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
Now is a great time to migrate to a modern billing platform. Consumers expect to do business through the channel they prefer, not the channel their carriers prefer. Modern billing systems enable capabilities such as electronic bill presentment and payment, mobile device support, and automated, scheduled payments much more easily than legacy systems. The vended options are numerous and more proven now, and "out of the box" features are becoming more and more robust and mature.
Modern billing platforms offer flexibility and enhanced automation over legacy technology. Vended solutions today offer many bill plan options, payment methods and invoicing options, such as direct bill, account bill and split bill. They allow accounts to be adjusted and rescheduled on demand and are not based on inflexible monthly batch cycles, as are many legacy systems. Automatic application of business rules and workflows helps increase internal efficiencies. Modern platforms also offer modification and customization through configuration tools -- allowing business analysts to make needed changes.
Carriers face the same risks with a billing replacement as with any large enterprise effort. However, system implementations are generally more successful today than in the past, as the vendors and carriers have gained experience and the methodologies have improved. Carriers have the option of rip-and-replace or of a gradual cutover. There may be diminished service levels temporarily if multiple systems are in place, but the reduced risk in a gradual cutover is attractive to many. Software-as-a-service and cloud-based solutions are appealing, viable options with reputable providers, but most carriers have a wait-and-see attitude toward SaaS/cloud core systems.
Martina Conlon is a principal in Novarica's insurance practice.