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Customer-Centric Cash Flow

Insurers typically neglect the critical customer touch points of premium and claim payments. A customer-centric approach to these traditionally back-office functions not only pleases customers, it also brings efficiency and transparency to insurers' processes as well.

Full-Spectrum System

A full-spectrum system, Burke says, should be Web-enabled and include self-service bill payment and presentment wherein customers not only can see their bill and payment status, but also can apply funds to whichever policy they choose, on whatever schedule suits them. Such a system would improve customer satisfaction and also reduce call center-related costs. Further, it would enable rapid reconciliation of accounts, even when customers have multiple policies with different premium payment priorities. "In the case of anything going wrong, I could apply a rule to a payment and leave open the possibility of a customer coming back and reversing the transaction," Burke notes.

"Billing, payments and account balances should all be stored in the same place," Burke adds, "because when they're not, things fall out of sync very quickly and companies struggle." And unfortunately, struggling in this area is something insurance companies are used to.

One reason for that is the places in the insurance enterprise that these functions traditionally reside. Claims and billing have been handled separately from a functional standpoint, and from a financial standpoint they have been connected only loosely, in terms of processing, within the concept of collections and disbursements. And while the service aspect of claims is well understood, the continuum between claims and billing generally has been owned by the CFO. "There is unified ownership of the functions, but only in the very back office, despite the fact that front-office people are touching the customer when it comes to getting money from and paying money out to the customer," observes Donald Light, a San Francisco-based analyst with Celent. "Rarely does anyone talk to the CFO about how he or she is managing the customer experience."

Most companies have yet to consolidate their internal billing and payment systems, according to Light. But they are making important moves -- which further drives the competitive imperative for other carriers to follow suit.

Super-regional P&C carrier The Hanover Insurance Group, for example, seeks to maximize its competitive position by delivering service options characteristic of both the more technologically advanced national companies and the more responsive, high-touch regional players. The carrier has built the capability for its independent agent distribution partners to accept full or partial premium payments for new home and auto policies via electronic check, credit card and debit card at the point of sale (POS), as well as enabling customers to call the carrier and use an interactive voice response (IVR) system to pay by credit card. The Hanover also is offering discounts on its multivariate Connections Auto™ product to customers who pay in full via electronic payment.

"Customers come to us through our agents, so it's important to provide the customers, and therefore our agents, the same options they would have in the direct market," says The Hanover's Park. "It's very important to agents not to have to pass that money on to us or to worry about depositing checks. Remitting funds happens immediately at the transaction."

To provide the capabilities to agents, The Hanover built a new user interface into its The Agency Place agent portal. PegaSystems' (Cambridge, Mass.) PegaRULES Commander product enables configuration of different pay plans, pay options and account summaries, according to Mike Clifton, The Hanover's chief technology officer. Agents have the ability to enter a credit card, for example, and execute the transaction in its entirety or choose a billing plan.

"The configurability of our POS system allows for the rules within the customer service flow to automatically offer the appropriate options for payment," Clifton remarks. "The billing capability is mainframe-driven, while the rules are embedded in our POS capability. Having the rules outside the billing system pretty much lets you be as creative as you could wish." Other vendor partners include BillMatrix (Dallas) for bill presentment and credit card payment at POS and over the phone, and CheckFree (Atlanta) for online electronic check capability.

Planning for the work began in November 2005. The project, carried out by a team of 12 to 15 developers, kicked off in February; full functionality was rolled out by the end of July.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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