Electronic bill payment and presentment (EBPP) has experienced a mixed bag of interest among consumers, with payments of insurance premiums ranking low on their online bill-payment priority list.In fact, insurance carriers, along with utilities, telecommunications and mortgage companies, are among the businesses that are lagging behind in the expansion of EBPP, according to a recent report by Stamford, Conn.-based consulting firm Gartner Inc.
Major billers, such as credit card providers, are among the leaders in the EBPP space and are contributing to a growth trend that will see approximately 32 million U.S. consumers view some of their bills online by the end of this year. That's up considerably from the 20 million that viewed their bills online last year.
But as carriers reassess the significance of EBPP, they may have an opportunity to make strides. The recent anthrax cases that were reported on the East Coast in the wake of the Sept. 11 terrorist attacks have produced fear among consumers about handling regular mail. As a result, consumers who aren't advocates of EBPP may rethink the importance of paying bills electronically, Gartner reports.
In a study released in early November, entitled "Anthrax Scare Spikes Interest in Already Surging E-Billing," Gartner stresses that mail safety concerns raised by these scares have encouraged consumers and billers over the past month to pursue e-billing and payment more aggressively.
"The anthrax scare has heightened interest in a market already poised to take off," says Avivah Litan, a Gartner analyst. "The e-billing market has a long way to go before it replaces all consumer billing paper, but consumers recently have shown their enthusiasm for signing up for biller-direct systems."
Gartner reveals that more than 48% of consumers prefer going to their billers' Web sites directly to access and pay bills while 24% of those polled prefer to receive a consolidated set of bills at their banks' Web sites.
The anthrax scare might enable carriers to open the window of opportunity to expand EBPP among their customer base, but it will be up to carriers to put the pieces in place to make EBPP successful.
Over the past few years, several carriers, such as Los Angeles-based Farmers Insurance Co. and Mayfield Village, Ohio-based Progressive Insurance Co., have championed the EBPP movement in the industry. They've done this by furnishing customers with easy-to-read premium notices on the Web, and then offering quick steps in which to remit online, either by credit card or electronic fund withdrawal.
Carriers will need to make EBPP as painless as possible for customers. In a survey released in October by Newton, Mass.-based Meridien Research Inc., entitled "Electronic Bill Presentment and Payment: Money Talks and the Postman Walks," consumers in general have failed to embrace EBPP for several reasons, one of which is resistance to the $5 to $10 per month fee, which is sometimes charged for the service, says Jeanne Capachin, senior analyst for Meridien.
However, most carriers that offer electronic bill payment don't charge consumers bills this way-preferring to approach e-billing as a consumer convenience. This is true in part because when a transaction occurs electronically, the costs to process the invoice are reduced by 72%, Gartner reports. As a result, carriers can pass these savings along to consumers through a no-charge policy.
Obstacles to overcome
The obstacle that will confront carriers in making EBPP palatable to their customers won't be predicated on cost or on regular mail security concerns, but on other factors.
"The nature of an insurance premium is that it's a fixed amount," Capachin explains. "A credit card bill usually has a variable balance from month to month. These are the type of bills consumers wish to access online. I don't see a stampede to view or pay insurance premiums online."
Not everyone shares this low-growth forecast (see chart). "Large carriers are beginning to support a customer service Web site, and this includes adopting EBPP," says Kimberly Harris, senior analyst, Gartner.
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