To keep pace with the evolving expectations of their customers, insurers are investing in this oft-overlooked core system.
When the time comes to replace core systems, billing systems rarely get top billing — waiting as policy administration and claims get first priority. Insurance Networking News asked Katie Doyle, who manages product marketing at San Mateo, Calif.-based Guidewire Software Inc., what carriers can gain by updating the way they bill their customers.
INN: Does billing deserve equal focus with other core systems?
KD: Traditionally viewed as a back-office function, the impact of billing goes well beyond the ability to collect premium from insureds. The way that property/ casualty carriers bill their insureds affects customer retention, agent relationships and bottom-line results. The monthly bill is likely to be the only piece of carrier correspondence an insured reads, and the only one they call to discuss—making billing a carrier’s most important channel for influencing customer satisfaction.
Agents rely on billing departments to alert them of issues with their insureds and, equally important, pay them commissions earned. These agents, key contributors to a carrier’s business, also have a vested interest in the carrier’s billing processes. Every carrier relies on billing to collect revenue.
INN: You mention the impact that billing has on customer satisfaction and retention. How can billing help carriers improve customer satisfaction?
KD: Customers today expect more from their carriers than ever before. As competition for good customers intensifies, the carriers who are able to meet or exceed expectations will emerge with a significant competitive advantage. Customers are looking for flexibility from their carrier. They expect the ability to choose a payment schedule that meets their needs, and to be able to modify it if needs change.
Customers also expect methods of payment flexibility. Many have grown accustomed to paying bills online using credit cards and automatic funds transfer; they expect that carriers will offer these same options along with the ability to choose their payment dates. Insureds who hold multiple policies with a single carrier expect to pay one consolidated invoice each billing cycle.
Lastly, customers expect that any billing issues that arise will be promptly and accurately resolved. The majority of customer service calls a carrier receives are billing-related. Regardless of their specific issues, these billing-related calls provide carriers with an opportunity to provide exceptional customer service.
INN: We hear a lot about claims leakage—does the same concept apply to billing?
KD: Billing leakage is an emerging concept in the industry that is prompting many CFOs and CEOs to think of billing as not simply a cost center, but as a strategic function in the organization.
Leakage is profit lost as a result of operational inefficiencies. Leakage occurs when a carrier pays out more than needed in the form of claims, or when they fail to collect all that is owed in the form of premium payments.
Examples of billing leakage are abundant—free coverage provided to non-paying customers during cancellation, write-offs of amounts that fail to reconcile, premium miscalculations—their root cause is the same: legacy billing systems that rely on manual processes contain only a subset of the required functionality, and are difficult and costly to modify.
Fortunately, modern billing systems are now available. These systems allow carriers to imbed best practices into their billing systems, for consistency and accuracy across the operation.
INN: How will carriers be managing billing five years from now?
KD: The billing department of the future will be characterized by flexibility, efficiency and visibility. Billing departments will be able to deploy new functionality to address regulatory changes or capitalize on new market opportunities in a matter of days instead of the weeks/months that these changes require today.
In the future, carriers will have complete visibility into their billing operations. Customer service representatives will have snapshot views of complete customer or agent billing information to provide more accurate, immediate answers to their customers. Billing supervisors will have real-time access to data about business unit performance, billing behavior by customer segment and the ability to generate ad hoc reports in just a few clicks.
Perhaps the most significant change we’ll see is that billing data will no longer exist in a departmental silo, but will be leveraged throughout the organization. Billing data is an often under-utilized input into the underwriting process. A customer’s payment history and the number of delinquencies they incur during a policy period is vital information that can and should be used to make renewal and rate decisions.
This information is available today, but is locked inside of billing systems. In the future, this information will be integrated with rating and underwriting systems where it can be analyzed to make more profitable renewal decisions.
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