Too often cost-cutting efforts end up compromising customer service. Or, conversely, efforts to improve service drive up expenses. But Indianapolis-based Indiana Farm Bureau Insurance ($625 million in annual premium) has found a way to achieve both goals -- through implementation of a new billing system that enables a considerable degree of customization for policyholders while also reducing processing costs.
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Founded 75 years ago by a group of Indiana farmers, IFBI today is a multiline carrier that has expanded its customer base to include any resident of the Hoosier state. But the farmers who continue to make up a large portion of IFBI's customer base have complex insurance needs, says Jim Putka, director, systems development, IFBI. Not only do they need to insure their farms, he explains, they often have other commercial interests, require workers' compensation and have personal insurance needs as well.
As a result, some of IFBI's clients have 100 policies or more, creating a complex billing scenario with individual invoices for each policy. Since billing is typically tied to the policy effective date, customers would receive bills on multiple days during the billing cycle, Putka notes.
Frustrated with this arrangement, in January 2007 IFBI's executive board, which is comprised of farmers who also are policyholders, pushed the carrier to offer consolidated billing for its entire P&C offering, including personal, home, auto, commercial and workers' comp. The board also wanted IFBI to offer billing customized to the needs of individual customers.
For example, some IFBI customers wanted the same due date for multiple policies with different policy effective dates, notes Putka. Others wanted to bundle their commercial policies separately from their personal policies, with one bill for each type of policy, and still others wanted their auto policies billed on a monthly cycle and homeowners' policies on an annual cycle -- but for those bills to be combined when the homeowners' policy came due.
A Phased Approach
The carrier's 40-year-old homegrown legacy billing systems could not enable the flexibility and customization that IFBI required, so management decided to replace the system. Since the insurer already relied on Falls Church, Va.-based CSC's POINT IN policy admin system, IFBI decided to implement the vendor's Exceed billing system without issuing a request for proposal from other providers. IFBI began the implementation in spring 2009 and plans to complete the initiative later this year.
The project is being completed in three phases, explains Chera Brantley, IFBI business project manager. In Phase One, which began in March 2009, IFBI established a COBOL interface between its existing POINT IN system, which handled the carriers farm and commercial billing, and the Exceed solution and began to bill all new business policies for commercial, personal and farm lines on the Exceed system by the beginning of 2010. Eighty percent of IFBI's new business comes from existing policyholders who have been cross-sold or up-sold, and these customers were anxious to receive consolidated bills for all of their policies, Putka points out.
During Phase Two, which was completed early this year, IFBI built a front-end screen to enable its customer service representatives (CSRs) to customize bills manually based on customer requests. Phase Three, scheduled to be completed this spring, will automate the customization process. Once complete, all customer billing for the entire P&C line will be moved off of the POINT IN system (which Putka says will continue to serve as the carrier's policy admin system for the next five to 10 years) and onto the Exceed billing solution, enabling what the insurer calls "All-in-1 Customized Billing."
Cost and Service Benefits
In addition to hearing from customers that they like the consolidated billing, IFBI has reaped significant cost savings from the Exceed implementation. Consolidated billing will reduce mailing costs by 10 percent to 30 percent, Putka reports.
And there are other benefits as well, adds IT project manager Leigh Layton. "With consolidating billing, we receive a lower volume of payments, which decreases our processing costs," she says.
IFBI's more than 400 CSRs quickly realized the value of the consolidated and customized billing capabilities. Putka cites one rep who said she "was thrilled with consolidated billing." The CSRs appreciate how easy the billing system is to use and troubleshoot, and how it empowers them to meet customer needs for customization, he says.
For now, IFBI bills continue to be paper-based. IFBI chose to focus on the consolidation capabilities before embarking on the planned next step: electronification of bills. In preparation for this, IFBI recently purchased the Thunderhead (New York) document management system and is readying to offer customers new opportunities for electronic notifications and online bill payment.
"This kills at least two birds with one stone," Putka says in summing up the project. "It helps us reduce costs and improves customer retention. Not many cost-cutting initiatives result in improved services, but this one is really a winner."
CASE STUDY SNAPSHOT
Indiana Farm Bureau Insurance (Indianapolis; $625 million in annual premium).
LINES OF BUSINESS
Property and casualty, including personal, home, auto, commercial and workers' comp.
CSC's (Falls Church, Va.) Exceed billing system.
Consolidate billing systems to improve the customer experience while reducing operational costs.