Technology has allowed single-state insurers to competewith national carriers, but when the national carriers can spendmillions marketing their company to customers the smaller carriersneed to find a niche that will retain their policyholders andpossibly attract a few from the competition. For North CarolinaFarm Bureau Mutual Insurance Company, the battleground waselectronic billing.

"We were receiving feedback from our customers that they wantedelectronic billing—the ability to go paperless," says LindaSquires, senior executive of operations for NCFBMIC. "We hadcustomers that wanted services that we were not offering online:accessing declarations, getting proof of insurance. The biggerpicture for us was to stay competitive and meet customerexpectations."

Customers have expectations of going online to conducttransactions. NCFBMIC established a strategy to offer such serviceas a way to retain customers and offer a better level of servicethan what their competition was offering.

NCFBMIC already had an established relationship with BillMatrix,which is now Fiserv, but the carrier performed its due diligence bylooking at four other vendors, their offerings, and their areas ofexpertise as far as delivering an electronic billing solution.Following a four-month search, NCFBMIC selected Fiserv in August of2009.

At the same time, NCFBMIC was interacting with IBM to develop anew front end on the carrier's Website.

"It was a rapid interactive process because we were live withinsix months," says Squires. "We did take a slow approach in exposing[the system] to our employees and agency force. We wanted to makeit perfect before we opened it to our customer base."

In speaking with Fiserv, Anthony Neff, operations divisionmanager for the carrier, was told to expect approximately 20percent of their self-service customers going paperless, but Neffwas happy to report that NCFBMIC is now over 30 percent.

As the carrier proceeds with a replacement of its policyadministration system, Squires believes integration of thedifferent systems will spark an even larger number of electroniccustomers for billing, but NCFBMIC is not trying to push itscustomers into a single method of payment.

"We are trying to serve every type of customer need," shesays.

Such variety is why insurance remains such anextremely competitive business, according to Squires.

"We want to grow our business, but we also need to retain thatcustomer," she says. "If you don't deliver these types of services,customers are going to shop elsewhere. There are too many nationalcompanies that spend heavy dollars on advertising that we can'tafford. We monitored the feedback on our Website and we could seethe increase in expectations to be online. We need to look at thenext generation of customers and make sure we have what theyexpect."

In addition to customer service, NCFBMIC has discovered severalpleasing bonuses: savings from going paperless and not having tomail as many paper bills.

"It was a nice side effect, but it was not the driver in ourbusiness decision," says Squires.

One of the challenges NCFBMIC faced was to make it clear tocustomers what their options were, explains Neff.

"We created a new payments and billing page as we redid ourWebsite to explain the benefits," he says. "The term e-bill maymean one thing to you, but it could mean something different toanother customer."

Having customers visit the NCFBMIC Website to pay their billsalso gives the carrier more marketing opportunities.

"From a customer base, the overall acceptance rate was more thanwe expected," she says. "Offering the billing options [online] iscreating more activity as customers come to our Web site."

Using the Fiserv product also meant that the vendor could hostthe billing solution and the customer data.

"We are not responsible for the compliance in storing creditcard information," says Squires. "Our core competency is sellinginsurance. They actually host and store the data. We prefer Fiservtake on that responsibility, allowing us to focus on our primaryexpertise—best serving our customers."