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How to avoid getting a Dutch headache from regulation changes

By Mark Armstrong, VP and MD EMEA, Progress

Regulation is a term that more often than not provokes groans. Changes to regulation are a necessity in every industry, whether it is healthcare, banking or insurance. They allow those industries to function properly in the light of new technologies and changing market forces. It’s actually the implementation of regulation which elicits those groans from many involved.

With clever software, however, those groans and grumbles can be turned into content sighs by streamlining the process of implementing regulation.

Regulation is not the bad guy

It is usually the last thing anyone would ask for, but regulations are designed to minimise the risk for everyone involved. Take insurance for example, regulation ensures that policies reflect the current legal and social environment in which they are operating. This in turn means that those policies are accurate and fair while any claims that are made are processed accordingly. This reassures customers, builds trust with the insurers and avoids unnecessary and lengthy disputes. Insurers benefit from happier customers and also from knowing that their policies accurately reflect and adhere to legal guidelines, thus mitigating any associated risk. You only need to look at the mis-selling issues around endowments, pension and most recently PPI to see why regulations are so important to avoid future difficulties.

Getting what you want

The frustration comes when faced with the implementation of new regulation. New regulation, inevitably, has a knock-on effect on to the products that companies offer. Premiums may rise or fall; certain products might become obsolete while new ones become possible. The problem is that these products are usually managed on lines and lines of code and hinge on complex business rules which can only be updated manually. These business rules are the processes that help offer the right service to the right person based on a set of predefined criteria.

The frustration comes when new regulations mean changes need to be made to the code outlining the business rules, with hours of intensive editing required from software teams. Not only is this a time intensive task, it often means a slow delivery to market for new services and an inability to act with agility. In fact, many businesses have an IT backlog of change requests that may take months or years to deliver.

How BRMS helped avoid a Dutch headache

By automating the decision making process and separating the business rules from code, both IT and business people can quickly create or modify rules using an intuitive interface. Businesses can do this by implementing a business rules management system (BRMS), allowing IT and business analysts to collaborate, identify and deploy automated business rules, freeing dedicated development to focus on innovation.

One industry that faces constant challenges in keeping up with regulation changes is healthcare. It would be a cheap literary device to call it a matter of life and death.  Brocacef, a distributor of pharmaceuticals, recently replaced its complex system for managing and implementing the reimbursements of insurance companies with the Progress Corticon BRMS.

Brocacef operates within Holland, a market that radically changed the process for determining healthcare prices. No longer established by the government, healthcare costs are now decided during annual negotiations between healthcare providers and health insurers. Ironically, through introducing de-regulation, an open-market is created which eventually requires additional regulation to tie together its many parts.

Each insurer maintains its own systems and rules for the payment of reimbursements to patients and pharmacies for drugs and other medical products. For example, some insurers require pharmacies to issue generic prescription drugs or specific brand drugs wherever possible. This differentiation across individual price level agreements has created significant complexity within the healthcare reimbursement system that previously didn’t exist. The updates required include changes in prices, reimbursements, legislation and regulations for approximately 106,000 products.

To deal with this complexity Brocacef chose Corticon as it offered the easiest means to create and update business rules without using programming. As a result of using Corticon, Brocacef was able to reduce costs, fundamentally by changing the time it took to implement changes from 1.5 weeks to 1.5 hours.

It will only get more difficult if you let it

Regulation is going no-where. In an age where greater and greater awareness and demand from Governments, regulatory bodies and customers is growing, businesses should look for how they can use this to gain ground on competitors and improve their own internal efficiency. Implementing BRMS into their back-end processes will not only save time and money now, but safeguard them against any future changes to the market.

Global Banking & Finance Review


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