Anyone who challenges authority lives by the phrase, “Rules aremade to be broken.” But what if the rules themselves are broken?Business rules, that is.

I spent some time on Monday speaking with people aboutunderwriting and the problems insurers face in correctly performingthis important function. That led to another discussion of businessrules.

I spend a lot of time speaking with software vendors and one ofthe points they invariably bring up about their systems is how easyit is for their customers to infuse the systems with businessrules. The problem some carriers have, though, is they have rulesfor writing rules about their rules. In other words, rules runamok.

I spoke with Tomer Srulevich of Sapiens and he explained that abanking customer his company worked with had over 20,000 rules intheir old underwriting system. He doesn't believe such insanity isfound solely in the banking arena, either. Some municipalitiesdon't have that many rules. (I believe here inLas Vegasthey haveonly a couple dozen rules.)

Donald Light of Celent, who just wrote his annual CIO Pressuresand Priorities treatise, discovered that nearly 40 percent of theCIOs interviewed for the report plan to wrap and extend theirunderwriting systems during the coming year.

“This is likely driven by a need for greater flexibility andautomation, and is enabled by the increasing use of rules andworkflow/BPM systems,” wrote Light.

One point that has to be pounded into the heads of manycompanies looking to improve their underwriting is that a newsystem is not a panacea. It's like having a goal of losing 10pounds. Wishing and hoping don't work.

Insurers need to combine new practices and processes if thesoftware is going to reach its potential. With the cost of anyunderwriting system—new or simply improved—it means more than justwriting a check.