Group life insurers looking to maintain a competitive advantageare turning to electronic billing to avoid the back-and-forthbilling adjustments with their customers that are traditionallypart of group programs. In his report E-Billing: A StrategicNecessity for Group Insurers, Celent Communications senior analystMatt Josefowicz says e-billing currently has a 30 percent adoptionrate among group life insurers, but he expects it to reach 80 to 90percent in the next three to four years.

Forward-looking insurers are seeing this is where the industryis headed, says Josefowicz. By sending electronic bills to groupcustomers, adjustments can be made more effectively than with apaper bill, where changes and corrections have to be donemanually.

Of course, if all group life customers paid the insurer asbilled, the urgency to change to e-billing would not be there. Thereal need is relieving the pain points of list billing, Josefowiczsays. List billing for group products has a lot to do with rostermanagement. If you are a group insurer, a benefits insurer, or evena workers comp insurer, your relationship with your customers isdependent upon their employee roster, and that changes frequently.The most important changes involve terminations. Thats the singlebiggest pain point in list billing, he says.

Depending on the size of the company, the benefits managersometimes has to cull through a thick stack of paper to make surethe employee roster is accurate. Often, it is not. What happensthen is the benefits manager crosses people out, recalculates theamount by hand, sends the bill to the finance department to bepaid, and when the insurance company gets the check, it doesntmatch the amount that was billed, says Josefowicz. Then the insurerhas to do a very labor-intensive reconciliation.

Insurers cant blame customers for not wanting to pay more thancustomers think they owe, but rebilling can be expensive for aninsurer. With group billing [software] solutions, clients can seethe bill electronically, sort it by employee, remove employees whoare no longer with the firm, and recalculate the bill on the fly,says Josefowicz. They have the recalculation entered into theinsurers system, so when they pay the recalculated amount, itdoesnt cause an exception on the receivables side of the insurancecompany.

Many insurers have been using homegrown e-billing solutions, butnew products have been generating more business for softwarevendors. Josefowicz estimates a presentation-oriented system can bepurchased for under $200,000, with some products reaching up to $1million. Most carriers have estimated they start hitting a positiveROI when they get about 20 percent of their customers to convert toe-billing, says Josefowicz.

He believes the biggest selling job needs to be done with thecustomers. You have to make a real effort to educate the customeron the benefits, he asserts.

The most successful implementations weve seen have been wherestrong attention is paid to driving adoption through customereducation, adds Josefowicz.