Software Lets Insurers Play By The Rules

As insurers and other companies tailor their businesses to reach smaller customers, they're finding a new ally in business-rules technology.

Business rules--which govern how insurance companies apply rates, set coverage plans, and make changes to benefits--are typically hard-coded into applications, and it takes a programmer to change them. Rules engines change that, putting that programming logic in a central place where it can be more readily shared among apps and adjusted to meet changing business conditions. That lets companies make faster and better decisions about what different types of customers should pay, potentially speeding up the sales cycle.

Aetna Inc. has been making inroads among individuals and small businesses seeking health insurance, thanks to a rapid-response Quoting and Renewal System from Connecture Inc., a supplier of insurance-sales software. The software lets brokers and agents get quotes to customers the same day their information is received. It used to take about a week to get a quote via manual underwriting methods, says Chris Hakim, an Aetna general manager. Aetna's rules engine, in place for 18 months, "has changed the way we do business," he says. Aetna membership grew by 95,000 subscribers in the second quarter, largely because it signed up more individuals and small companies.

Earlier this month, Blue Cross Blue Shield of Arizona rolled out its own rules engine, which lets members of any group plan go to its Web site and change their benefits. The software, Resolution EBS Inc.'s Centrifuge, can fire off a quote that shows both the old and new prices. If the user accepts the price, the change goes into Blue Cross' back-end systems, and the user gets an E-mail confirming the change. That has put users in charge of their benefits, guided by rules from business analysts instead of the programmers, says Christopher Matthieu, director of E-business technologies.

The new approach gets around a major IT logjam: maintaining applications in which the rules are buried. The approach isn't limited to insurance companies, either. Prefab home builder Southern Energy Homes Inc. and credit-reporting and marketing company Equifax Inc. each are using rules-engine software to better tailor their products to customer demands.

Insurers are finding other uses for rules technology as well. Horizon Casualty Services, a subsidiary of Blue Cross Blue Shield of New Jersey, supplies a service to other insurers that calculates the value of medical services given to accident victims. RulesPower Inc. software applies staff expertise to individual cases to quickly determine how much should be paid, according to operations director John Oliveira. Such automation could help the company expand, he says. "We could double our volume and not double our staff."