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Using EDM to succeed in automating the life underwriting process

I saw this article in Insurance Networking News today - Survey: Carriers Struggle to Automate Underwriting Process about a Tower Group survey. What struck me is how relevant enterprise decision management or EDM is to solving some of the challenges identified. According to the survey, many insurance executives concede that their companies are late in automating the life insurance underwriting process. These executives identified three main areas of concern in each of which I see a role for EDM.

  1. Growing revenues
    One of the key focus areas for EDM is precision. This means making more targeted decisions in acquiring new customers, among other things. My colleague Ian Turvill has a great post on how insurers, especially life insurers can grow their revenues with better segmentation and EDM. Precision in cross-sell and up-sell is also critical and enabled by EDM for greater revenue per customer. As segmentation gets more and more fine-grained, automation is critical to handle the complexity.
  2. Improving profitability
    Not only can EDM apply lifetime value analytics and sophisticated risk and opportunity models to the underwriting process, thus improving profitabiliy, but many insurers find they can reduce their cost basis also (by eliminating the purchase of external reports and data except when they will make a difference for instance) through the use of business rules for decision automation.
  3. Driving operational efficiency
    Operational efficiency means straight through processing at some level and without an EDM-like approach to automating the underwriting decision the process will always be held up for manual decision-making.

The article went on to say (my emphasis)

Life insurers face a common set of challenges in the underwriting process, relative to product management, operations and distribution. Those challenges range from making better and faster changes to business rules, to ensuring compliance in a tough regulatory environment and to pushing enhanced products and services through delivery channels.

Business rules, and particularly a business rules management system, delivers the agility you need to make changes to the decision-making process while ensuring compliance (which cannot be managed with business process tools alone. Focusing on the decisions itself as a corporate asset allows it to be reused across channels for maximum consistency. Embedding analytics into the decision brings segmentation, profitability and risk modeling to bear. EDM is the way insurers will do this in the future. There's more on insurance applications of EDM in the insurance section.

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