By KIMBERLY MORTON, global product marketing director at Guidewire Software
In a challenging economy, insurers are pressed to trim costs and improve the bottom line. At the same time, an entrenched soft market has made it more difficult to achieve top-line growth. There is opportunity to achieve both of these objectives in an often-overlooked process that is as old as the insurance transaction itself: billing.
Insurers have come to understand the importance of billing as a customer service touch point. In a recent industry survey, 80 percent of all carriers responding reported that billing is "important" or "very important" to customer satisfaction, and 100 percent of large carriers surveyed believed that billing impacts retention.
As a result, companies are looking to modernize their legacy billing systems in order to provide service that goes beyond the invoice. In fact, research firm Gartner says that for insurers, replacing legacy billing applications is a "strategic imperative."
However, improved customer service is only one of the benefits that modernized billing systems have to offer. Investing in billing technologies that deliver process improvement, enhanced customer and agent service, and better control of and visibility into the billing operation can also deliver real cost savings and generate new growth, creating a fast and positive return on investment in the process.
By capitalizing on state-of-the-art billing technology, carriers can free themselves from inflexible systems that cannot support the changing needs of customers and agents. At the same time, providing those constituencies with better service in the billing process can trim expenses as well.
Cost-reducing billing options. Carriers primarily view the creation of multiple billing options as a customer service benefit; however, these options also save the company money. Providing customers with plans that best fit their unique financial circumstances increases the likelihood of timely payments which results in increased cash flow. Electronic billing options eliminate costly manual check processing and get funds on insurers' books faster.
Legacy systems struggle to accommodate these types of options; in particular, single-invoice, multi policy billing. For instance, a common scenario might find a large carrier with multiple divisions and separate billing systems for each division. The carrier would be unable to send a single invoice to insureds with multiple policies, which increases processing costs and leads to customer frustration. Not surprisingly, the company would also be unable to obtain a complete picture of the accounts and payment history a customer had with the company. Modernizing its billing system would enable the carrier to streamline and centralize billing and to support both policy- and account-level invoicing.
Web self-service for customers and agents.
Pushing self-service to the Web is a proven cost-reducer. However, billing information is often locked in mainframe systems that are difficult to integrate with Web portals or agency management systems. Therefore, agents and customers must contact the carrier for information and to resolve any discrepancies, increasing billing staff costs. The ability to integrate with Internet delivery platforms is a key-cost saving feature of progressive billing platforms that also enhances customer service.
Automated statement reconciliation. In surveying insurers, about half of small carriers (under $100 million in written premium) reported that their billing systems are difficult to balance. Legacy systems are simply not designed to provide reporting capabilities to management about the billing process itself and its impact on overall business performance.
For instance, a carrier could contend with a legacy billing system that provides poor visibility, making it difficult to resolve disputes around internal balancing issues, increasing staff training time, and creating manual workarounds to solve problems or even reconcile with the general ledger. Replacing its billing system will enable such a carrier to automate journal entries and create a drillable reconciliation report. Agents can handle many issues through a self-service portal and view commissions in real time, while staff training can be reduced to deliver significant expense savings.
Equally compelling to growth-focused companies struggling in an ultra-competitive market, the billing process presents the opportunity to spur revenue generation.
Supporting Sales. Property/casualty insurance billing is widely recognized as the guaranteedpoint of communication between an insurer and their policyholders or agents. A customer may never read marketing materials insurers send, but they will examine the bills they receive.
However, legacy billing systems offer little support for customized invoice messaging, and customers will ignore marketing messages that are not targeted specifically to them. Billing systems incorporating state-of-the-art, standards-based integration technologies can connect to CRM platforms and document management systems to provide custom messaging capability. Carriers can drill down into customers' accounts and create marketing messages based on what they know about individual policyholders, the types of policies customers already have, and whether or not a customer is a desirable target for upsell or cross-sell.
Marketing to the next generation of insurance consumers. Tech-savvy customers expect anytime, anywhere access to billing information and payment options. They demand flexibility, including electronic bill presentment and payment (EBPP) and the ability to choose payment schedules that best meet their needs.
Progressive billing systems support multiple presentation methods and delivery channels. At the same time, flexible and configurable systems allow carriers to rapidly deploy new billing and payment plans via system configuration, rather than requiring custom coding by IT, slashing internal development costs.
leakage. Leakage occurs in billing when a carrier fails to collect all that it is owed due to calculation mistakes, faulty procedures, or the inability to automatically apply funds to the right accounts due to irreconcilable differences between different systems. State-of-the-art billing platforms automate many common tasks, increasing accuracy and allowing billing staff to focus on exception processing. Additionally, integration with both Web portals and core administration platforms eliminates reentry of policy data, further reducing the chance of errors.
For example, carriers that struggle with legacy billing systems can find their staff drowning in a sea of spreadsheets. In particular, several legacy billing systems provide only basic functionality, requiring manual intervention to integrate with different systems and with external partners such as collection agencies. Updating billing systems enables carriers to eliminate the spreadsheets and automate tasks such as delinquency processing, leading to increased earned premium collections and reduced leakage.
Carriers contend with a variety of legacy billing system issues that increase operating costs and depress revenue generation. They may deal with a variety of different billing systems, acquired to meet different needs over time. In fact, one-third of large carriers surveyed reported using four or more billing systems throughout their organization. These systems are often not integrated, lacking a common user interface. Dealing with multiple systems makes it difficult for billing representatives to locate customer information quickly. Legacy, "green screen" billing systems also lack the intuitive, Web-based design with which today's generation of users is most familiar.
Progressive billing systems offer open, standards-based architecture and Web-based, yet enterprise-grade, designs that minimize the "footprint" on user desktops. Combined with intuitive navigation and automation, and workflow modifiable via a configurable rules engine rather than locked in application logic, these systems reduce costs throughout the billing process. At the same time, Web-service programming interfaces that enable integration into a service-oriented architecture (SOA), seamless connection to other core systems such as policy administration, and support for agency and customer portals help insurers support new distribution channels and new products and increase cross-selling opportunities.
Modernizing billing will improve customer service, but that is only part of the benefit. A more compelling value proposition, particularly in today's challenging economy, is the ability of a customer-focused billing system to deliver real cost-benefit in terms of expense reduction and increased revenue. Achieving these bottom-line results is what transforms billing from an administrative necessity to a business opportunity.
November 1, 2009
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