Leave a Good Impression With Electronic Payment
Insurance Networking News, June 2007
Take a look at the numbers. Online bill payments accounted for 39% of bill payments among online households last year, an increase of 4% over the previous year, according to The 2007 Consumer Bill Payment Survey, a study by Rochester, N.Y.-based Harris Interactive Inc. and The Marketing Workshop Inc. Norcross, Ga. In contrast, the volume of checks sent by mail fell 4%, accounting for 34% of the volume.
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Those stats aren't lost on insurance companies. The vast majority of insurers understand the importance of offering electronic bill presentment and payment (EBPP), both directly to policyholders and as a component of their agent service portals, according to Matthew Josefowicz, insurance practice manager for Boston-based Celent LLC.
Half of insurers already offer EBPP to their policyholders, and nearly half already have it for agents, according to a 2006 Celent report, "Billing: Business and IT Issues for P/C Insurers."
"Insurers that do not offer EBPP or ACH/EFT payments, and even card payments, will find themselves at a competitive disadvantage," Josefowicz asserts.
In fact, he sees more electronic presentment and payment, and more credit card payment, as the major trend in billing and payment technology in the insurance industry.
REAL-WORLD EXAMPLES
One example of that trend is Albuquerque-based New Mexico Mutual Casualty Co., which has made technology changes over the past few years. The company's green-screen legacy claims system had outlived its usefulness. The company was bringing in a new Web-based policy administration system, and needed a new claims system to work with it.
They decided on a Web-based claim system from San Mateo, Calif.-based Guidewire Software Inc. Now, New Mexico Mutual is planning to use the vendor's BillingCenter. That system shares a platform with Guidewire's ClaimCenter and PolicyCenter. BillingCenter manages the end-to-end billing process for all lines of business and was developed in Java for the J2EE standard.
New Mexico Mutual hopes the system will do just that, while providing online capabilities, with the planned go-live date of May 2008. "I need to make sure I can get reports out of the system," says Lynn Krueger, billing and collections manager.
"We need increased online capability for the agents and customers [business owners] to be able to pay online," she adds.
E-BILLING IN HEALTH
P&C insurers aren't the only line of insurance focusing on electronic billing and payment technology. Back in the 1990s, as part of a large new internal billing system project, Pittsburgh-based Highmark Inc. decided to rewrite its internal billing system, a huge project that spanned multiple years, and a phase of this project included e-Billing, according to Al Dodson, the company's manager of e-Billing.
The Highmark project also included e-billing. The insurer chose an eBilling solution from San Francisco-based Avolent Inc. to create a single environment for its customers and its subsidiary customers to view invoices and make payments with a virtual consolidated bill. Customers are notified via e-mail when invoices are available, and they go to the secure Highmark e-Bill Web site to view invoice and billing reports.
Highmark's dental subsidiary got first crack at the e-billing system in 2001. And after a few revisions e-Bill has gone live in other Highmark departments, including its claims administrative services only (ASO) billing, its group business insurance and its life insurance subsidiary, and more implementations are underway.
Another insurer succeeding with online billing and payments is Ohio Casualty Group (OCG), based in Fairfield, Ohio. Six property/casualty insurance companies are part of the company, which is licensed to write auto, home and business insurance.
The company uses three billing systems - one for commercial lines, another for personal lines and a third for agency billing, says Kevin Newell, the director of billing and collections team. But the insurer's real story is its online billing and payment for commercial and personal lines.
OCG established a relationship with Norcross, Ga.-based CheckFree Corp. to implement an online presentment payment application in May 2006. According to Doug Apple, IT manager for billing applications, to implement the application OCG used technology within the company.
Newell adds, "We purchased a license and that was pretty much it. We had to do some tailoring on our side to accept interfaces." The customer logs in to OCG's Web site and follows a link to a CheckFree Web site and makes the transaction there. "We feed billing information to that application and [customers] can view their billing information online and then make a payment online," says Newell.
CHALLENGES
Now that insurers have put e-business in place, the new challenge seems to be adoption, though OCG's Newell and Highmark's Dodson point out they are happy with their adoption rates.
In 2006, the number of e-payments made electronically by Highmark customers grew twelve-fold, reaching more than 48,000. Highmark expects more than $7.5 billion worth of payments from eBilled customers in 2007.
"We're pleased with where adoption is sitting," says Dodson. "I think our adoption rates are so high because customers feel value on their end. They wouldn't do it if it didn't save them time and effort, so I think we're going to keep looking at how we can save them time and effort."
Newell agrees that success comes from giving customers what they want. "We've had very good results. As far as I can tell we're spot-on with industry trends in terms of adoption rate and capture rate. It's something our customers have wanted, and we were able to put a package together and implement it."
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