As insurers upgrade their financial and billing systems to meet regulatory mandates for more transparent reporting, they are seizing the opportunity to enhance the customer and distributor experience as well. Carriers that get billing right will reap the rewards of improved customer satisfaction and retention, easier regulatory compliance, and lower operating and maintenance costs. But many insurers are hampered by inflexible legacy systems. What are the capabilities of the new generation of financial and billing systems, and how can they help insurers improve their competitive positions? Is it imperative that carriers undertake a rip-and-replace approach to upgrade their capabilities, or are there other options? And what are the risks of these initiatives? --Peggy Bresnick Kendler
There are many software vendors in the property/casualty marketplace peddling policy administration, claims and billing systems. If a carrier is in the market for one of these products, now is a good time to be looking. Newer systems are more flexible and more robust than in the past, and carriers are beginning to reap the benefits from these systems.
Newer products are more configurable than legacy systems. This can enable a carrier to implement the software faster and with less modification from the vendor. It also should allow for faster implementation of changes to the systems as you move forward. All of this plays into lower total cost of ownership.
But carriers do take a risk anytime they make a big change to any of their systems. To mitigate the risk, you need to plan carefully, establish good testing procedures and have knowledgeable employees involved in the process. When replacing your current system with a vendor product, conduct a proof of concept of your top two or three choices to make sure you understand how the functionality works prior to deciding on a product.
You need to really understand where your pain points are when upgrading your billing and financial systems. In some situations you might be able to rewrite some code or purchase component software to improve a piece of your current system without replacing the whole system. In certain situations, software as a service (SaaS) and the cloud are viable options. It all depends on what you are trying to accomplish and what is available in the marketplace.
Rod McKimson is VP of Information Technology at Pekin Insurance (Pekin, Ill.)