Mailing a bill to a customer seems like a simple task for a company to perform, but as with most matters of business these days, complications can ensue. Studies conducted by the Robert E. Nolan Co. have shown nearly half of the inquiries made of personal lines insurers are billing related, according to Steve Discher, a senior vice president with the consulting group. "If you are going to have one out of every two calls be billing related, hopefully you can either minimize that number or try to add some value when the call is occurring," he advises.
Most carriers are expending effort to minimize the number of calls, Discher believes, by providing some self-service capabilities in billing so policyholders can pull their bill off the Web, study the statement, and make a payment by check or credit card. "There's quite a bit of investment going on to allow customers to do what they want to do when they want to do it," he says.
Another front for progress is bill redesign. Some carriers have determined their billing statements are not customer friendly, so they are working to simplify the bill, reports Discher. Examples of this include new color schemes to make it easier for a customer to read a bill as well as the use of different type fonts so a customer can understand the difference between a bill and a declaration sheet. "There has been quite a bit of investment in making the bill easier to use," he says.
Personal lines, particularly automobile and homeowners, is where Discher observes the majority of inquiries being made into billing as well as where he sees the majority of investments occurring. "One interesting thing some carriers are doing is they are using the billing opportunity for interaction for other services and to inquire how things are going with the customer," he says.
To achieve a better level of customer service, FCCI Insurance Group's Carey Geaglone, assistant vice president of information services, explains it was imperative for the carrier to present a single invoice regardless of which of the carrier's three policy administration systems the policy was issued from.
A single view of the billing information was necessary in order for the carrier's customer service reps to answer calls from customers, she says, adding, "We also wanted to post invoices online so [policyholders] could go to our Web site and view their information."
As FCCI continues to grow in the number of states in which it does business and the number of agents it uses, the goal was to get to the single bill. "That was the biggest piece we were trying to address," says Geaglone. "Going forward as a selling point to our agents is ease of doing business, the ability to view information online, and to be able to make payments online. It's all around making it easier to do business with us."
Another benefit from FCCI's implementation of a new billing solution from STGMastek involved cash management of accounts receivable. "In the past, if we had two invoices for multiple policies, we might send both invoices in one envelope or they might be 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 our finance department to track and report on the transactional level, details needed from a regulatory compliance standpoint," she says.
The billing and collection department for New Mexico Mutual serves as the carrier's customer service department as well as a mini call center, according to Lynn Krueger, billings and collections manager. To train the CSRs properly, the carrier gathered together some frequently asked billing questions and made sure 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 can help the customer to the fullest. If it gets too technical, we transfer the call, but we try to handle the call without a transfer, if possible."
Mike Zambrano, a communications specialist with New Mexico Mutual, reports that because the old billing system used by the workers' comp carrier is outdated, CSRs have had to jump into two or three systems for the correct information, which has kept customers on the phone a significant amount of time as the information 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 responsible for answering calls concerning billing. But insurers also have set up customer service centers to offload some of the work from the agents' office to a call center to allow the agent to focus more on sales and business development, according to Discher.
Some agents are supportive of this strategy, notes Discher, especially large producers who are more sales focused. "Generally speaking, the highly productive and highly focused agents are in support of [the carriers' goals]," says Discher. "I don't think there's a lot of mistrust. [Agents] want to see the service is credible, and once they get past that and see it works, more agents will be willing to let go."
Some carriers want their agents to maintain that heavy involvement with billing, though. Oklahoma Farm Bureau Insurance (OFBI) uses captured agents to provide customer service to the policyholders. "They already know what's being charged, so a real-time system and a way for agents to collect money and deposit it solves a lot of issues if the agent can explain to the insured what to expect," says Dave Nockels, vice president of information systems for OFBI. "Billings, when the insured doesn't know what they'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 have capabilities to receive e-mail and automatically forward messages to 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 customers electronically 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 billing systems, but Discher believes that remains the lowest priority among those carriers working on their billing issues. "Our clients are spending a lot more time on bill redesign and making the bill easier to understand; letting customers do what they need to on the Web; and setting up their own billing centers to offload the work from agents," he says. "Those things are happening much more actively than full-scale billing system replacements, which are more complex and difficult to do."
Increasing the payment options for its customers is one benefit of the Guidewire billing system for New Mexico Mutual. "We didn't have that with our old system, other than cash or check," says Krueger. The new system also offers online access for both customers and agents. Plus, the carrier was able to redesign its statement, she notes.
New Mexico Mutual put together an agency task force and asked the participants for their feedback on what they'd prefer statements to look like. Representatives of the carrier traveled throughout the state to visit agencies. "They gave us the best of all the different statements they have seen," says Krueger. "They didn't like any one in particular, but they liked certain features of several. We took the information and redesigned our statement through [the product] BillingCenter."
On the back of each statement, explains Krueger, New Mexico Mutual can separate each policy period and show both the payment plans and the payment due date for each of the customer's policies so the policyholder can know exactly what amount is due for each policy.
In addition, on the front of the statement, the customer can see, among other things, what the minimum amount due is along with the total amount due, which is a feature asked for by the carrier's agents, she claims.
Another upside to billing inquiry from policyholders is setting up an appointment with an agent. "If there is a question regarding the bill, [the carrier] uses it as an opportunity to talk to the customer about cross-selling or up-selling and making sure the billing information is accurate," says Discher. "The carrier will confirm the billing details with clients as well as things such as their e-mail address and when and how they want to be contacted to upgrade the information page and make sure it's of high quality."
If carriers aren't making billing information available to policyholders online, Discher warns, such work must become high priority. "At this point, it's a table-stakes requirement for most personal lines carriers to have online billing," he says. At a minimum, he contends, customers should be able to pay the insurance bill and be able to make a general inquiry on what their coverages are, the last time they paid their bill, and other informational features. "If you don't have [online capabilities], that should almost certainly be a priority," he asserts.
Today's payment plans call for something insurers are familiar with in several ways: ease of doing business. "One of the things we're trying to do is make it as easy as possible for customers to pay their bills and give them enough pay plans," says Nockels. "We've been a holdout on credit cards. There seemed to be something wrong about charging your insurance premium to a credit card. But now we are going to accept credit cards for full payment of insurance, whether it be for an intermediate bill, a renewal, or new business." Customers also can receive claims information and reprint their invoices, policies, declaration, and security verification cards.
Large carriers likely have a custom billing system built in-house, Discher remarks, whereas midtier carriers might conduct billing as an extension of their policy administration system or go out and purchase a stand-alone system. "A lot of the larger carriers will not go with a package solution because their policy requirements are so significant in volume or their customization requirements are such they like to be able to conduct business the way they want to," he says.
The billing system for OFBI is tightly coupled to the policy administration system, explains Nockels. "One thing we did with the new billing system is give the insured more information with the bill."
For example, if the policy is a renewal, the customer is given information on the policy and the risk being covered. "It's not meant to be a declaration of insurance, but it's enough to answer some of the questions we were getting on our old system," says Nockels. "Sometimes it's three or four pages of information, depending on the number of risks on the policy. You couldn't rate a policy with that sheet, but we don't want our customers to go shopping anyway."
Some insurers, particularly on the life side, have to deal with consolidation of billing systems. "If you have multiple policies for a customer, a single consolidated policy is an absolute must-have," states Discher.
Multiple bills drive up costs for processing, he continues, and also create confusion for customers. "They don't want to get three separate bills for three separate policies, especially if the policies are similar," he says. "Who wants to be receiving three bills for three life insurance policies?"
Such a proposition is more difficult for multiline carriers, Discher points out. "If you have life insurance policies and your auto and home are with the same carrier, chances are that's a challenge to do consolidated billing," he says. "But within the individual lines themselves, property and casualty policies are similar policies."
The training for customer service reps to handle inquiries involves not just explaining to the customer what's on the bill but also what the sources of information are for that bill, adds Discher. "You may have multiple systems where you have to go and look for the information, so the training is essential," he says. "CSRs have to make sense of a billing system that is very complex on the back end."
Although a commercial lines insurer, FCCI's three policy administration systems each had its own billing system. The different systems not only created different looking bills, but the way in which the different systems calculated the components of the bill also was a problem, Geaglone notes.
Before implementing the new billing solution, Geaglone indicates a full process reengineering had to be conducted to bring more consistency to the carrier's efforts. "Now, we don't have any systems limitations on how we present the information, how we calculate installments or late fees, and the type of detail we could capture," she says.
With multiple administration systems, integration was a key issue, adds Brenda Davis, CIO at FCCI. "We put into production what we called Release One, which was consolidating two of our billing systems into the new one," she says. "We're now in the midst of Release Two, which picks up the other system and a subsystem and gets us to the full single bill."
Complexity arose around the conversions, and as part of this endeavor, FCCI also took on the development of an in-house transactional data store to consolidate the policy data and feed the data into the billing system. "That will allow us in the future to plug or unplug policy systems if we choose to replace those," says Davis.
From the beginning, the FCCI project was a partnership between the business unit and the IT department, relates Geaglone. "The business users were very involved with defining system requirements and user acceptance testing," she says. "When it came time to train the population, the business users conducted the training--commission specialists did the commission area, etc."
FCCI started this project with the mandate from both the company's CEO and CFO that there would not be a lot of effort spent on performing a formal ROI. "We have key performance indicators to measure against the Ward Group study, which includes ourselves and a selected group of insurers that matches our mix of business and measures performance," says Davis. "We monitor things such as premium per employee to see our trends in productivity. After the fact, we expect to see those trends improve. We also expect to see some return on cash flow with easier payment capabilities and not having so many uncollectibles or bounced checks."
Davis believes a soft perspective on ROI is easy to identify as efficiencies improve. Putting it into hard dollars would have been difficult, she adds, because simultaneous with this billing project FCCI had other organizational projects taking place. "Pinning ROI to this one project wasn't worth the effort," she says. "We just expect to become more efficient as we go forward."
Insurers realize the interaction between the carrier and the policyholder is an opportunity to communicate. Yet the negatives involved with billing problems can outweigh the opportunity to communicate with the customer, which is a key reason insurers focus on doing billing right. "When clients call in to complain about their bill, who wants to pick up the phone and have that interaction?" asks Discher. "Certainly, you want to take advantage of the situation, but you want to minimize it in the sense it's a hassle for the customer."