Mailing a bill to a customer seems like a simple task for acompany to perform, but as with most matters of business thesedays, complications can ensue. Studies conducted by the Robert E.Nolan Co. have shown nearly half of the inquiries made of personallines insurers are billing related, according to Steve Discher, asenior vice president with the consulting group. "If you are goingto have one out of every two calls be billing related, hopefullyyou can either minimize that number or try to add some value whenthe call is occurring," he advises.

Most carriers are expending effort to minimize the number ofcalls, Discher believes, by providing some self-servicecapabilities in billing so policyholders can pull their bill offthe Web, study the statement, and make a payment by check or creditcard. "There's quite a bit of investment going on to allowcustomers to do what they want to do when they want to do it," hesays.

Another front for progress is bill redesign. Some carriers havedetermined their billing statements are not customer friendly, sothey are working to simplify the bill, reports Discher. Examples ofthis include new color schemes to make it easier for a customer toread a bill as well as the use of different type fonts so acustomer can understand the difference between a bill and adeclaration sheet. "There has been quite a bit of investment inmaking the bill easier to use," he says.

Personal lines, particularly automobile and homeowners, is whereDischer observes the majority of inquiries being made into billingas well as where he sees the majority of investments occurring."One interesting thing some carriers are doing is they are usingthe billing opportunity for interaction for other services and toinquire how things are going with the customer," he says.

To achieve a better level of customer service, FCCI InsuranceGroup's Carey Geaglone, assistant vice president of informationservices, explains it was imperative for the carrier to present asingle invoice regardless of which of the carrier's three policyadministration systems the policy was issued from.

A single view of the billing information was necessary in orderfor the carrier's customer service reps to answer calls fromcustomers, she says, adding, "We also wanted to post invoicesonline so [policyholders] could go to our Web site and view theirinformation."

As FCCI continues to grow in the number of states in which itdoes business and the number of agents it uses, the goal was to getto the single bill. "That was the biggest piece we were trying toaddress," says Geaglone. "Going forward as a selling point to ouragents is ease of doing business, the ability to view informationonline, and to be able to make payments online. It's all aroundmaking it easier to do business with us."

Another benefit from FCCI's implementation of a new billingsolution from STGMastek involved cash management of accountsreceivable. "In the past, if we had two invoices for multiplepolicies, we might send both invoices in one envelope or they mightbe sent separately," recalls Geaglone.

There were several possibilities for error with such a system."We added a lot of receivable types of transaction detail for ourfinance department to track and report on the transactional level,details needed from a regulatory compliance standpoint," shesays.

The billing and collection department for New Mexico Mutualserves as the carrier's customer service department as well as amini call center, according to Lynn Krueger, billings andcollections manager. To train the CSRs properly, the carriergathered together some frequently asked billing questions and madesure those questions could be answered online quickly and easily."[CSRs] can call up things in just a matter of seconds," she says."We are trained in all aspects of the business–the audit process,underwriting. We cross-train with those functional areas so we canhelp the customer to the fullest. If it gets too technical, wetransfer the call, but we try to handle the call without atransfer, if possible."

Mike Zambrano, a communications specialist with New MexicoMutual, reports that because the old billing system used by theworkers' comp carrier is outdated, CSRs have had to jump into twoor three systems for the correct information, which has keptcustomers on the phone a significant amount of time as theinformation was being gathered. The new system from Guidewire,which the workers' comp carrier is in the process of installing,will expedite customer service calls, he states.

For many carriers, the agent traditionally has been responsiblefor answering calls concerning billing. But insurers also have setup customer service centers to offload some of the work from theagents' office to a call center to allow the agent to focus more onsales and business development, according to Discher.

Some agents are supportive of this strategy, notes Discher,especially large producers who are more sales focused. "Generallyspeaking, the highly productive and highly focused agents are insupport of [the carriers' goals]," says Discher. "I don't thinkthere's a lot of mistrust. [Agents] want to see the service iscredible, and once they get past that and see it works, more agentswill be willing to let go."

Some carriers want their agents to maintain that heavyinvolvement with billing, though. Oklahoma Farm Bureau Insurance(OFBI) uses captured agents to provide customer service to thepolicyholders. "They already know what's being charged, so areal-time system and a way for agents to collect money and depositit solves a lot of issues if the agent can explain to the insuredwhat to expect," says Dave Nockels, vice president of informationsystems for OFBI. "Billings, when the insured doesn't know whatthey're for, cause problems and raise questions."

The agent's information is located on the bill issued by OFBI.The new Innovation system the carrier purchased from ISCS will havecapabilities to receive e-mail and automatically forward messagesto the agent's work list for the day. "It's going to be automated,and it will be easier for the agents to contact the customerselectronically so they can send documents," says Nockels.

The agents want the customer service job, according to Nockels,because they like to know what the insured is thinking and doing."[The agents] know exactly what questions to answer on the bills,"he says.

Some carriers are investing in total upgrades for their billingsystems, but Discher believes that remains the lowest priorityamong those carriers working on their billing issues. "Our clientsare spending a lot more time on bill redesign and making the billeasier to understand; letting customers do what they need to on theWeb; and setting up their own billing centers to offload the workfrom agents," he says. "Those things are happening much moreactively than full-scale billing system replacements, which aremore complex and difficult to do."

Increasing the payment options for its customers is one benefitof the Guidewire billing system for New Mexico Mutual. "We didn'thave that with our old system, other than cash or check," saysKrueger. The new system also offers online access for bothcustomers and agents. Plus, the carrier was able to redesign itsstatement, she notes.

New Mexico Mutual put together an agency task force and askedthe participants for their feedback on what they'd preferstatements to look like. Representatives of the carrier traveledthroughout the state to visit agencies. "They gave us the best ofall the different statements they have seen," says Krueger. "Theydidn't like any one in particular, but they liked certain featuresof several. We took the information and redesigned our statementthrough [the product] BillingCenter."

On the back of each statement, explains Krueger, New MexicoMutual can separate each policy period and show both the paymentplans and the payment due date for each of the customer's policiesso the policyholder can know exactly what amount is due for eachpolicy.

In addition, on the front of the statement, the customer cansee, among other things, what the minimum amount due is along withthe total amount due, which is a feature asked for by the carrier'sagents, she claims.

Another upside to billing inquiry from policyholders is settingup an appointment with an agent. "If there is a question regardingthe bill, [the carrier] uses it as an opportunity to talk to thecustomer about cross-selling or up-selling and making sure thebilling information is accurate," says Discher. "The carrier willconfirm the billing details with clients as well as things such astheir e-mail address and when and how they want to be contacted toupgrade the information page and make sure it's of highquality."

If carriers aren't making billing information available topolicyholders online, Discher warns, such work must become highpriority. "At this point, it's a table-stakes requirement for mostpersonal lines carriers to have online billing," he says. At aminimum, he contends, customers should be able to pay the insurancebill and be able to make a general inquiry on what their coveragesare, the last time they paid their bill, and other informationalfeatures. "If you don't have [online capabilities], that shouldalmost certainly be a priority," he asserts.

Today's payment plans call for something insurers are familiarwith in several ways: ease of doing business. "One of the thingswe're trying to do is make it as easy as possible for customers topay their bills and give them enough pay plans," says Nockels."We've been a holdout on credit cards. There seemed to be somethingwrong about charging your insurance premium to a credit card. Butnow we are going to accept credit cards for full payment ofinsurance, whether it be for an intermediate bill, a renewal, ornew business." Customers also can receive claims information andreprint their invoices, policies, declaration, and securityverification cards.

Large carriers likely have a custom billing system builtin-house, Discher remarks, whereas midtier carriers might conductbilling as an extension of their policy administration system or goout and purchase a stand-alone system. "A lot of the largercarriers will not go with a package solution because their policyrequirements are so significant in volume or their customizationrequirements are such they like to be able to conduct business theway they want to," he says.

The billing system for OFBI is tightly coupled to the policyadministration system, explains Nockels. "One thing we did with thenew billing system is give the insured more information with thebill."

For example, if the policy is a renewal, the customer is giveninformation on the policy and the risk being covered. "It's notmeant to be a declaration of insurance, but it's enough to answersome of the questions we were getting on our old system," saysNockels. "Sometimes it's three or four pages of information,depending on the number of risks on the policy. You couldn't rate apolicy with that sheet, but we don't want our customers to goshopping anyway."

Some insurers, particularly on the life side, have to deal withconsolidation of billing systems. "If you have multiple policiesfor a customer, a single consolidated policy is an absolutemust-have," states Discher.

Multiple bills drive up costs for processing, he continues, andalso create confusion for customers. "They don't want to get threeseparate bills for three separate policies, especially if thepolicies are similar," he says. "Who wants to be receiving threebills for three life insurance policies?"

Such a proposition is more difficult for multiline carriers,Discher points out. "If you have life insurance policies and yourauto and home are with the same carrier, chances are that's achallenge to do consolidated billing," he says. "But within theindividual lines themselves, property and casualty policies aresimilar policies."

The training for customer service reps to handle inquiriesinvolves not just explaining to the customer what's on the bill butalso what the sources of information are for that bill, addsDischer. "You may have multiple systems where you have to go andlook for the information, so the training is essential," he says."CSRs have to make sense of a billing system that is very complexon the back end."

Although a commercial lines insurer, FCCI's three policyadministration systems each had its own billing system. Thedifferent systems not only created different looking bills, but theway in which the different systems calculated the components of thebill also was a problem, Geaglone notes.

Before implementing the new billing solution, Geaglone indicatesa full process reengineering had to be conducted to bring moreconsistency to the carrier's efforts. "Now, we don't have anysystems limitations on how we present the information, how wecalculate installments or late fees, and the type of detail wecould capture," she says.

With multiple administration systems, integration was a keyissue, adds Brenda Davis, CIO at FCCI. "We put into production whatwe called Release One, which was consolidating two of our billingsystems into the new one," she says. "We're now in the midst ofRelease Two, which picks up the other system and a subsystem andgets us to the full single bill."

Complexity arose around the conversions, and as part of thisendeavor, FCCI also took on the development of an in-housetransactional data store to consolidate the policy data and feedthe data into the billing system. "That will allow us in the futureto plug or unplug policy systems if we choose to replace those,"says Davis.

From the beginning, the FCCI project was a partnership betweenthe business unit and the IT department, relates Geaglone. "Thebusiness users were very involved with defining system requirementsand user acceptance testing," she says. "When it came time to trainthe population, the business users conducted thetraining–commission specialists did the commission area, etc."

FCCI started this project with the mandate from both thecompany's CEO and CFO that there would not be a lot of effort spenton performing a formal ROI. "We have key performance indicators tomeasure against the Ward Group study, which includes ourselves anda selected group of insurers that matches our mix of business andmeasures performance," says Davis. "We monitor things such aspremium per employee to see our trends in productivity. After thefact, we expect to see those trends improve. We also expect to seesome return on cash flow with easier payment capabilities and nothaving so many uncollectibles or bounced checks."

Davis believes a soft perspective on ROI is easy to identify asefficiencies improve. Putting it into hard dollars would have beendifficult, she adds, because simultaneous with this billing projectFCCI had other organizational projects taking place. "Pinning ROIto this one project wasn't worth the effort," she says. "We justexpect to become more efficient as we go forward."

Insurers realize the interaction between the carrier and thepolicyholder is an opportunity to communicate. Yet the negativesinvolved with billing problems can outweigh the opportunity tocommunicate with the customer, which is a key reason insurers focuson doing billing right. "When clients call in to complain abouttheir bill, who wants to pick up the phone and have thatinteraction?" asks Discher. "Certainly, you want to take advantageof the situation, but you want to minimize it in the sense it's ahassle for the customer."