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Leave a Good Impression With Electronic Payment

Carrie Burns June 2007

With consumers now paying more premiums online than by paper check, insurance carriers need to present electronic bills effectively enough to leave a lasting good impression.

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.

Nationwide, consumers paying at least one bill online per month rose to 74%, compared to 69% of respondents in the previous survey. Consumer adoption of online bill payment has more than doubled since January 2002, when 37% of online households reported paying at least one bill online.

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.

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