an essential tool for insurance and financial institutions as they aim to streamline their underwriting processes, reduce costs, and improve accuracy. However, automated underwriting systems often require additional support in the form of business rules engines to optimize their operations and enhance their capabilities.
Table of Contents
The Benefits of Connecting Automated Underwriting Systems to Business Rules Engines
Automated underwriting systems leverage vast amounts of data to make policy decisions, but they may not always incorporate the necessary business rules to optimize the process. By connecting an automated underwriting system to a business rules engine, a company can design and manage business rules, ensuring that tasks align with business goals, regulatory requirements, and underwriting guidelines. This reduces the risk of errors, inconsistencies, and bias in policy decisions, improving the overall accuracy and efficiency of the underwriting process.
Customizing Underwriting Criteria
Automated underwriting systems are designed to handle vast amounts of data, but they may not always accommodate the unique needs of specific markets, products, or customers.
Rules engines provide a user-friendly way of tailoring automated underwriting systems to specific business requirements. Insurance companies can use rules to design specific underwriting requirements, such as unusual risk factors or specific customer needs, without having to even touch the codebase or shut down the system.
Compliance is a critical aspect of the underwriting process, and failing to comply with regulations can have serious legal and financial consequences. Automated underwriting systems are designed to adhere to regulatory requirements, but may not always contain up-to-date prerequisites. Put simply, laws and regulations are constantly evolving, which means that means need to be able to make changes efficiently.
Companies use rules engines to define and enforce compliance rules, which reduces the risk of non-compliance, improving the overall risk management of the underwriting process.
How Large Insurance and Financial Institutions Use Business Rules Engines
Large insurance and financial services companies in the US, use business rules engines to optimize their underwriting processes. Business rules engines define and enforce underwriting guidelines, ensuring that the insurance and financial products align with business targets and compliant requirements.
Why Automation is Better than Manual Underwriting
For starters, it is faster and more efficient, which enables businesses to process more policies in less time. This results in increased revenue and cost savings.
Also, automated underwriting systems provide a more consistent underwriting process, reducing the inconsistency and bias that can occur with manual underwriting.
Actual Real-Life Problems Caused by Manual Underwriting
Manual underwriting can cause a variety of problems for organizations.
Firstly, it is slow and inefficient, often requiring significant time and resources to process applications. This can lead to long wait times for customers, hurting the customer experience and potentially leading to lost business.
Secondly, manual underwriting is prone to errors and inconsistencies, since it relies heavily on human judgment. This can lead to inaccurate policy decisions, creating risks for insurance providers, financial organizations, and customers.
Thirdly and finally, manual underwriting can be susceptible to implicit bias, as underwriters may inadvertently incorporate their own prejudices or preconceptions into underwriting decisions. This can lead to unfair or discriminatory practices, which can harm both customers and institutions.
By deploying business rules engines, companies can enhance the accuracy, efficiency, and customization of their underwriting processes, which translates into better customer service and an increase in market share.