Like surfers shooting the curl, insurance companies have learned to ride the industry's wild ebb and flow. No matter what causes the next mini-tsunami-increased competition, government intervention on pricing, new technologies and distribution channels, or evolving customer needs—insurance companies need to improve business practices to stay ahead of the wave.Until now, insurers have relied upon simplified, customer-facing business transactions, such as policy and claims administration and point-of-sale (POS), for direct competitive advantage. The recent concentration on systems upgrades has led to considerable neglect of key business processes, including billing and accounts receivable. Although critical, those functions lack the appeal of hot topics such as Web services, service-oriented architecture (SOA) and regulatory compliance.
Unlike policy administration, rating and claims activities, billing provides frequent touch points with policyholders. Even though billing gives insurers the opportunity to interact monthly, or more often, with policyholders, many carriers consider the process a back-office "chore" that can't help establish true market advantage. Instead, "insurers are turning their attention to the challenge of higher service expectations from 21st century consumers, business customers, and especially distribution partners," according to a recent study by Boston-based Celent LLC.
Ultimately, it's all about the customer, and billing provides a chance to personalize the interaction between the carrier and policyholder. Whether it's a returning customer or a new one, every process and system-front office, back office and enterprisewide-must serve policyholders' needs. With that in mind, the desire to improve customer service remains a key driver for IT spending among insurers, especially in the property/casualty sector.
Recently, attention has focused on the purchase "experience." But what happens after the sale is important as well, and one of the obvious post-sale touch points is the bill. The bill is an opportunity to renew contact with a policyholder and demonstrate excellence in customer service once again.
THE NEXT WAVE
Until now, billing has been handled as part of the policy administration system. Most systems have components "pre-integrated" with the core system, which makes billing operate according to the system's default option. However, insurance companies understand that their old billing systems may have been adequate for basic practices of core bill issuance and collections but do not meet the challenge of higher service expectations from the consumers of a new era.
So, let's talk about the next wave. Many new billing systems are "plug and play," while others treat billing as an outsourced service instead of an in-house function. The plug and play varieties common today equate to billing-in-a-box-simply plug them into a legacy system and any insurer can use billing to enhance the customer or policyholder experience. Those systems still use indispensable insurance company resources to complete billing functions. When billing is processed as a service under a business process outsourcing (BPO) arrangement, carriers have access to the newest technology, highly skilled staff and additional customer service options.
"Although, homegrown solutions are a significant portion of the current installed base, they have a disproportionately low satisfaction level compared to vendor solutions, especially around core billing functions like supporting different bill types," cites the Celent report.
Regardless of which type of billing system a carrier chooses, the spectrum of functions insurance companies are looking for include superior customer service, electronic bill presentment and payment options (EBPP), enterprise-wide integration options, and the flexibility to define business rules according to a company's specific situations.
In short, the key drivers influencing IT spending in billing operations are all linked to ease of use. Whether a company wants to integrate bill presentment and payment to increase customer satisfaction or to standardize processing and automated processing to eliminate manual intervention, all the options are available with today's billing systems.
THE DECISION
Often, service levels of older systems are below average and below expectations. Insurance companies and agencies looking to improve the experience and address regulatory issues are investing in new billing systems as well as infrastructure.
As system upgrades and integration initiatives are completed, insurance companies are looking to spend IT dollars on the next wave of technology that can help them get an edge over the competition by improving customer service.
Billing systems and services are that next wave. No longer relegated to the back burner or the back office, billing systems and services can deliver the service that policyholders want, expect and demand.
Nimish Sankalia is senior vice president of Systems Task Group International Ltd., New York.
