Billing systems are crucial to any business, as they provide the platform for the most frequent and sensitive customer interactions and also must interface with many of the other business critical applications companies rely on.
But as more customers acclimate to self service applications via the Web and phone, property/casualty insurers need to keep improving billing systems, otherwise they risk alienating clients who are becoming accustomed to highly efficient billing processes.
Consumers "are dealing with customer service operations in other industries that have more advanced servicing technologies, and are expecting this same level of automation in their dealings with insurers," says Mike Fitzgerald, senior analyst at Celent, a research and consulting firm.
One example is the ability for systems to share data so that the customer only has to provide it once, or not at all, Fitzgerald says. "In many customer interactions, a caller only has to enter their customer number or policy number and the call center employee's screen pops with all the information that is needed about that customer," he says. "If insurers do not have this level of support in their billing customer service areas, they run the risk of alienating their clients."
So it shouldn't be surprising that many companies are launching new billing system projects in an effort to take advantage of the latest technologies and features that make billing processes go more smoothly for customers, agents and anyone else involved.
"Insurers need their billing systems to meet customer service needs in an effective and high-quality manner," Fitzgerald says. "Many are operating with legacy environments that are inflexible and difficult to change," Fitzgerald says. "This places them at a disadvantage as they attempt to respond to the higher levels of customer service demanded by consumers. Additionally, insurers must reduce operating expenses, maintain equity, manage cash flow, and report on their results."
Newer billing systems can deliver potential benefits such as reduced time to market for billing plan and program changes, increased ability to interface with other corporate systems, both upstream and downstream, and greater flexibility, Fitzgerald says.
"Billing systems interface with front-end sales systems and customer relationship management [CRM] systems, providing account-level information such as what the customer's bill plan is, what the current payment status is, etc.," Fitzgerald says. "These systems pass information downstream to other administration systems so that billing details can be recorded on the customer's account."
Continuous Improvement
Safety Insurance Group, a property/casualty insurer based in Boston, is in the early stages of moving to a more modern billing platform. The company has been using Exceed Classic from Computer Sciences Corporation (CSC) since 2007, and is now migrating all its billing for services, other than auto insurance, to CSC's Exceed Java, according to Jim Berry, VP of insurance operations at Safety Insurance.
The insurer has upgraded its billing systems a number of times since it was founded in 1980. Initially the company developed an in-house system before moving to a second platform in 1997, when it launched its homeowners and other commercial products.
In 2007 Safety Insurance opted to move all of its billing to Exceed Classic, because the previous system didn't deliver the flexibility or scalability the company needed to keep up with what others in its markets were doing.
"The old system didn't have the necessary base functionality to support additional billing plans, payment terms, finance charges, number of installments," Berry says. "It wasn't easily adaptable to provide both our agents and our insureds with Web inquiry capabilities."
There are two primary benefits to moving to the Java system, Berry says. First, it is less expensive to run function-rich billing applications in a Java environment on servers than on a mainframe in a Cobol environment, he says. The second is demographic. The number of skilled Java programmers is growing while the number of Cobol programmers continues to shrink.
"We've been very happy with Exceed Classic. We especially like CSC's continuous delivery releases, which allow our company to enjoy the benefits of the innovation of the entire Exceed billing customer community," Berry says. But once CSC committed its future initiatives to the Java platform, it became clear that the way forward lay with that platform, he adds.
The Exceed system has allowed the company to make continuous incremental improvements in its technology and billing capabilities-everything from bug fixes to revamped user screens to new payment methods-which are important to delivering a high level of customer service and keeping clients satisfied, Berry says.
"Billing can be a differentiator in a negative way if your company isn't able to provide the levels of capabilities that your customers expect," such as being able to access their balances at any time, in a variety of different ways whether it's via phone, the Web or mobile devices, and being able to pay in various ways such as EFT or credit card, Berry says. "Unlike policy and even to a lesser degree claims, consumers' expectations regarding billing aren't limited just to our insurance industry competitors' offerings. When it comes to billing capabilities, they expect their insurer to provide the services and capabilities that any type of retail product provides. The challenge in staying current is enormous."
Upgrading the billing system over the years has come with some challenges. "Maintaining service levels while undergoing a system conversion of any type puts enormous demands on the back-office operations staff," Berry says. "Strong leadership from the affected business unit is absolutely critical in undertaking an effort of this type. It's vital to keep your eye on the ultimate goal, which is to deliver better service to your customers."
Safety Insurance makes sure to educate everyone involved in billing about why technology changes are made and the potential benefits to customers as well as agents, Berry says. "We have to say we're in a very competitive world and we have to continue to offer these capabilities to match what others are providing," he says. Customers "expect all companies to be able to process bills as well as any other company they do business with in any industry. It's the one area where our service levels are measured against capabilities outside of our competitors."
Supporting Business Objectives
One property/casualty insurer making inroads is US Assure, which is in the midst of deploying STG Billing, a modern billing system from MajescoMastek. The company expects to begin using the system in early 2013.
"We needed a solution that supports our program administration and insurance services business objectives, which include offering distributors multiple products from multiple carriers and also offering billing as a service to other wholesalers, program administrators and insurance companies," says Selena Breedlove, US Assure SVP.
The STG Billing system supports US Assure's multiple carriers and multiple product program administration business with direct bill, agency bill and commission payment capabilities, Breedlove says. With the new system, the company will be able to leverage its existing billing support services, with full billing and commission services to its various partners.
The company expects to be able to easily integrate new products and carrier partners to the billing environment. STG Billing provides a user-friendly system for distributors, carrier-partners, insured and employees, Breedlove says, and the company anticipates cost savings and the ability to operate a more eco-friendly system through the use of electronic payment and presentment capabilities.
Standardizing and Simplifying
FCCI Insurance Group, another insurer using the MajescoMastek billing system, began its multi-phased approach to implementing in March 2008.
"Our primary goal was to improve the experience for our customers," says Carey Geaglone, VP of IT. "We were using multiple policy admin and billing systems across our various regions. In addition to having multiple bills for a given policyholder, there were inconsistencies in invoice design, payment plans, fees and cash application rules."
That could be frustrating for the insured, agent and billing coordinator responsible for managing the account, Geaglone says. The upgraded system provides a more streamlined approach, making FCCI easier to do business with, she says.
"We are pleased to provide our customers with single bills and consistent payment plans, fees and cash application rules," Geaglone says. "We are also now able to provide online invoice and payment, ease of managing moratoriums on notices of cancellations, and greatly improved financial reporting, controls and customer inquiry."
The enhanced billing "has significantly reduced the number of inquiries from agents and policyholders, and our agents have complimented us on our improved ease of doing business," Geaglone says.
In addition, new lines of business are now configurable, which allows the company to serve new customers faster.
The project was ambitious, according to Geaglone. "We partnered with Majesco to build out some of the account bill functionality along with some of the state and line configurations that are now available out-of-box, so our project had the added stress of co-development," she says.
FCCI converted four legacy systems and reengineered its business processes across regions as part of the initiative. "We had strong partnerships in place between our IT department and business departments and between FCCI and Majesco, and that helped make the project a success overall," Geaglone says.
Easing Integration
As with other core system replacement projects, billing implementations do carry a degree of risk and complexity.
"With a billing implementation there often are a high number of interfaces to build and test," Celent's Fitzgerald says. "Data integrity must be preserved throughout the billing process and sufficient information must be passed to financial systems to enable accurate financial balancing."
And, as with any other crucial technology implementation, it's important to do your homework when researching vendors. Virtually all stand-alone billing systems include the basic functions needed for property/casualty insurers, but not all have implemented the automation, such as automated workflow routing and electronic alerts that speed problem resolution, to achieve best-in-class customer service, according to "Stand-Alone Billing System Vendors, North American Market," a report by Celent, published in January 2012.
A few vendors include or are working to include these automated features in their solutions, the report says. Others have some features but not all. "Insurers that are evaluating alternatives are encouraged to consider which billing systems, when combined with their current application environment, will deliver the most powerful billing customer service response," the report notes.
Looking Ahead
Expanded billing functionality and improved technology in the market mean that insurers have a wide range of systems and vendors to consider when looking for a solution to fit their needs. In its report, Celent evaluates billing systems and vendors in areas such as advanced technology and technical flexibility, breadth of functionality, customer base and depth of client services.
The report notes several trends in the industry, based on discussions with insurers concerning the needs that drive investment in modern billing systems. One trend is the increasing prevalence of Internet purchasing and bill payment in other industries, which continues to increase the pressure on insurers to deliver Web capabilities, such as electronic bill pay and presentment, mobile transactions, and policyholder/producer portals. Most legacy systems can't provide that, Celent says, and updated technology must be introduced to fully enable these functions.
Another trend is that large insurers increasingly are coordinating their offerings between lines of business. Progress is being made to make sales and service across product lines transparent to customers and agents. Payment and billing services that are enterprisewide, multi-line, and support a shared-services model are a critical capability in realizing this goal, Celent says. In addition, large insurers often seek to consolidate multiple billing systems onto one platform.
Many smaller insurers are also replacing aging billing systems and seeking out-of-the-box solutions that are supported by strong vendor support services, Celent notes. They are looking for vendors that can deliver a fully functioning implementation with minimum disruption and maximum speed.
And it's likely that insurers of all sizes will soon recognize the need to raise their game. The potential opportunities to simplify and standardize business processes, ease systems integration and cut costs are too great to ignore. Those opportunities, combined with competitive pressures for more customer-centric systems and processes and the benefits, are compelling.
Bob Violino is a business editor and writer based in New York.
